How to supercharge your retirement income

Whilst we would never argue against a well structured pension plan, we firmly believe that property should form part of any retirement strategy. Here's how to get the biggest bang for your buck.

A couple of years ago, I was approached by a prospective client who was looking to invest a substantial sum that he had saved through working in Qatar and Dubai for several years.

The amount he was considering investing was around £200,000 and his preference was for a newly built two bedroom apartment in Manchester city centre, an area he knows well. It fell to me to have to advise him that £200k would cover a one bedroom in the city centre core or a two bedroom on the city centre fringe, either of which represented a compromise.

After a discussion about his objectives, we established that -

• ​The reason for investment in property was to provide income to supplement his existing pension arrangements.
• Holding a senior position in a well paid profession, he has no need for the income until he actually retires.
• That he intended to retire in around 15 years time.
• That his employment status and financial profile suggested that he would have no difficulty in raising an expat buy to let mortgage.

The amount of rental a property will generate is closely linked to its value, so in order to maximise rental income it makes sense to own properties with as much value as possible. After crunching the numbers and speaking with specialist mortgage brokers, I was able to suggest that instead of buying a single property, he could use his capital to cover the deposits on two apartments. and use 60% mortgages on 15 years repayment terms to fund the balance. The result?

• My client now owns two 2 bedroom apartments in Manchester city centre's highly sought after Northern Quarter.
• The first of the properties is complete and income producing.
• The second will complete during the course of this month.
• The net rentals fall very slightly short of of his mortgage repayments, but, through annual rent increases, should be at break even within 4  to 6 years.
• In 15 years time he will own two city centre apartments worth over £500,000 in today's terms despite having used only £200,000 of his own money, with the mortgages fully paid off by his tenants, 
• Upon retirement he will have a rental income two and a half times greater than he originally anticipated, making an enormous difference to his standard of living.

The careful and strategic use of mortgages can make the difference between doing well and doing very well indeed. There is no other investment available to a retail investor that will ramp up returns to the same extent.

​I love property!


This article is not intended as financial advice. If you wish to discuss retirement planning, you should talk to a suitably qualified practitioner licenced to give advice in your jurisdiction