Some investors believe buy-to-let property is an excellent way to generate a passive income. While it is true that many have made a lot of money using this approach, it is not something I plan to follow.
In my opinion, there are three reasons why investing in rental properties is not as attractive for me personally as owning stocks and shares.
First of all, there is the amount of investment required. With the average UK property price now standing over £260,000, I would either need a large lump sum or a large mortgage to buy a rental home. By comparison, I only need a few pounds to invest in equities.
Then there is the cost of owning a buy-to-let property. Mortgage and stamp duty rates are higher for rental investors than homeowners, and there will be an annual running cost. That is without considering the cost of finding tenants in the first place. I might have to pay a fund management fee or investment platform fee with stocks and shares, but these are relatively small and predictable in comparison.
And finally, there is the time required. Buy-to-let property is not a passive investment, contrary to widespread belief. Owning a rental property is a business. Like any business, it requires time and effort to make it work.
On the other hand, when I buy shares in a corporation, I am also investing in the time and effort of the company’s managers. They look after the business on behalf of all shareholders. There is no need for me to lift a finger.
Despite the drawbacks of buy-to-let, this asset class does have some benefits. Property prices have outperformed inflation in the long run. There is also a fairly steady demand for rental homes, suggesting investors will always be able to achieve an income stream.
For investors with the right skills, buy-to-let could be the right choice.
Growth opportunities
But rather than buying property, I prefer to invest in stocks and shares. I am buying shares in companies with global diversification and portfolios of leading brands. These are two other factors I would not be able to achieve with rental property.
Without millions of pounds, it would be impossible for me to build a well-diversified portfolio. It would also be impossible for me to create an international property portfolio.
One of the companies that I already own in place of rental property is Diageo. This enterprise owns a portfolio of globally-recognised alcohol brands and is managed by a team of experienced individuals.
The one downside of buying individual stocks and shares compared to buy-to-let property is that I have no control over how the companies operate. In this respect, rental property does provide the better option, but it also comes with more work.
If I wanted to diversify into property, I would buy shares in a property manager such a Grainger, one of the UK’s largest professional landlords. This would provide diversification without exposing me to some of the risks above.
The post 3 reasons I’m avoiding buy-to-let and buying shares instead appeared first on The Motley Fool UK.
More reading
Rupert Hargreaves owns Diageo. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Triton International (TRTN) closed the most recent trading day at $61.10, moving +0.31% from the previous trading session. This change outpaced the S&P 500’s 0.37% loss on the day. – Zacks Coming into today, shares of the shipping container leasing company had lost 1.36% in the past month. In that ...
See Details: Triton International (TRTN) Gains As Market Dips: What You Should Know
Asbury Automotive Group (ABG) closed the most recent trading day at $151.49, moving -0.81% from the previous trading session. This move lagged the S&P 500’s daily loss of 0.37%. – Zacks Heading into today, shares of the auto dealership chain had lost 12.82% over the past month, lagging the Retail-Wholesale ...
See Details: Asbury Automotive Group (ABG) Dips More Than Broader Markets: What You Should Know
Cushman & Wakefield (CWK) closed the most recent trading day at $21.46, moving +1.18% from the previous trading session. This change outpaced the S&P 500’s 0.37% loss on the day. – Zacks Coming into today, shares of the company had lost 2.35% in the past month. In that same time, ...
See Details: Cushman & Wakefield (CWK) Gains As Market Dips: What You Should Know
Wesco International (WCC) closed at $121.43 in the latest trading session, marking a +1.57% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the maker of electrical and industrial maintenance supplies and construction materials had lost ...
See Details: Wesco International (WCC) Gains As Market Dips: What You Should Know
The recent rate-fueled valuation crush among next-gen tech has created some ripe acquisition opportunities for cash-rich mega-cap tech. After rapidly deteriorating investor sentiment, Peloton PTON is the latest acquisition target, with poor management decisions dragging its market value -80% below the highs it reached a year prior. – Zacks Now, ...
See Details: Big Tech Looks To Buy Beaten Down Innovation-Fueled Entrants
In the latest trading session, HP (HPQ) closed at $37.49, marking a -0.29% move from the previous day. This change was narrower than the S&P 500’s daily loss of 0.37%. – Zacks Heading into today, shares of the personal computer and printer maker had lost 2.72% over the past month, ...
See Details: HP (HPQ) Stock Moves -0.29%: What You Should Know
In the latest trading session, One Stop Systems, Inc. (OSS) closed at $4.05, marking no change from the previous day. This change was narrower than the S&P 500’s daily loss of 0.37%. – Zacks Heading into today, shares of the company had lost 15.09% over the past month, lagging the ...
See Details: One Stop Systems, Inc. (OSS) Flat As Market Sinks: What You Should Know
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: Luminar Technologies, Inc. (LAZR) Gains As Market Dips: What You Should Know
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: NCLT okays Taguda's revival plan for Ushdev International
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: Rel Capital resolution: Lenders hire KPMG India, L&L Partners
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: Soaring refining margin bodes well for oil firms
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: Buckle (BKE) Gains As Market Dips: What You Should Know
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: AutoNation (AN) Dips More Than Broader Markets: What You Should Know
Luminar Technologies, Inc. (LAZR) closed at $14.84 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – Zacks Prior to today’s trading, shares of the company had lost 6.09% over the past month. This has was ...
See Details: FuboTV Inc. (FUBO) Stock Moves -0.3%: What You Should Know
In the latest trading session, Fiverr International (FVRR) closed at $81.01, marking a -0.52% move from the previous day. This change lagged the S&P 500’s daily loss of 0.37%. – ... Read more »
Sterling Construction (STRL) closed at $27.51 in the latest trading session, marking a +1.63% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – ... Read more »
Boise Cascade (BCC) closed at $77.20 in the latest trading session, marking a +0.69% move from the prior day. The stock outpaced the S&P 500’s daily loss of 0.37%. – ... Read more »
In the latest trading session, CRISPR Therapeutics AG (CRSP) closed at $62.36, marking a +0.76% move from the previous day. This move outpaced the S&P 500’s daily loss of 0.37%. ... Read more »
Bausch Health (BHC) closed the most recent trading day at $24.39, moving -0.53% from the previous trading session. This move lagged the S&P 500’s daily loss of 0.37%. – Zacks ... Read more »
Wall Street has been mostly kind to investors so far in February after a tough January. Market participants are upbeat about improving U.S. economic conditions as reflected by encouraging fourth-quarter ... Read more »
Bank of Nova Scotia (BNS) closed at $73.75 in the latest trading session, marking a +0.78% move from the prior day. This move outpaced the S&P 500’s daily loss of ... Read more »
Fox FOXA is set to report second-quarter fiscal 2022 results on Feb 9.For the quarter, the company’s current Zacks Consensus Estimate for earnings is pegged at breakeven against a loss ... Read more »
In the latest trading session, Generac Holdings (GNRC) closed at $279.97, marking a +0.01% move from the previous day. This move outpaced the S&P 500’s daily loss of 0.37%. – ... Read more »
Spirit Airlines Incorporated (NYSE:SAVE) and Frontier Group Holdings Inc (NASDAQ:ULCC) have announced a $6.6 billion merger to create one of the largest low-cost airlines in the U.S. The new airline ... Read more »
The First Trust Energy AlphaDEX Fund FXN is probably a suitable pick for investors looking for momentum. FXN hit a 52-week high and is up 59.6% from its 52-week low ... Read more »
U.S. stock index futures crept higher during overnight trading Monday, after the major averages moved between gains and losses during regular trading as the market awaits key inflation data later ... Read more »
Immunovant, Inc. IMVT reported a net loss of 36 cents per share in the third quarter of fiscal 2022 (ended Dec 31, 2021), wider than the Zacks Consensus Estimate of ... Read more »
The Buckle, Inc. BKE looks well poised on the back of its robust strategic efforts, including strength in e-commerce business and an impressive sales trend. BKE has been putting up ... Read more »
Wall Street put up a moderate show last week with the S&P 500 (up 1.6%), the Dow Jones (up 1.1%), the Nasdaq Composite (up 2.4%) and the Russell 2000 (up ... Read more »
The Interpublic Group of Companies, Inc. IPG is scheduled to report fourth-quarter 2021 results on Feb 10, before the opening bell. – Zacks Let’s check out how things have shaped ... Read more »
Mednax, Inc. MD and its affiliated practices Pediatrix Medical Group recently acquired Night Lite Pediatrics, LLC in Orlando, FL. Night Lite is a private 13-clinic pediatric urgent care practice. The ... Read more »
Here are three stocks with buy ranks and strong growth characteristics for investors to consider today, February 7th: – Zacks Apple AAPL: This company whose business primarily runs around its ... Read more »
Shares of Gol Linhas GOL have displayed an uptrend on the bourses over the past month, gaining 16.2% against its industry’s 3.1% decline. – Zacks Image Source: Zacks Investment Research ... Read more »
Monday, February 7, 2022 The Zacks Research Daily presents the best research output of our analyst team. Today’s Research Daily features new research reports on 16 major stocks, including Bank ... Read more »
Sanofi SNY announced that the FDA has approved its monoclonal antibody, Enjaymo (sutimlimab-jome), to decrease the need for red blood cell transfusion due to hemolysis in adult patients with cold ... Read more »
For Immediate Release Chicago, IL – February 7, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the ... Read more »
Signage outside the Internal Revenue Service (IRS) headquarters in Washington, D.C.Bloomberg | Bloomberg | Getty Images The IRS on Monday announced it will stop using a controversial third-party service for ... Read more »
Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you’re an income investor, your primary focus is ... Read more »
Investors might want to bet on Xilinx (XLNX), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and ... Read more »
Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you’re an income investor, your primary focus is ... Read more »
For Immediate Release Chicago, IL – February 7, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the ... Read more »
BankUnited, Inc. BKU has announced a new share repurchase plan. The company’s board of directors has approved the repurchase of up to $150 million in shares of BKU’s outstanding stock. ... Read more »
TEGNA Inc. TGNA shares rallied 7.4% in the last trading session to close at $21.34. This move can be attributable to notable volume with a higher number of shares being ... Read more »
BCB Bancorp (BCBP) could be a solid choice for investors given the company’s remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue ... Read more »
Marathon Oil (MRO) could be a solid choice for investors given the company’s remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue ... Read more »
The fourth-quarter earnings picture for the transportation sector has been robust. This is especially true as earnings of 95.2% of the market capitalization of the sector that has reported so ... Read more »
For Immediate Release Chicago, IL – February 7, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the ... Read more »
Robert Half (RHI) could be a solid choice for investors given the company’s remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue ... Read more »
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor’s dream. But for income investors, generating consistent cash flow ... Read more »
The entertainment industry is growing rapidly, with surging demand for over-the-top (OTT) content and other services. Therefore, prominent industry participants Comcast (CMCSA) and ViacomCBS (VIAC) should benefit. But which of ... Read more »
Quidel Corporation QDEL has been gaining on the back of its strong diagnostics portfolio. A solid third-quarter 2021 performance, along with solid potential in In-Vitro Diagnostics (“IVD”) products, is expected ... Read more »
Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you’re an income investor, your primary focus is ... Read more »
Liu Jie/Xinhua via Getty Images States can forgo clawing back pandemic-era unemployment benefits in a broader set of circumstances than previously allowed, the U.S. Department of Labor said Monday. In ... Read more »
Steven Heap/EyeEm/Getty Images It's easy to miss necessary tax forms as more companies go paperless, but with mounting challenges at the IRS, filing an inaccurate tax return will only lead ... Read more »
