Purchasing property via sipp

[HomesWarehouse]

Hi guys. I'm thinking of buying commercial property via my pension sipp. I can afford a small warehouse unit. A large shop but am thinking of buying a pub/restaurant.

Originally my idea was to buy somthing high yielding and sit on it and build thebpension pot. But I almost fancy having a bar/restaurant in the family and letting it back to myself/the mrs and running it

Anybody been down a similar route have any advice ?? I have enough cash in there to purchase the above options outright And for the record. I'm 29ys old so nowhere near retirement age yet. So long term investment is the goal.

 

[Mark T Jones]

I don’t know about the SIPP. You really need dedicated professional advice on that one

I have to say though that this approach to running a pub/restaurant makes me shudder (not in a good way!)

 

[Scalloway]

But I almost fancy having a bar/restaurant in the family and letting it back to myself/the mrs and running it

What experience do you have of running a restaurant? A friend of mine who has grown his business from almost nothing to a turnover of £20 million opened a couple of restaurants as his business grew. He had to close them after a few years as he could not find out how to make money from them.

 

[Mr D]

Jamie Oliver and a number of companies have had to close some restaurants recently - presumably these were people experienced at running a restaurant business.

 

[HomesWarehouse]

Guys. I see your point with the industry killing off pubs and restaurants across the U.K. The investment from my pension would only be to purchase the building freehold tho. A second option would be buy the premises and lease to someone who would like to run it


Although the more I look at it. The third option. Of buying a range (3-4) small shops/beauty salon type buildings seems like the safe bet for producing income.

 

[Noah]

I see your point with the industry killing off pubs and restaurants across the U.K.

You should distinguish between pubco-owned pubs, and independent pubs - or to put it in somewhat simplistic trade terms, leasehold and freehold pubs. Pubcos are killing leasehold pubs, but freehold pubs are generally much more likely to be successful.

 

[MikeJ]

My pension owns the company's building. That allows us to pay the pension rent, and exceed the £40k per year limit of contributions to your pension.

 

[Mr D]

Mike - that would be because the pension is receiving income from its asset? Or done as an external payment to pension fund?

 

[Mark T Jones]

You should distinguish between pubco-owned pubs, and independent pubs - or to put it in somewhat simplistic trade terms, leasehold and freehold pubs. Pubcos are killing leasehold pubs, but freehold pubs are generally much more likely to be successful.

Really not that simple. There are many successful punch tentants and many failed freeholds.

 

[Noah]

Really not that simple. There are many successful punch tentants and many failed freeholds.

Off the top of my head, there are several local ex-pubco pubs that are flourishing, many current pubco pubs that are struggling, and only very few that are doing well.

Coincidentally, I recently asked an industry source for statistics on failure rates of pubco ties v. freehold - will be interesting to see the results. My direct experience and shared anecdotes support my supposition; let's see what the statistics say...

 

[Mark T Jones]

Off the top of my head, there are several local ex-pubco pubs that are flourishing, many current pubco pubs that are struggling, and only very few that are doing well.

Coincidentally, I recently asked an industry source for statistics on failure rates of pubco ties v. freehold - will be interesting to see the results. My direct experience and shared anecdotes support my supposition; let's see what the statistics say...

Tenancies will certainly have a higher failure rate, not least because the barriers to entry and commitment required are far lower.

There are also far more of them. That doesn’t lead to a logical conclusion that an individual tenant is more likely to fail if they have properly thought through their business

 

[Gordon - Commercial Finance]

Buy the property and let someone else take the risk of running a pub!