To Buy to Let or not

Those of us who have ventured in to the buy to let area of investing and have lived to tell the tale know what the risks are, however some still invest without understanding the downside. I have a friend who has 13 properties and I love listening to him tell me about the latest nightmare that one of them is giving him, my favourite was when a local hooker rented out one of his flats and stole all his fixtures and fittings.
I told a client recently that the level or risk is similar to investing directly in to the UK stock market and he thought I was a little bit mad! It's bricks and mortar for goodness sake he said. True, but let me explain some of the risks:

• Rental Void- you need to calculate on 10 months rental each year and not 12 months, this will help deal with vacant periods.
• Property Maintenance- New boiler, windows, roof, carpet, kitchen, lighting.... the list can be endless.
• Increased crime- criminals targeting the area will reduce the appeal of the property for rental and re-sale.
• Asylum centre or other project built nearby- This has happened to a friend of mine and he suffered a 25% fall in value nearly overnight on the capital and he's had to lower his rents.
• Purchase and Sale costs- stamp duty, legal fees, valuation, estate agents, all will reduce your return.
• Capital gains tax- not as easy to dodge as it was since the MPs expenses scandal.
• Income tax- If you're already a high rate taxpayer or greater then the income is added to your own income for tax purposes, this might push you in to higher rate tax if you're on the basic rate.
• Liquidity- During market downturns (they come after all booms if you're unsure) you may have to cut your losses if you want to sell, or worse it might not get any buyers at all and at the same time you could be paying for a mortgage without a tenant to help.

As you can see it's not without risk. I haven't mentioned the harassment factor with managing a property, or paying an estate agent to deal with everything.
The other alternative would be to invest the money and leave it with a professional to worry about. My friend with the 13 properties waited too long to sell during the boom and is now selling them one at a time. He's realised that he can get a good income from investing for his retirement without having to decorate any other room but his own for a change.