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And Now For Some Good News


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#1 rantnrave

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Posted 05 March 2013 - 12:14 PM

From the LettingAgentToday website:

Landlords who entered the buy-to-let market five years ago are unlikely to have made any money at all – and could be counting their losses.

Those with buy-to-let mortgages are making losses on their investments, while cash buyers are unlikely to make profits.

The warning has come from financial consultant Brian Hall, founder of The Model Works and who specialises in reports on the housing market.

Hall criticised data from the Association of Residential Lettings Agents which shows stable buy-to-let profits, describing it as ‘incomplete, inaccurate and biased’.

Hall’s model uses house price indexes and mortgage data, and also factors in costs such as Stamp Duty, fees, arrears and management costs. While ARLA projects returns over the next five years, Hall looks back over the last five years and calculates the returns should the property be sold now.

His numbers show that anyone who had bought a typical buy-to-let property five years ago would have made a net yield loss of £9,811. After ten years, the net yield becomes a profit of £10,239, climbing to over £29,000 in 15 years.

Hall said: “If you read the numbers you can see geared investors are making a loss and cash buyers are making no profit at all. It is crucial someone making such an important decision is properly informed.”

ARLA defended its own reporting. It said: “The ARLA Review and Index is based on surveys conducted among ARLA members and investor landlords. It is independently written and includes clear details on the methodology used.

“The index model used has provision for altering assumptions for different scenarios and is one of a number of reports across the property industry.”

However, Hall’s report comes as another – from BDRC Continental’s landlords Panel – shows that a landlord in central London would rack up £8,071 per year in maintenance, insurance, fees and other costs, excluding mortgage repayments. In outer London, the costs would be £7,870.

The panel findings show that just under one-quarter (23%) of private landlords letting out property in inner London spent over £5,000 on maintenance in the last 12 months. Insurance was the next highest cost with 14% of landlords spending £2,000 or more, and 12% spending the same on agent fees.

In outer London, maintenance has cost almost one-quarter (24%) of private landlords over £5,000, 11% spent £2,000 or more on agents, and 5% spent the same amount on accountants. Although spend on insurance is lower, the amounts spent on letting fees are higher.
Mark Long, director for BDRC Continental, said: “There are a lot of costs associated with being a private landlord, not least maintenance, insurance and professional advice from accountants and solicitors.

“However, our survey tells us that the market for private rental across London is strong and landlords feel positive about their prospects, so despite the costs, the market for letting property in the capital in London remains buoyant and profitable.”


:lol:



#2 cybernoid

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Posted 05 March 2013 - 12:40 PM

Calculations I have made based on properties I know the exact details of show that you've been on to a loser if you bought since 2003/2004. I guess it varies across property types and regions.

Don't tell them though, let them snigger at you for throwing your money away on their 'investment' when in fact they are subsidising your living costs for you while you wait to buy at value.

Sshh!

#3 long time lurking

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Posted 05 March 2013 - 12:48 PM

From the LettingAgentToday website:


:lol:



But the banks love it as they have a army off interest only unpaid caretakers

#4 The Preacherman

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Posted 05 March 2013 - 12:49 PM

Anyone who joined the BTL party post 2004 will have lost money yet few would own up to it.

#5 long time lurking

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Posted 05 March 2013 - 12:54 PM

Anyone who joined the BTL party post 2004 will have lost money yet few would own up to it.


Agreed and another 15 + years of hoping IR`s don`t rise is a long time

#6 beccles

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Posted 05 March 2013 - 01:02 PM

I dont believe it, homes under the hammer tells me everyone makes money.

#7 thecrashingisles

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Posted 05 March 2013 - 01:02 PM

Anyone who joined the BTL party post 2004 will have lost money yet few would own up to it.


Hmmm, sadly those who bought in central London will have made a killing.

#8 eight

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Posted 05 March 2013 - 01:09 PM

I dont believe it, homes under the hammer tells me everyone makes money.


OTOH, I can't believe there's a single person with six figures in the bank hasn't at least thought about putting it into property. When you're only trying to beat 2% it must look tempting. Whether many of them follow through or properly do the sums is another matter, but I know anecdotally of at least one.
There is a war going on for your mind. If you are thinking, you are winning.

#9 interestrateripoff

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Posted 05 March 2013 - 01:34 PM

The cost of servicing the debt with no repayment vehicle makes buy to let a gamble on house prices going up. It's just like bidding up the price of tulips.

Proof that Brown had repeated IMF / OECD / BIS warnings over house prices and did nothing!!!
Looting: The Economic Underworld Of Bankruptcy For Profit
The exponential growth of debt and the unsustainability of debt
The logic of HPI @ 10% YoY means your £100k house would be worth £1.38bn in 100 years
Paying down my mortgage with money found on the street

It's time to sue the Bank of England / Federal Reserve for GROSS NEGLIGENCE
If DEBT is the problem REPAYMENT is the solution or you default

 

"The trouble with the world was that prices were so low that only the rich people could buy and the aim of the Conference was to raise them to a point where it would again be possible for poor people to buy something."

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New digest on the credit crisis and economy Part2 Part 3

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#10 cybernoid

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Posted 05 March 2013 - 01:38 PM

When you're only trying to beat 2% it must look tempting.


2 is larger than a negative number, your money is immediately available in a savings account and you don't have to manage letttings agents and tenants and maintain a property.

Other than that, youre in leveraged debt secured against a depreciating asset. And banks are raising rates, like the bank of Ireland for example.

Great idea! Pile in! Fill yer boots!

:lol:

#11 aSecureTenant

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Posted 05 March 2013 - 01:48 PM

Anyone who joined the BTL party post 2004 will have lost money yet few would own up to it.


Very smart, clued BTL investor and letting agent I know sold up 2004/2005.

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Ignoring ALL UKIP and 'Election' threads on HPC until further notice


#12 The Masked Tulip

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Posted 05 March 2013 - 02:05 PM

Robbie Fowler launches 'buy-to-let' school


http://www.telegraph...let-school.html
The success or failure of your deeds does not add up to the sum of your life. Your spirit cannot be weighed. Judge yourself by the intention of your actions and by the strength you faced the challenges that have stood in your way.

The people closest to you have been trying to tell you that you have made a difference. That you did change things for the better. The Universe is vast and we are so small. There is really only one thing that we can ever truly control - whether we are good or evil.


The political triumph of the American Right has been to advance relentlessly the economic interests of the country's richest people, while emphasising a swath of moral, social and foreign policy issues that motivate and certainly distract middle-class and poor voters.

#13 long time lurking

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Posted 05 March 2013 - 02:58 PM

Robbie Fowler launches 'buy-to-let' school


http://www.telegraph...let-school.html


Wasn't there a tread on here a few years ago concerning the very same man trying to sell of his portfolio in the Stock port area (all of which were just hear say/rumor) ?

Perhaps this is his new angel

#14 Blod

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Posted 05 March 2013 - 03:08 PM

Very smart, clued BTL investor and letting agent I know sold up 2004/2005.

+1
Someone I know got out in 2005/6 then started to have doubts, luckily or unluckily the credit crash happened before he had a chance to wade back in. It'd have been sweet to see him taught a lesson. :angry:

#15 EMac

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Posted 05 March 2013 - 03:26 PM

Very smart, clued BTL investor and letting agent I know sold up 2004/2005.

Interesting. Seems to be following our typical bubble life cycle. The smart money has left while the masses have been piling in. How long until we see capitulation is I guess dependent on how many fingers the government has left to plug the leaks in the dam.




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