Wednesday, Feb 14, 2007
The Psychology of the Amateur BTL Landlord Neatly Described ...
MONEYWEEK: How not to invest in property
John Stepek examines the psychology of the amateur BTL Landlord described in Thisismoney as having a £230K interest-only mortgage coming to the end of the fixed-interest period - remember it? Mr Stepek describes the folly of the BTL-er psychology which some amazingly simple and obvious points, including "If you bought shares in a company paying a nice dividend one year, and then the following year, it slashed the dividend to zero and said that you would in fact, have to start paying the company for the privilege of holding onto the shares, what would you do? You’d sell, of course." I think this is evidence of herd mentailty and I wonder what will happen when BTL-ers no longer want to loose money?
Posted by talking rot @ 11:08 AM (171 views) Add Comment
9 Comments
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1. Blindleadtheblind said...
a very concise and well written article. How many more are in a similar position I wonder? Sentiment changes quickly ...and especially when it affects money in peoples pockets, this together with tighter lending practices and I expect higher IR especially on poor risk BTL mortgages will cause mass panick in the housing industry...look out below!!
2. autopilotengage said...
This article is one of a number which sends the signal for me. I want to know where to put my money before all the hot money starts to flow out of BTL into ???
The tips i've had so far are gold, oil and commodities.
3. Sam said...
Am sure it's been said many times before. there are three reasons why people sell property. -- divorce, debt and death.
4. Jim Tallis said...
Pork Bellies! Invest in Pork Bellies and Tullips!
5. inbreda said...
"especially on poor risk BTL mortgages"
According to the article I'ev posted today, BTL mortgages are a better risk than the mortgage market as a whole.
I accept though that in a downturn the non-BTL default rate will probably not increase at anywhere near the speed of the BTL default rate.
6. The Capitalist said...
Auto - check out the gold price over the last few days - get in if I were you. Try Lyxor Gold ETFs listed on the LSE, very liquid and secure. IMHO and DYOR.
7. sovietuk said...
The property optmists do seem to be doing alot of very wishful thinking lately. Rates are erring on the side of increases and this is going to make the argument for these so called investments even more spurious. When the sentiment changes as well as the logic then prices will falter. The game in it's present form will be pretty much over(if it isn't already - allowing time for data to come through) . Will be interesting to see the level of casualties and how it all plays out. BTL mis-selling scandal in 5 years time???? People loosing their property investment pensions ???
8. Disgustedofyork said...
A level headed and briliantly written article, and certainly one you would want to pass on to all property optimists you know, when they wheel out the 'property can only go up' arguments. And a nice to see somebody question the judgement of somebody with a fairly biased view providing advice.
9. geed said...
A breath of fresh air to read a constructive argument supporting the demise (or at least the risk of) of BTL and logical reasons as to why this fad will/can't last. I am astounded why people just dont realise that capital gains are not there be default. I never stop hearing statements from my generation (30ish) of "well, property always goes up so you better get in", I ask them if they remember 1974, 1982, or 1990? Blank looks usually follow. It will take a lot to change this sentiment, but things have been going our way lately. Will 5.5% be enough though?