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neitherbullnorbear

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About neitherbullnorbear

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    Winding up HPCers
  1. getting back on topic, I suggest you read the second post in thsi thread. All will be explained. The OP doesn't understand the concept of annualised figures.
  2. The OP seems to have missed out one option - are they being stupid.
  3. It's getting late in the day - and my head's hurting! If you borrow 170k at 6% over 25 years, it will cost you 255k. So that's effectively the cost of capital You sell for 400k, so 400k-255k = 145k profit you pay cap gains at 40% = 58k. leaves 87k buying costs, say 4K = 83k. Selling costs, say 8K = 75k assuming maintenance costs of 1k per year (i've no idea what average is) = 50k letting agent and management costs, again, guessing, say 0.5k per year = 12.5k = 37.5k lets try and add voids into equation. I guess we really need to know what the rent is, but lets say getting on for 1 month a year, give or take, so we're talking, say, 15k That leaves 12.5k. And on top of this, there's the little matter of a 75k rent subsidy. Perhaps a little harsh, as the monthly cost of servicing teh debt is 0.68k. Lets say that rather than 250k, the subsidy is 0.1k a month, which is probably about right. to get this 12.5k in 25 years time, it will cost you 30k Granted, you would expect rents to go up over this period, but it would be dangerous to rely on that. Rents have been pretty much flatlinging at a time of relatively strong economic growth. Again, feel free to question my maths (and my brain is somewhat frazzled at this late hour) but this doesn't look so healthy. P.S. Predicting house price growth is pretty tricky as modelling is over a relatively short time frame with vastly differering economic background. But, IMO BTL-type properties will significantly underperform the wider market (i.e. I think there are too many BTL-friendly flats, not enough family houses). I think there will be a slight downturn next year, but some BTL-heavy areas could see significantly falls. As I have said, BTL has never been tested in a big economic downturn. I think once we have seen one, we will be in a better position to judge it. Judging it on teh presumption that everything will be hunkydory for the next 25 years is foolish, IMO. There will be rough patches whcih will see off plenty of investors. Of course, the big variable here will be inflation. We can assume averaged out ober 25 years it will be a benign force, and high inflation will of course erode debt - but could also see spikes in IRs to control it. And teh economic consequences could see large voids and/or an inability to subsidise these voids or below capital cost rents.
  4. Ayr's nothing to right home about either (slighly rundown seaside resort with atrocious weather), although there's some nice sailing and golfing nearby. There seem to be a lot of underworked staff at the Scottish Tourist Board on HPC today.
  5. It looks like she may be about to get a tutorial from the University of Life. How can you possibly be thinking of going into BTL without knowing what's happening to interest rates?!
  6. Having read 'The Ecclesiastical History of the English People' recently, I would have to agree.
  7. Christ on a Honda 500cc - I don't know where to begin on this one. May I suggest that you go to the BoE web page, after familiarising yourself with the phrases "annual" and "month-on-month". Failing that, if your really want to live in a make believe world where the CPI is irrelevant, that's fine by me. Warmest regards, NBNB.
  8. I presume Traveller is a magazine for back packers with an interest in S&M. Plenty of places have got free museums. I think the pubs and clubs are the main problem rather than an attraction - it appears half the male population and a good few of the female contingent view anywhere more than 10 feet from their local as outer space. Any city that ranks shopping as one of its main attractions is a bit suspect in my opinion. And it literally rains every day. Some of the centre is quite nice, but too many areas are a stinking flea pit IMHO. And there is something of a chip-on-shoulder culture (although I'd imagine it goes well with deep fried mars bar) when it comes to the English and, for that matter, Edinburgh. I suppose when all is said and done, there are just too many Neds.
  9. "... If that 30k was raised by re-mortgaging a property, the deal looks even better." methinks we need to educate today's youngsters about the risks of gearing, as well as the benefits.
  10. Sorry, I haven't got the time to meet every single person from Glasgow, so will have to talk in general terms about the city, which I do, I'm afraid, consider, by-and-large, to be an inward looking miserable stinking flea pit. The Trossachs are very nice, though you often get too many midges and wee gees. Its open to question which are more annoying.
  11. If Scotland declares independence from England, I'd give it five years before the rest of Scotland declares independence from Glasgow. The weegee city is, quite simply, a socio-economic disaster zone - not that it stops them blaming everyone else for their problems mind. To quote someone from Edinburgh: "I don't undterstand the weegees. They hate England. They hate Edinburgh. And they hate each other." Sums up the scrounging b*******s to a tee. As far as oil goes - doesn't it really belong to Shetland?
  12. "3% price inflation a year will see a property double in price in 25 years. Even if you don't repay any debt and have to subsidise the rent to the tune of £250 a month - a 200k property being worth 400k 25 years later - even with a 75k rent subsidy - is a spectacularly good investment bearing in mind only 30k would be invested in a normal 85% BTL mortgage scenario. If that 30k was raised by re-mortgaging a property, the deal looks even better. 200k - 30k deposit = 170k presuming 6% interest rate, cost of servicing debt = 10.2k per year over 25 year = 255k equity when sold for 400 = 200k (including deposit) = minus 55k so you are relying on the rent - which is subsidised to the tune of 75k, to make up the shortfall. I haven't factored in associated costs of housing, voids, selling & buying costs. i also haven't factored in the opportunity cost. i did this in about 10 seconds, so anyone fell free to point out any errors.
  13. Strange, now I come to think of it, that Unrealisticbear, so normally the first to post news, missed this one.
  14. Tomorows CPI will be an absolute key event IMO. If it it doveish, combined with this data and the fall in oil prices, it suggests to me that IRs may not go up as much as it looked like recently, and that another 0.25% by year end is not guaranteed. If your a bear, I think you'd be wanting 2.5% at least.
  15. Yields talk - we've already seen this in the current vogue for BTL - where London became too expensive and saturated, rents stagnated or fell in real terms and the yield equation simply didn't add up. This was far from the end of BTL though, as it migrated to the provinces. A slowing economy, higher IRs and a drop off in tenant demand next year - all perfectly feasible to the point of being likely - will test the market. Some people will still go in, some may even be able to make the sums add up. But an awful lot more will go home, get the calculator out, and discover that, as much as they may want to do it, they simply can't afford it. And this is with a relatively benign scenario.
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