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House Price Crash Forum


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Everything posted by cybernoid

  1. Assuming 500k purchase price, lower than actual since it was 'over', Lets say for the buyers sake they get 1500, rule of thumb taking into account voids, agency cut and fees etc = 15k a year income A cash buyer gets a maximum 3% yield. Ive done all the other sums elsewhere, but that isn't enough when you take everything else into account. Therefore it is overpriced. Personally I wouldn't do buy to let for less than 2-3 times that yield, I put that at a reasonable value of 170k-250k, lets say 210k. When you consider the 130k paid for it 13 odd years ago that sounds reasonable to me. Could be owner occupier, but the same rules apply. Much of the market is buy to let, which ties capital values to rent and therefore earned income. When the choice is rent or buy you cannot get away from earned income anchoring prices for owner occupiers either. Chances are they spent some money from another property sale at an inflated price, who knows. In that case they didn't have to earn it, easy come easy go. It is twice fair price by any reasonable measure, people who pay such prices simply aren't thinking.
  2. What would it rent for? What makes you think people are thinking?
  3. 1, Very likely if they bought outside london within the last ten years 2, Quite possible if they bought outside london within the last ten years The over-riding factor in this is if they are IO highly leveraged BTLers who bought within the last 10 years, outside of london, they couldnt have done their sums. Or they believe in irrational forever rising prices. In either case, they are not rational, or are stupid. Therefore they behave irrationally/stupidly. Hence an unwinnable case is bought, petty ineffectual revenge is sought by cutting of their nose to spite their face in at least 1 case we know of, and their latest wheeze, an unwinnable appeal is being lodged. Dumb people do dumb things.
  4. As if an operation the size of west brom is going to notice. Some bored drone is going to have an extra row to go through in their database one day. Revenge!! The only impact it will have is another property on the market. A few more thousand of those and we're getting somewhere. Then that girl he evicted could afford her own home instead of relying on the likes of the people in that thread. Wheres the tragedy? And somehow they get to thinking they are the righteous ones.
  5. Was in 30k negative equity too. I wonder whose fault that was? Not theirs, presumably. I can believe they lost that property with neg equity out of bloody mindedness. This is the situation you get when you have to be stupid to get into buy to let. The renting housing stock is in the hands of imbeciles. Agree it will be carnage. But this is how the correction can be so fast. There are many on the precipice. With so much housing stock in the hands of people like this, the rush for the exit is going to be unprecedented.
  6. Just skimming the comments again, some buy to letter stopped paying their mortgage in view of this disagreement and as a result west brom took it over and promptly evicted the tenant. Absolutely staggeringly, this landlord and other commentators hold the view that this tenant is a victim of west brom as well, and not of this irresponsible landlord who stopped paying their mortgage but continued to pocket the rent. Unbelievable.
  7. Oh look, no explanation again. By troll list you mean list of people who call you on your bullcrap. Is anyone not on it? Why don't you just email yourself your opinions instead? Waste of bandwidth.
  8. Uncertainty is intelligence. Knowing you know only what you know, and from that information, you make your best guess. And you know its a guess, and you back it up with reasonable rationale. And you make allowance for the accepted possibility you may well be wrong. No ego. No arrogance. Intelligence. Something sorely lacking in the more arrogant and egotistic posters who won't even back up their utterances with simple rationale. Those same posters, RK, who I just have to ignore as rambling mad men. They cannot backup their assertions with simple reasoning. Not intelligent. Aggressive. Argumentative. Patronising. With ego enough to quote themselves in their own sig! That kills me ! Its not sane to pay much attention to such people, youve had so many chances to explain yourself RK. Bzzz. in the troll bin.
  9. Well people can afford the repayments today obviously, or they wouldn't be 'selling'. But, as is constantly pointed out on here, this is due to these low borrowing costs… which you cannot assume will be here forever. West Brom judgement? The leverage is extreme, a tiny rise in borrowing costs will bring this all to a very swift conclusion, particularly when you consider how much of the market is now in buy to letters hands. And again, you look at 'cycles' as if they are some law of nature. Wages aren't going anywhere, glad you noticed at last, but you take that as evidence that they're just about to rocket up? If they were already rising you'd take that as evidence that your predictions were coming to fruition as well presumably. And if they were falling, well thats just the downswing in the cycle right, they're be flying up again in no time! This sounds very much to me like confirmation bias. And again I make the point, what about the mechanisms? How do these things happen? Oh cycles. That explains nothing, and predicts nothing. Ive very clearly described, with rationale, how this to me looks like a house of cards with such a high proportion of buy to letters on interest only when borrowing costs cannot get any lower, and now we are a deflationary environment largely due to the oil price fall, something your 'cycles' and you didnt see coming, what pressure is there on wages? These are mechanisms. How does your scenario come about? I really think you ought to explain yourself. Whats the point of even being on here if all you're going to do is pop up and type a couple of sentences with no rationale? Are you looking for approval from strangers on the internet? is there some deep psychological need you have? You're welcome to continue, i'll just be shaking my head at you, and so what. How about an explanation of your position?
  10. Nowhere near. Id expect to pay 750 for a property that would sell today for 230k+ I wouldn't pay more than 400 pcm for a place like that.
  11. Having thought for a moment, she continued further. "But daddy, like you, no-one else here makes much money either. Not enough to spend a million on a house! So how is it worth a million if no-one can pay a million for it?" "Why are you crying daddy?"
  12. Well, whatever. No amount of ranting will stop intelligent people in positions of authority making rational and proper judgements in an open and shut case like this. If you're smart you get it, if you're dumb you don't. She's just embarrassing herself. Anyone that understands this and reads that will simply roll their eyes and turn the page.
  13. Thats true. And perhaps it will be improved a lot, when you look at the proportion of non-owners coming through the system, its the norm for the under 40s, you might reasonably expect better provision to be made. Personally I expect a similar market to that on the continent in the future, where the rights and security of tenure are that much better, and where most rent, and live perfectly happy and content lives. With so many renting it will be an issue to concentrate on by any future government wanting to be elected. But bear in mind also that you can do both. You can rent for a significant proportion of your life and enjoy the freedoms and opportunities that gives you, and then you can buy when you are ready. Perhaps a lot of us won't ever need to, if better provision for renters comes into play in the future, as I expect. I suspect there are some who would be surprised by the cash position of the renters they look down on, after all, freedom brings opportunity, to invest in assets other than housing and indeed invest in yourself, or your own business, etc. And with a significant amount of cash, a mortgage can be rather low later in life, if indeed you need one at all. Which can make the whole approach cheaper since instead of borrowing and paying interest on that borrowing for a long time, a renter can invest and grow their cash instead, benefitting from this cash themselves rather than letting the bank do so. Then with a lower mortgage comes lower interest payments should they come to buy at a later date. Which, as I suggested, might not actually be necessary. You know, those that are pro-buying, if thats what you want, no-ones stopping you. This isn't an argument, where one side is right and the other wrong. There is more to it, what is best varies from person to person. If its right for you, thats ok. But why do you feel the need to convince everyone else that its right for them too? We've considered our positions. If you have regrets, convincing strangers on the internet that you made the best move isn't very healthy. We all make mistakes, perhaps you should move on? This forum seems like an odd place to spend your time if you've bought already, you made your move, you're committed, why not enjoy it instead of trying to make it sound smart to some strangers?
  14. Ive spoken to enough buy to letters, and done the sums myself enough times when I've had the real world actual data, to know that you only make on the capital appreciation with buy to let, and that gain needs to be considerable to outweigh costs of buying and selling. Some were lucky. And I say lucky because they didn't know prices were about to triple in 10 years, and they didn't do their sums beforehand, or they wouldn't have done it. And good for them. Chances are they'll blow it on some other investment since it took actively ignoring the sums to make it.. but there you are. I make that point to illustrate that just 'renting it out instead' if you want to move is a losing proposition. You don't make money that way, you have headaches. Maybe, just maybe you will gain a little, if the market is interfered with enough by the government, but these sums are small compared to the headaches it takes in my view. There already are a lot of losers in the housing market, plenty of buy to letters become unstuck. And those that bought since 2004 in most of the country have had properties and agents to manage in return for no gain at all, or a gain so negligible it wasn't worth the hassle. As for owner occupiers, well if thats what they want good luck to them. And I take the point that renting has its downsides. The insecure tenancy is a problem for a lot of people, but moving to get away from problem neighbours is a positive, whereas if you get that issue and you've bought it, things will be a lot more difficult for you, for example. There are pros and cons for both. They both have an unavoidable 'cost of living', be it rent or interest on a mortgage plus opportunity costs. It would vary per individual what those opportunity costs are. If you're a bit of a plodder who doesn't understand other investments then your opportunity cost is going to be a lot less than someone who can invest well outside of housing and makes more due to opportunities that require relocating, for example. The other opportunity cost a homeowner sitting on a housing estate with their life has of course is loss of the varied life experiences that are out there. Living abroad, living in a city for a time, living in the country for a time, perhaps on a farm, on the coast, in a sleepy hamlet, all those kinds of things. Again they take some get up and go, organisation and zest for life to experience, and if you're not that sort, then fine. Plenty of people lead drab lives and seem happy with it, fine. They're happy with their decisions, so they say, over and over and over… hmm…. and Im happy with mine.
  15. Its a choice between investing in housing and investing elsewhere. If you have a repayment mortgage you pay the interest component, equivalent to the rent - certainly true everywhere I've ever rented - and the remainder of that repayment is paying off the house. Whereas if you rent, again like interest on a mortgage that is lost money and is simply a part of the cost of living - you can choose what to do with the excess, and are not forced into putting it into your house. Of course if we're talking about what makes you better off financially overall, then the flexibility of renting ought to be taken into account as well. You can move for better work opportunities very easily at very little cost versus a mortgaged person. In my case I am better off for that reason alone. I suppose, in the round, it depends what sort of person you are, and what you do with your life. If you're not particularly competent generally and cant come up with anything better to do than stay in the same house for decades, plodding away at the same job because no-one else wants to hire you, or you lack ambition, and you don't have the financial acumen to invest in anything other than your shelter, then I guess buying early is the best you can hope for. If you'd like a bit more out of life, if you have ambition and want to move to take advantage of opportunities because you are in demand because you are talented and/or intelligent, if you'd like to see more of the world than the same housing estate for decades, live abroad for some time perhaps, or want to sample other areas of the country, live in other types or property, maybe a houseboat ! or a windmill ! Maybe you'd like to start a business venture and want to reduce your living costs simply, by renting a cheaper place for example. If you'd like to feel the wind in your hair and want to look back on a life well lived, then maybe renting is best. In my case, the work opportunities that the ease of moving rent has given me has more than made up for any difference in buying versus renting calculations over that time, even if you bent the numbers as hard as you could to try and make buying a better case. Ive certainly had a far more interesting and rewarding time than those I knew from my home town who saddled themselves with a mortgage as soon as they could. Some of this is a little tongue in cheek, by the by. But the points stand. Ive certainly no regrets. I doubt many of the bored mortgagors could say the same when they look back. "Here lies mr debt slave, he paid a mortgage. Er, thats it."
  16. You seem to have missed my edit. 1% would be better. In most of the country house prices haven't moved since 10 years ago, so it ought not to surprise anyone if house prices are the same as they are now or lower in 10 years. You argued that owning is cheaper than renting, its not. I think its all a bit complicated for you, I have nothing to gain from educating you further.
  17. Teaser rate on that mortgage. Over the lifetime of the mortgage, assuming borrowing costs don't increase, average mortgage cost is 920/month Assuming achieves asking rent, income from rent - 875 - 15% agency fee = 744 Assume a month void per year, assume 1 tenancy agreement per year, assume maintenance of 500 a year income in a year = (744 x 11) - 300 - 500 = 7384 which is 615 a month. Cashflow negative to the tune of 920-615 = 305 per month. Mortgage arrangement fee - 1.5k, stamp duty 1.5k Assume landlord can afford to subsidise that loss and sells ten years later, putting them 39.6k down in cash they've had to find by that point, and assuming house prices haven't dropped, or indeed risen, they get back the 200k value, less selling fee of lets say 2k from EA. For simplicities sake assume at this 10 year point the amount owed on the mortgage is total amount to be paid on mortgage (276k) times 15/25, the proportion of the mortgage term for which payments still need to be made = 165k. Ignoring that interest is paid first, and other fees associated with paying the mortgage off early... Leaving 180k-165k-2k = 13k profit, which is in exchange for tying 20k up for 10 years and managing a property and a letting agent, and being exposed to a leveraged gamble on the housing market. Put that 20k in a bank account earning 5% and in those 10 years you'll have 33k, again 13k profit. Without capital appreciation it is pointless. Quite. Edit: forgot the opportunity cost of the 40k the landlord has to find to keep up the repayments over this ten year period. That amount is paid as part of the monthly mortgage payments in equal amounts per month, so for ease of calculation can be considered to be an average of 20k over the 10 years. As shown that 20k would have made 13k profit, this 13k loss therefore cancels any profit of the buy to let making it worse than a bank account. Even one on 1% interest. Welcome any adjustments to this, maybe Im wrong with some of it. This is back of a fag packet stuff, but gives the general picture I think. Whichever way you slice it, answer = pointless.
  18. Yep. This is an attitude that ought to resonate with people interested in this site, you would imagine. Im always confused by the self made rich bashing that goes on here on occasion, as though having money in itself is a crime. Most here haven't bought into the massive mortgage on a tedious semi dream that so many have, so why do they think salaried wage slave PAYE work is somehow righteous? Its all part of the same thing, handing yourself over to be farmed. And then having a dig at those that don't !? Theres a bizarre self righteous socialist worker type cohort on this site, I've no idea what they're doing here.
  19. If by 'servicing a mortgage' you mean paying the interest on an interest only mortgage, then renting and 'buying' are equivalent except renting is cheaper due to no maintenance costs. Also you have the flexibility of moving for work, or due to bad neighbours, or because you fancy a change etc without all the costs of selling and buying a house. Further, you are not exposed to the risks of the housing market where a small percentage fall puts you into thousands of pounds of debt. If you mean a repayment mortgage versus rent, then you should take a look out there at prices versus rents. The rent is never more than the cost of the interest on the borrowing. It is not cheaper to buy. Further, if you 'buy' with a repayment mortgage you are investing in the housing market, whereas better returns are likely to be had elsewhere. You have the freedom to do that when renting. Rent controls is one of the reasons people are 'marching'. Tenant rights is the main one, making renting more feasible for families who don't want to live under a constant fear of eviction. Its always a tragedy in the media when some over indebted 'home owner' family is evicted for not paying their bills… no such sympathy is ever extended to renters who DO pay their bills but are made homeless regardless. Theres plenty to 'march' for.
  20. It would be a 100 quid one. You'd be expected to buy a house immediately afterwards. After all, youve got the fridge now. You can use the saving from that for a deposit, yes?
  21. No mention of agent fees either, when 'managing' a property throughout the term its typically 15% of the rent. Plus the contract etc costs. Nor mention of voids, or maintenance costs. Ive known of quality flats at that level having a monthly maintenance fee of around £100, thats without any maintenance being carried out on the flat itself. Its utter bull. But, nevertheless, interesting to observe. I believe that a lot of these buy to let sorts actually lie to themselves, and ignore these kinds of costs. Partly its sheer incompetence of course, but part of it is wishful thinking, and wanting to appear, even to themselves, that they're doing a smart thing. Oh well. They subsidise my costs in these times of madness so I'm not overly concerned about how they justify it to themselves. Keep up the good work, canny investors.
  22. These changes will come, but not for a few years in my view. Pro tenant will be anti landlord, and the boomers are the only group courted by the main parties, and they are the landlords. Combined with the corruption of course, if an MP doesn't have property they let themselves, they will have someone in their ear with some ready cash who does. It will come. I believe the future is bright for tenants, with companies eventually formed to serve this sector who provide quality housing on flexible terms by way of competitive advantage. Imagine the virgin brand applied to let properties, hotel quality long term yet flexible accommodation. The correction has been held off for so long now they have created another issue for themselves… unsatisfied tenants making up most of the under 40s who will HAVE to be courted in future by any political party that wants to win an election. I'd expect it to start by attacking letting agents, a popular choice amongst landlords and tenants alike. Hence approaching lettings agent fees to begin with.
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