LaceUp Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. For the first time ever some of their properties are showing a profit now that interest rates are so low and rents have stayed the same. I always felt that these part time property developers/landlords would jump out the market when property prices started heading south so speeding the crash. I guess if rents are related to property values in time rentals will reduce and cancel out the low interest rate benefits. But my question is this, maybe - just maybe - the governments and BOE's actions may be working? Quote Link to comment Share on other sites More sharing options...
KingBingo Posted January 19, 2009 Share Posted January 19, 2009 Not if you take a time horizon longer than, say, 10 minutes. They are in trouble, they just don't see it yet. Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. For the first time ever some of their properties are showing a profit now that interest rates are so low and rents have stayed the same. I have a relative with two BTLs. He is picking up £1000 profit a month due to the excess of rent above interest payment at current rates. Even when he goes back onto SVR (low rate wont last forever), it will still be cash positive. However, he also realises his capital is dropping by £5000 per month. Have your friends considered the value of their properties may have dropped by any chance? VMR. Quote Link to comment Share on other sites More sharing options...
DrGUID Posted January 19, 2009 Share Posted January 19, 2009 Yeah right. I had to cut my rent 15% to get a tenant, and I'm in so much negative equity its laughable (I even had a 20% deposit!). Remortgaging in 2010 won't be much fun . Quote Link to comment Share on other sites More sharing options...
the-sign-jacker Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. For the first time ever some of their properties are showing a profit now that interest rates are so low and rents have stayed the same.I always felt that these part time property developers/landlords would jump out the market when property prices started heading south so speeding the crash. I guess if rents are related to property values in time rentals will reduce and cancel out the low interest rate benefits. But my question is this, maybe - just maybe - the governments and BOE's actions may be working? erm, no. it wont work, never has and never will. the next generation cannot take the burden or this debt without jobs that dont depend on passing the even bigger debt down to the generation below and so on. you CANNOT magic up free money. esp to these kind of levels. i cant believe people stupidly think this can be saved by more debt. at some pint the free ride roundabout has to stop. and it looks like its now, despite the banks soaking up the next 30 years earnings, which isnt enough. forget it. bunker up. its going down. Quote Link to comment Share on other sites More sharing options...
It is different this time Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. Wait until they need to remortgage when their current deals run out. What used to be a 5% deposit for BTL mortgage is now 25% deposit! Quote Link to comment Share on other sites More sharing options...
Executive Sadman Posted January 19, 2009 Share Posted January 19, 2009 Are they use the profit to pay down mortgage or buy new car? Quote Link to comment Share on other sites More sharing options...
Legal_Landlord Posted January 19, 2009 Share Posted January 19, 2009 Wait until they need to remortgage when their current deals run out. What used to be a 5%deposit for BTL mortgage is now 25% deposit! However they may have been smart enough to get a lifetime tracker mortgage at BBR + 1% and so have no need to remortgage ever ! Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted January 19, 2009 Share Posted January 19, 2009 erm, no. it wont work, never has and never will. BTL maths was good in the mid 90's. you CANNOT magic up free money. esp to these kind of levels. But the government can QE as much as it likes. VMR. Quote Link to comment Share on other sites More sharing options...
MrB@work Posted January 19, 2009 Share Posted January 19, 2009 Good luck refinancing their mortgages when the rollover. balance sheet damage will outweigh any rental profit. Quote Link to comment Share on other sites More sharing options...
simpleton Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. For the first time ever some of their properties are showing a profit now that interest rates are so low and rents have stayed the same.I always felt that these part time property developers/landlords would jump out the market when property prices started heading south so speeding the crash. I guess if rents are related to property values in time rentals will reduce and cancel out the low interest rate benefits. But my question is this, maybe - just maybe - the governments and BOE's actions may be working? The UK is currently at genuine risk of going into financial meltdown - precisely because of bell-ends like (for example) your "friends" So please just ****** off. PS - I take it you don't watch the news / read a newspaper at all? Quote Link to comment Share on other sites More sharing options...
LaceUp Posted January 19, 2009 Author Share Posted January 19, 2009 I have a relative with two BTLs. He is picking up £1000 profit a month due to the excess of rent above interest payment at current rates. Even when he goes back onto SVR (low rate wont last forever), it will still be cash positive.However, he also realises his capital is dropping by £5000 per month. Have your friends considered the value of their properties may have dropped by any chance? VMR. They know the value is going down - but they say they are in it for the long term, it will come right eventually blah blah. Quote Link to comment Share on other sites More sharing options...
LaceUp Posted January 19, 2009 Author Share Posted January 19, 2009 The UK is currently at genuine risk of going into financial meltdown - precisely because of bell-ends like (for example) your "friends"So please just ****** off. PS - I take it you don't watch the news / read a newspaper at all? Thanks for the useful contribution. Yes I know the mess we are in. All the money I did not spend on becoming a slum landlord I invested in the stock market and savings accounts - so nothing to worry about there then! PS - simpleton by name simpleton by nature? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 19, 2009 Share Posted January 19, 2009 BTLs on SVR...must be rare breeds Quote Link to comment Share on other sites More sharing options...
A_Landlord Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. For the first time ever some of their properties are showing a profit now that interest rates are so low and rents have stayed the same.I always felt that these part time property developers/landlords would jump out the market when property prices started heading south so speeding the crash. I guess if rents are related to property values in time rentals will reduce and cancel out the low interest rate benefits. But my question is this, maybe - just maybe - the governments and BOE's actions may be working? Its not doom & gloom for me either. BTL mortgages include 1 tracker and 3 fixed and just going on to SVR in a few months time. Bought houses at 4 to 4.5x local average wage (not too far to fall back) and will be holding the houses for 15 to 20years. I have just put a cash offer (roughly a 1997-99 price) on a new purchase and waiting to hear back. In the last 10months, I have accepted 10% and 15% off previous monthly rents. All properties making a profit, which will jump in the next few months. Ploughing all profits into paying down mortgages. I could see the storm coming and have been working & saving like mad for the last 12months, and now I am in the position to pay off all BTL mortgages if interest rates rocket (although this would mean wiping out my large deposit for my next home). I feel I am positioned which ever way interest rates go and all houses are well located for schools and have families in - so with long term tenants which I do not need to increase rent on. Quote Link to comment Share on other sites More sharing options...
It is different this time Posted January 19, 2009 Share Posted January 19, 2009 However they may have been smart enough to get a lifetime tracker mortgage at BBR + 1% and so have no need to remortgage ever ! Well if they think interest rates will be 1% or 2% forever they are not smart at all! advice them your tactic when rates hit 7% or 8% Quote Link to comment Share on other sites More sharing options...
KingBingo Posted January 19, 2009 Share Posted January 19, 2009 The UK is currently at genuine risk of going into financial meltdown - precisely because of bell-ends like (for example) your "friends"So please just ****** off. PS - I take it you don't watch the news / read a newspaper at all? Well that was an idiotic response. Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted January 19, 2009 Share Posted January 19, 2009 They know the value is going down - but they say they are in it for the long term, it will come right eventually blah blah. They are probably right, nominal values will reach 2007 peak prices one day, maybe within their own lifetime. I have a friend with 5 BTLs in Ireland and NI. I bet he is cash positive every month (looks even better in £) but I wouldnt swap places. VMR. Quote Link to comment Share on other sites More sharing options...
bearbullfence Posted January 19, 2009 Share Posted January 19, 2009 I was speaking to friends over the weekend who have buy to lets. They think the current situation is GREAT. For the first time ever some of their properties are showing a profit now that interest rates are so low and rents have stayed the same.I always felt that these part time property developers/landlords would jump out the market when property prices started heading south so speeding the crash. I guess if rents are related to property values in time rentals will reduce and cancel out the low interest rate benefits. But my question is this, maybe - just maybe - the governments and BOE's actions may be working? Hmm, maybe, just maybe for existing BTL. I checked out the BTL mortgages from Woolwich over the weekend... minimum LTV 40%, with a 1.5% fee or £1750 which ever is higher, plus a rate of 5.5%. New BTL is dead. Quote Link to comment Share on other sites More sharing options...
MrB@work Posted January 19, 2009 Share Posted January 19, 2009 Its not doom & gloom for me either. BTL mortgages include 1 tracker and 3 fixed and just going on to SVR in a few months time. Bought houses at 4 to 4.5x local average wage (not too far to fall back) and will be holding the houses for 15 to 20years. I have just put a cash offer (roughly a 1997-99 price) on a new purchase and waiting to hear back.In the last 10months, I have accepted 10% and 15% off previous monthly rents. All properties making a profit, which will jump in the next few months. Ploughing all profits into paying down mortgages. I could see the storm coming and have been working & saving like mad for the last 12months, and now I am in the position to pay off all BTL mortgages if interest rates rocket (although this would mean wiping out my large deposit for my next home). I feel I am positioned which ever way interest rates go and all houses are well located for schools and have families in - so with long term tenants which I do not need to increase rent on. Are you not disturbed by the fact that you are able to buy a house at "roughly a 1997-99 price", and if you valued your own stock at those levels would you still be solvent? I've noted a few comments from people who bought in 2005-2007 but 'not at 2007 prices'. E.g. I bought in 2007, but at 200 price :/ On face value you seem better off than most LLs, but I don't buy into teh miracle LL's who always seem to be able to buy at magical lows, even in the boom years. Quote Link to comment Share on other sites More sharing options...
A_Landlord Posted January 19, 2009 Share Posted January 19, 2009 (edited) Hmm, maybe, just maybe for existing BTL. I checked out the BTL mortgages from Woolwich over the weekend... minimum LTV 40%, with a 1.5% fee or £1750 which ever is higher, plus a rate of 5.5%. New BTL is dead. I had a look at a snapshot of the BTL mortgage market on http://www.moneysupermarket.com/mortgages/ Some painful reading with the high arrangement fees/high deposits/high fixed interest rates .... not nice. The landlords better be saving hard, because there is a world of pain coming in a year or so when interest rates increase and they come off their deals and on to SVRs. Edited January 19, 2009 by A_Landlord Quote Link to comment Share on other sites More sharing options...
renterbob Posted January 19, 2009 Share Posted January 19, 2009 Its not doom & gloom for me either. BTL mortgages include 1 tracker and 3 fixed and just going on to SVR in a few months time. Bought houses at 4 to 4.5x local average wage (not too far to fall back) and will be holding the houses for 15 to 20years. I have just put a cash offer (roughly a 1997-99 price) on a new purchase and waiting to hear back.In the last 10months, I have accepted 10% and 15% off previous monthly rents. All properties making a profit, which will jump in the next few months. Ploughing all profits into paying down mortgages. I could see the storm coming and have been working & saving like mad for the last 12months, and now I am in the position to pay off all BTL mortgages if interest rates rocket (although this would mean wiping out my large deposit for my next home). I feel I am positioned which ever way interest rates go and all houses are well located for schools and have families in - so with long term tenants which I do not need to increase rent on. Sounds like a plan. Goodluck. Quote Link to comment Share on other sites More sharing options...
bimyo Posted January 19, 2009 Share Posted January 19, 2009 They are probably right, nominal values will reach 2007 peak prices one day, maybe within their own lifetime.I have a friend with 5 BTLs in Ireland and NI. I bet he is cash positive every month (looks even better in £) but I wouldnt swap places. If things are GREAT this month, they're GREAT in general: there is something quite telling about the mid-2000s debt-as-wealth culture in that thinking. Quote Link to comment Share on other sites More sharing options...
Thread Killer Posted January 19, 2009 Share Posted January 19, 2009 They know the value is going down - but they say they are in it for the long term, it will come right eventually blah blah. This is true if they are cash buyers and owners of this property. But if they have debt, a BTL mortgage, they are stuffed, because reducing rental income and increasing repayments will kill them. Cashflow is king, and cashflow will be what kills them (as any business owner knows). Quote Link to comment Share on other sites More sharing options...
A_Landlord Posted January 19, 2009 Share Posted January 19, 2009 Are you not disturbed by the fact that you are able to buy a house at "roughly a 1997-99 price", and if you valued your own stock at those levels would you still be solvent?I've noted a few comments from people who bought in 2005-2007 but 'not at 2007 prices'. E.g. I bought in 2007, but at 200 price :/ On face value you seem better off than most LLs, but I don't buy into teh miracle LL's who always seem to be able to buy at magical lows, even in the boom years. The 1997-99 price was for a house that needed renovating before renting, so a lot of people will not want to take this on in the current climate. Not had a reply yet, which is probably good as they have no other offers on the table and need to sell. My houses will drop back to 3.5x local average salary - which to me would be a loss of 20k/house IF I needed to sell in the near future. Instead I am looking to pay down the LTV and get the rent to pay down the remaining mortgages. I am even thinking of paying most of the mortgages off and atleast enjoying ~22-25k income/year (much better than the savings rate I am getting for it today in Northern Rock) ... although the problem comes when I want to MEW. Quote Link to comment Share on other sites More sharing options...
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