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kman

Best Time Ever To Purchase Btl?

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A mate has purchased a btl property for 220k, with 25% down on a tracker his monthly payments are only £400, he can let said property for £1200+ pcm. Is he on to a winner? Haven't Japanese interest rates stayed at virtually at zero for the past 10-12yrs? Why should we expect any different?

in my area (IG10 - zone6 - Greater London) the property sold in the peak for 240k rents out for 850pm

1200pm looks like a wet dream for me ...

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in my area (IG10 - zone6 - Greater London) the property sold in the peak for 240k rents out for 850pm...

not atypical for the very peak of the bubble but pathetically low... a 'gross' yield of 4.3%, even with 99.999% occupancy [ha], not one penny of maintenance costs [perhaps not an unreasonable assumption for some of the landlords i know] no tenant search fees, and [implausibly] no letting agent's fees, for a cash buyer you'd be looking at a yield far below, until recently, the best bank accounts... a buyer with a 25%, 20-year repayment mortgage would almost certainly never go cash flow positive on an annual basis until the entire mortgage had been paid off... on an interest only mortgage, even at an implausibly low rate, you wuoldn't go cash flow positive on an annual basis for the best part of a decade...

...1200pm looks like a wet dream for me ...

agreed.

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My brother has student BTL properties in the area and has had for many years (since the early 90's) all his properties are occupied for at least 50 weeks a year and the students have been willing to pay even whilst they are not living there.

We had to pay 11 months' rent for both daughters' student hovels, per academic year. Not a question of being 'willing to' -it was a condition of the lets. Last LL wanted 11 post-dated cheques, from bank of mum and dad only.

Plus of course the hefty deposit, which was invariably a hell of a job to get back even when the place was a pigsty to start with.

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So you think interest rates will stay this low?

Jees it never ceases to amaze me how stupid people are, even when its plastered all over the news.

I wonder what sort of crystal ball you are using... we are in uncharted territory... QE DOES NOT necessarily mean interest rates will rise..... believing what you read in the news is dangerous for your health... you need to be able to think for yourself.... sure higher interest rates are a possibilty but so is long term low growth and low rates or even deflation.

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Most of the HPC posters will say your friend did a big mistake. But I will say this.

Those prepared to take (calculated) risks are most of time winning.

If he managed to get a decent discount plus having the property in a student town with the benefit of low interest rate, chances are he is onto a winner.

The doom mongers anti BTL brigage will always say something negative whatever the circumstances, without looking besides their self assured sheeple like mentality, but going the opposite direction property wise.

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University town, letting property here never seems to be a problem. I'm no investor but with interest rates so low, where does one put their savings? his 55k will be earning him 800 a month ; sounds good to me.

Hi Kman,

I don't want to appear rude but...... being evasive regarding giving a location for this 'pot of gold' that your 'friend' has invested in makes you look a little trollish.

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Hi Kman,

I don't want to appear rude but...... being evasive regarding giving a location for this 'pot of gold' that your 'friend' has invested in makes you look a little trollish.

Oxford

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A mate has purchased a btl property for 220k, with 25% down on a tracker his monthly payments are only £400, he can let said property for £1200+ pcm. Is he on to a winner? Haven't Japanese interest rates stayed at virtually at zero for the past 10-12yrs? Why should we expect any different?

FFS. This really show why we need higher quality maths eduation in this country.

a - 1200+ pcm is fantasy land. It's also gross, so you've got to take your expenses out of this figure. (Including the time that you spend working on it!!!!)

b - If property prices go down 20%(say) this year, which is highly likely, then 220k turn into 176K, or due to the lovelyness of gearing/leverage, the 55K invested will now be worth 11K, a solid return of -80%. Even with the fantasy cash flow of 9.6K from letting, that's still over 60% of the investment spunked up the wall. Nice.

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Most of the HPC posters will say your friend did a big mistake. But I will say this.

Those prepared to take (calculated) risks are most of time winning.

If he managed to get a decent discount plus having the property in a student town with the benefit of low interest rate, chances are he is onto a winner.

The doom mongers anti BTL brigage will always say something negative whatever the circumstances, without looking besides their self assured sheeple like mentality, but going the opposite direction property wise.

Add a calculation then to justify your claim.

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Its also the best time ever to cover your Gonads in Butter and fry them to a crisp whilst sticking pins in your eyes.

Two years and its property bliss for BTL, but for today my money is happier sitting in the old sky rocket.

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House prices 'could drop another 55%' and leave Britain bankrupt

House prices could slump by another 55 per cent, a respected City forecaster warns.

It also predicts a deep recession lasting throughout next year and a 'very real probability' that Britain will go bankrupt.

The report leaked yesterday from financial analysts Numis Securities says that the collapse in house prices is not 'anywhere near over'.

http://www.dailymail.co.uk/news/article-11...n-bankrupt.html

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There is plenty of chatter in the press about how voids are increasing and rents falling and there is some anecdotal around about how they are not. Is anyone aware of any worthwhile research into how rents and voids have behaved in previous crashes?

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A mate has purchased a btl property for 220k, with 25% down on a tracker his monthly payments are only £400, he can let said property for £1200+ pcm. Is he on to a winner? Haven't Japanese interest rates stayed at virtually at zero for the past 10-12yrs? Why should we expect any different?

Ask your friend what he doesn't understand about this word?

Downward spiral

Eroding assets

Political ineptness

Rising unemployment

Economic contraction

Surging company failures

Staggering corruption

Inappropriate stimuli

Oligarchic bankers

Negative equity

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A mate has purchased a btl property for 220k, with 25% down on a tracker his monthly payments are only £400, he can let said property for £1200+ pcm. Is he on to a winner? Haven't Japanese interest rates stayed at virtually at zero for the past 10-12yrs? Why should we expect any different?

An emperor of a prosperous city who cares more about clothes than military pursuits or entertainment hires two swindlers who promise him the finest suit of clothes from the most beautiful cloth. This cloth, they tell him, is invisible to anyone who was either stupid or unfit for his position. The Emperor cannot see the (non-existent) cloth, but pretends that he can for fear of appearing stupid; his ministers do the same. When the swindlers report that the suit is finished, they dress him in mime. The Emperor then goes on a procession through the capital showing off his new "clothes". During the course of the procession, a small child cries out, "But he has nothing on!" The crowd realizes the child is telling the truth. The Emperor, however, holds his head high and continues the procession.

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A mate has purchased a btl property for 220k, with 25% down on a tracker his monthly payments are only £400, he can let said property for £1200+ pcm. Is he on to a winner? Haven't Japanese interest rates stayed at virtually at zero for the past 10-12yrs? Why should we expect any different?

Prices are set to fall 25% over the next year or two.

So that 55K, 25% deposit will be gone.

It will take almost 6 years at 800 a month to get back the 55K deposit.

Probably closer to 10 years once voids and maintenace are taken into account (Its going to take 4 months just to cover stamp duty and legal fees, mortgage arrangement fees, and even more months to cover initial furniture and appliances etc). And this all assumes interest rates stay low.

Your mate is going to be spinning his wheels for the next 10 years just getting his deposit back.

Unless you can get a massive bargain, BTL is stupid investment until prices bottom out. There is no hurry to jump in. It wont be a V shaped bottom, more likely U or L shaped so there will be plenty of time to get in near the bottom.

Edited by Iron Condor

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Ask your friend what he doesn't understand about this word?

Downward spiral

Eroding assets

Political ineptness

Rising unemployment

Economic contraction

Surging company failures

Staggering corruption

Inappropriate stimuli

Oligarchic bankers

Negative equity

I just started this topic becuase he is a millionaire and I am not! I've disagreed with other things he's done but he always seems to be in the money and me well I've just been made redundant twice in 2 months!! now with no hope of any work.

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I just started this topic becuase he is a millionaire and I am not!

There are plenty of people who think they are "millionaires" and live millionaire lifestyles. There was a woman on the TV the other night described as a "millionaire businesswoman". She was being forcibly evicted from her (sorry the bank's) home.

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There is plenty of chatter in the press about how voids are increasing and rents falling and there is some anecdotal around about how they are not. Is anyone aware of any worthwhile research into how rents and voids have behaved in previous crashes?

Might be worth doing some searching on this website.

This sort of thing used to be discussed a lot here.

However: the private rental market during previous crashes was very different. The historical figures (can't remember where from, not Nat. Stats. as I recall, I think they were from the government dept. that deals with local government, Prescott's old sinecure) showed private rents acutally rose throughout previous crashes.

The opposite has happened this time and the circumstances are very different with BTL not only driving prices up previous to the crash (whereas before it was MIRAS etc) but furthermore, private letting was only a very small part of the market anyway compared with LA housing. The idea of letting out a property you couldn't sell or were trying to flip as a "developer" didn't seem to be in the public psyche, and back then it was harder to do anyway.

So in short, I don't think it would tell you much to be honest.

I'm not aware of anecdotal evidence that rents aren't falling, in the West Mids they've been down for more than a year already with local letting agents happy to admit to the press, ever since so-called "forced letting" flooded the market completely changing its make up (e.g., houses becoming available in areas previously only ever offering flats). There is so much rental property on the market at the moment I don't see how voids can't be rising, put it that way.

Edited by Cogs

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  • 317 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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