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apom

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Quick Question?

But before I start...

Don't forget a lot of landlords have owned properties since pre boom.. They are happily paying of their mortgages with your rent.. And do you know what...? Good luck to them..

As for the others.. Loosing money hand over fist because there is now way as a renter that you could cover their mortgage.. well.. what I want on here.. more then anything is for one of these investors to explain why it is a good investment..

I can't understand it..

Prices are too high to cover costs in rental.. or for a sustainable market based on required FTB's..

If the market requires (as we are told) 30% of the market to be FTB's and it’s so expensive that its dropped to 8% and that the number of FTB's is being helped out with BTL landlords... But they are loosing money...

House prices are only what people are currently paying... how can it make sense to loose money each month...? hundreds each month.. that is madness...

madness..

I did a sum against a £350,000 property rented for £1000

Considering an 85% mortgage at 5%..

They were loosing £240 a month..

before any costs.. insurance.. leasing agent fees.. maintenance.. tax on income..

any other costs..

and that’s with £52,500 of your own money tied into an investment.. that may also drop in value..

There are better ways to invest your money..

"Hi.. I am a landlord.. I have invested £52,500 of my money in such a way that I loose about £400 a month from my own pocket and have a massive debt where I am only paying of interest.."

does not get you sitting at the same table as Richard Branson in the "Business Man of the Year" award dinner.

So why do you do it?

Possible I am being naive.. personally I have invested too much money in Fast Motorbikes and Slow Horses.. ;) so I can't talk..

But BTL seems financial suicide.. almost like you have been sucked into a speculative market as the "patsies" who supplied the profit and are left with the Lemon.. and still believing the "claptrap" you were fed when you made the investment.. because.. I have heard the explanations on here before.. and I must admit I have sniggered.. And then felt a little odd..

But I would love to be proved wrong..

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Don't forget a lot of landlords have owned properties since pre boom.. They are happily paying of their mortgages with your rent.

Big deal.

Say you took out a mortgage on a house for 100k five years ago... now it's worth 300k. You're paying 5000 a year on your mortgage and renting it out for 12k a year. Wow, that's a 7% yield!

Or is it?

In reality, you could sell that house for 300k, stick that 200k in a savings account and make 10k a year with no need to deal with the hassle of renting.

I honestly don't understand why anyone wants to be a landlord right now, unless they're a slumlord like TTRTR or renting out a room to subsidise the mortgage on the house where they live. If you're doing anything else, you're losing money.

But BTL seems financial suicide.. almost like you have been sucked into a speculative market as the "patsies" who supplied the profit and are left with the Lemon..

That's exactly what it is. BTL was just the latest Ponzi scam, and the suckers left holding those 300k 'executive apartments' are the 'greatest fools' at the bottom of the scam.

Edited by MarkG

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Look.. its possible that it might make sense..

loosing hundreds a month for the privalage of the markets deflation to eat into your deposit...

I just can't see it myself..

intrigued to hear the market.. explain itself

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at the moment they will be taking a loss every month.

BUT

over time, say 10-15 years the balance would have risen slowly over time. then the investment starts to pay back. its now such a long thing it hardly worth it, but when the dust settles they will still own a house they havent really paid for.

whereas money in a bank if you spend the interest will become smaller over 15 years.

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Look.. its possible that it might make sense..

loosing hundreds a month for the privalage of the markets deflation to eat into your deposit...

I just can't see it myself..

intrigued to hear the market.. explain itself

Check out TTRTR's thread TTRTR

I question the logic of him holding on to his rental property, "worth" £615k, and bringing in a rent of 650 a week.

Basically, he has tenants crammed in to make it work, and it barely does. Follow the thread and you will see that he makes about £2k a year over what he could risk free if he sold the property. Is £2k a year enough to justify the hassle of being a landlord (he manages it himself) and the massive downside risk to the housing market?

He eventually claimed that he would be improving the properties (cost £55k) to achieve an extra £1k per month in rent.

If this is actually true, then he can maybe justify it. But the medium term threats seem huge. If his properties do have potential for improving their returns, he is a savvy developer rather than a BTLer. However in a falling market he may only be able to cushion his fall. I can't see much upside.

The BTLers holding the 2 bed £300k flats with massive service charges are the ones who will get screwed over in a very bad way......

I would also be interested to know what the situation is regarding loan to value for BTL. If prices plummet, will BTLers be in breach of any covenants in their mortgages? I'm pretty sure they would be if rents drop.

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Cool.. I said they were interst only repayments..

so the mortgage is not getting paid of.

so you would have to sell the property to realise any equity..

and with cost meainbing a high loss and current inflation it owuld be 15 years untl breakeven monthly..

currently 12 times £400 is close to £5000 a year loss.

Explain more....

still not helping me..

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Why do you care? If landlords are subsidising your rent, just accept it and forget about it.

What concerns me is that I might rent a place off a landlord who can't pay their bills, and then get turfed out on the street when the place is repossessed. That seems like a real risk right now, particularly if you're renting an 'executive apartment'.

whereas money in a bank if you spend the interest will become smaller over 15 years.

So you'd rather have less money at the end of those fifteen years by _not selling_ a depreciating asset, than more by selling it and putting the money into the bank until house prices drop back to sane levels?

I can see you'd make an ideal BTL landlord!

It's amazing that so few people understand the most basic rule of investing: buy low, sell high.

Edited by MarkG

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Okay, watch this maths..

Lets just pretend that you make an investment..

One that you don't want to be subsidising.. We shall pretend that you only want to pay interest against the loan and it will always have tennats.

So you have a property and the rental for the property can be £1000 a month.

so you take of running costs, insurance and paying the leasing agents.. Tax etc..

I will say £150 a month.. which is very generous.

so you can take £850 a month.

so £850 is £10,200 a year..

Say you are paying 5% interest..

£204,000 is the amount you can borrow.

£240,000 is the lowest break even a month if you have an 85% loan.

Interest only..

Currently the property I have done this calculation against is £350,000 (percieved)

Now.

Tell me if you know £150 a month is that reaslistic fo running costs above the loan..?

and if official figures are to be believed a property is empty 10% of the time..?

I need experienced opinions against the above two figures..

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Guest prudence
at the moment they will be taking a loss every month.

BUT

over time, say 10-15 years the balance would have risen slowly over time. then the investment starts to pay back. its now such a long thing it hardly worth it, but when the dust settles they will still own a house they havent really paid for.

whereas money in a bank if you spend the interest will become smaller over 15 years.

No they won't. As the rent is only likely to cover io mortgage the profit will be whatever equity is left in the house after the capital has been repaid aand deduction of initial equity. Even in a low inflation environment that is not likely to be much particularly if over that period there have been very few years of growth and even fewer years of real growth(increase minus inflation).

Almost certainly they would have ended up being much better off if they had used that initial equity more wisely rather than putting it into a depreciating asset

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Thanks all so far..

Stil no BTL landlord to advise me of the investment virtues...

Non investors seem to agree with me...

and it is a loss. i can see it is a loss.. I want to know why that loss makes sense in the long run..

as far as I can see it its £400 a month to have the ability to sell something in yeas time that maight have gone up with inflation..

chances are down a little as the economy can't support present salary- debt levels..

Come on.. i am not looking to rip into mr BTL..

I jsut want to see the reasoning behind it..

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Guest prudence
Thanks all so far..

Stil no BTL landlord to advise me of the investment virtues...

Non investors seem to agree with me...

and it is a loss. i can see it is a loss.. I want to know why that loss makes sense in the long run..

as far as I can see it its £400 a month to have the ability to sell something in yeas time that maight have gone up with inflation..

chances are down a little as the economy can't support present salary- debt levels..

Come on.. i am not looking to rip into mr BTL..

I jsut want to see the reasoning behind it..

Why are you so convinced that the loss has to make sense in the long run. People who have invested in any asset at the wrong time have not been sensible. There will always be many stupid investors..........

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Why are you so convinced that the loss has to make sense in the long run.  People who have invested in any asset at the wrong time have not been sensible.  There will always be many stupid investors..........

I am convinced that it would be the most ridiculous thing i could do with my money.,,,

This theory explains it all... I have another thread relating to it

http://www.rousselle.com/allan/archives/000415.html

I believe that it would be a better lifechoice to get extensive tatooing on my face and a crack habit then to buy a BTL investment right now..

There must be somewhere logic to it.. and I am intrigued to hear it

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One of the reasons people tike ttrtr stay in housing is they are not clever enough to do anything else.

You don't need brains to rent out houses you need money.

To back this up is the old saying 'The clever ones know when to get out not when to get in'

I have run several businesses and sometimes I have got out at the right time and sometimes not.

I have seen posts where ttrtr is still talking about buying properties. He's a fool, but talks the game.

People like him just fade into the past.

He just doesn't have the inteligence to do anything else with his money so he does the same.

He was in the right place at the right time and good luck for that. Now lets see what he does. It reminds me of an episode of only fools and horses where Rodney bought some lawnmower parts couldn't sell them but del got a mate to buy them from him. Rodney uses the money to buy some more.

But in this senario the economy is Del, Gorden Brown is Dels mate and ttrtr is Rodney.

Edited by eurows

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There must be somewhere logic to it.. and I am intrigued to hear it

One of the options I am considering in a few years time is to become a Landlord.

Having FTBd in 1995, I now own my current house ouright (3 bed semi) and I have a choice to make in a few years (two options)

1. Sell my 3 bed house in 2009 and simply buy a bigger house. (hopefully, my investments will permit this upgrade without need of a mortgage) This will leave me with few savings but no mortgage to pay.

2. Keep the first house and rent it out in 2009. Use the rent to pay the mortgage on the bigger house (bought in 2009) and keep (edit: some of!) my investments untouched (for a rainy day).

I am hoping option 2 will look the most promising when the time comes.

In a few short years, being a landlord will make sense again. My current house should appreciate in value post 2009 and my tenant(s) will pay for my new house.

When prices peak again, I'll turf out the tenants and sell the 3 bed semi. Hopefully this will more than pay off any outstanding mortgage on the new house.

As I've owned the first house so long, I'll dodge CGTax too.

How's that for logic?

Edited by Without_a_Paddle

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I've been a landlord since May this year. I bought a 2 bed flat which when I enquired about had sitting tenants. Between me putting in a offer and completion of the sale, they had moved out. The reason was probably because they didn't know me and so they didn't trust me. Little did they know, but I live on he same road and always said hello!

The good news is that the vendor is very wealthy (from property) and so did not have a mortgage. The tenants moving out didn't bother him and he also allowed me to have he keys before we signed contracts. I know that most of you, if not all , will think that I'm crazy to renovate before signing a contract but he gave me his word that the flat was mine.

Because the flat is a conversion and is part of a victorian villa, I couldn't use any lender. I did get a mortgage sorted and while the solicitors dragged theur heals, I spent a couple of months renovating........... I changed the kitchen, bathroom filled holes/cracks and painted all the rooms, carpet in the spare bedroom and laminate flooring in the walk in waldrobe. I furnished the whole flat with a fridge freezer, washer/dryer, dishwasher, cooker, 3 piece suite, dining table and chairs, TV, 4 metres of wardrobe space, double bed and matress and probably a few things i've forgotten about.

How much you will no doubt ask. The whole lot cost less than 2K.The reason, I bought the kitchen units, and all appliances from Ebay (recommended) and did all the work myself. I bought the flat for £130K, putting down around £20k as a deposit.

I only make around £50 per month, which I am entitled to tax free because I have fully furnished the flat. I charge £725 so obviously my BTL mortage + my loan for the deposit is around £675.

I plan to move into this flat in 2007 but I'm sure that if didn't I could make the allowable £8500 for the next 5 years. Not because prices will rise but because of the work i've put in. A one bed flat with an open planned lounge (kitchen in the same size lounge in my flat) in the same building sold a few weeks ago. I don't know how much for but it was up for £150k and sold withing a couple of weeks.

If prices drop or go up I will have to deal with it. I think you should all think the same way to save yourselves disappointment.

If you haven't bought already or are concidering BTL, there are good deals out there. BUT don't bother with brand new builds! £200k+ for a 2 bed apartment where you can buy a 3 bed semi for the same money is crazy.

And APOM, a £350kproperty only generating £1000 PCM! If you mean the property that TTRTR is letting or BTL, I believe he has a plan to justify his actions.Otherwise I agree, that is financial suicide.

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I've been a landlord since May this year. I bought a 2 bed flat which when I enquired about had sitting tenants. Between me putting in a offer and completion of the sale, they had moved out. The reason was probably because they didn't know me and so they didn't trust me. Little did they know, but I live on he same road and always said hello!

I was referring to a row of town houses in devon.

most BTL sold from new at £350,000 renting at £1000#

devon has the highest prices and the lowest wages...

The good news is that the vendor is very wealthy (from property) and so did not have a mortgage. The tenants moving out didn't bother him and he also allowed me to have he keys before we signed contracts. I know that most of you, if not all , will think that I'm crazy to renovate before signing a contract but he gave me his word that the flat was mine.

Because the flat is a conversion and is part of a victorian villa, I couldn't use any lender. I did get a mortgage sorted and while the solicitors dragged theur heals, I spent a couple of months renovating........... I changed the kitchen, bathroom filled holes/cracks and painted all the rooms, carpet in the spare bedroom and laminate flooring in the walk in waldrobe. I furnished the whole flat with a fridge freezer, washer/dryer, dishwasher, cooker, 3 piece suite, dining table and chairs, TV, 4 metres of wardrobe space, double bed and matress and probably a few things i've forgotten about.

How much you will no doubt ask. The whole lot cost less than 2K.The reason, I bought the kitchen units, and all appliances from Ebay (recommended) and did all the work myself. I bought the flat for £130K, putting down around £20k as a deposit.

I only make around £50 per month, which I am entitled to tax free because I have fully furnished the flat. I charge £725 so obviously my BTL mortage + my loan for the deposit is around £675.

I plan to move into this flat in 2007 but I'm sure that if didn't I could make the allowable £8500 for the next 5 years. Not because prices will rise but because of the work i've put in. A one bed flat with an open planned lounge (kitchen in the same size lounge in my flat) in the same building sold a few weeks ago. I don't know how much for but it was up for £150k and sold withing a couple of weeks.

If prices drop or go up I will have to deal with it. I think you should all think the same way to save yourselves disappointment.

If you haven't bought already or are concidering BTL, there are good deals out there. BUT don't bother with brand new builds! £200k+ for a 2 bed apartment where you can buy a 3 bed semi for the same money is crazy.

And APOM, a £350kproperty only generating £1000 PCM! If you mean the property that TTRTR is letting or BTL, I believe he has a plan to justify his actions.Otherwise I agree, that is financial suicide.

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One of the options I am considering in a few years time is to become a Landlord.

2. Keep the first house and rent it out in 2009. Use the rent to pay the mortgage on the bigger house (bought in 2009) and keep (edit: some of!) my investments untouched (for a rainy day). yadda yadda..... my tenant(s) will pay for my new house.

When prices peak again, I'll turf out the tenants and sell the 3 bed semi. yadda yadda.... As I've owned the first house so long, I'll dodge CGTax too.

How's that for logic?

the logic sounds like you have a poor attitude to the people you hope will pay your mortgage (e.g. "turf out the tenants"), and you have also clearly not yet done your homework as to the tax implications, regarding either Income, or CGT.

I would tell you what your errors regarding your tax assumptions are, but since I didn't like your tone, I'll leave that to someone more sympathetic. B)

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One of the options I am considering in a few years time is to become a Landlord.

Having FTBd in 1995, I now own my current house ouright (3 bed semi) and I have a choice to make in a few years (two options)

1. Sell my 3 bed house in 2009 and simply buy a bigger house. (hopefully, my investments will permit this upgrade without need of a mortgage) This will leave me with few savings but no mortgage to pay.

2. Keep the first house and rent it out in 2009. Use the rent to pay the mortgage on the bigger house (bought in 2009) and keep (edit: some of!) my investments untouched (for a rainy day).

I am hoping option 2 will look the most promising when the time comes.

In a few short years, being a landlord will make sense again. My current house should appreciate in value post 2009 and my tenant(s) will pay for my new house.

When prices peak again, I'll turf out the tenants and sell the 3 bed semi. Hopefully this will more than pay off any outstanding mortgage on the new house.

As I've owned the first house so long, I'll dodge CGTax too.

How's that for logic?

Sounds reasonable, but you are assuming that easy credit will be available after the banks get burnt on the crash.....the money supply will tighten, rates will be higher, they will want a cast-iron guarantee that you are a safe bet.

You could probably do it considering you have no mortgage at present. They may only lend you a small multiple of salary by today's standards.

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I've been a landlord since May this year. I bought a 2 bed flat which when I enquired about had sitting tenants. Between me putting in a offer and completion of the sale, they had moved out. The reason was probably because they didn't know me and so they didn't trust me. Little did they know, but I live on he same road and always said hello!

The good news is that the vendor is very wealthy (from property) and so did not have a mortgage. The tenants moving out didn't bother him and he also allowed me to have he keys before we signed contracts. I know that most of you, if not all , will think that I'm crazy to renovate before signing a contract but he gave me his word that the flat was mine.

Because the flat is a conversion and is part of a victorian villa, I couldn't use any lender. I did get a mortgage sorted and while the solicitors dragged theur heals, I spent a couple of months renovating........... I changed the kitchen, bathroom filled holes/cracks and painted all the rooms, carpet in the spare bedroom and laminate flooring in the walk in waldrobe. I furnished the whole flat with a fridge freezer, washer/dryer, dishwasher, cooker, 3 piece suite, dining table and chairs, TV, 4 metres of wardrobe space, double bed and matress and probably a few things i've forgotten about.

How much you will no doubt ask. The whole lot cost less than 2K.The reason, I bought the kitchen units, and all appliances from Ebay (recommended) and did all the work myself. I bought the flat for £130K, putting down around £20k as a deposit.

I only make around £50 per month, which I am entitled to tax free because I have fully furnished the flat. I charge £725 so obviously my BTL mortage + my loan for the deposit is around £675.

I plan to move into this flat in 2007 but I'm sure that if didn't I could make the allowable £8500 for the next 5 years. Not because prices will rise but because of the work i've put in. A one bed flat with an open planned lounge (kitchen in the same size lounge in my flat) in the same building sold a few weeks ago. I don't know how much for but it was up for £150k and sold withing a couple of weeks.

If prices drop or go up I will have to deal with it. I think you should all think the same way to save yourselves disappointment.

If you haven't bought already or are concidering BTL, there are good deals out there. BUT don't bother with brand new builds! £200k+ for a 2 bed apartment where you can buy a 3 bed semi for the same money is crazy.

And APOM, a £350kproperty only generating £1000 PCM! If you mean the property that TTRTR is letting or BTL, I believe he has a plan to justify his actions.Otherwise I agree, that is financial suicide.

all buyers whether BTL or people intending occupying the properties themselves should steer well clear of executive hotel style urban lifestyle flats!.......These are going to bomb whatever the rest of the market does.........Like you say £200k for a 2 bedder in Northern towns where a nice 3 bed semi is the same price.....in a nice suburb.

Same applies in the London area but prices £300k of both..........

As someone pointed out in here last week....even young urban professionals will be 30 years old before they can afford these prices and by that age they usually prefer suburban semi type stuff anyway....

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  • 302 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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