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tommyboy

Yields

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If you are comparing this to Btl, then it looks good, but not when the value of the property is increasing.

I'm not sure what your point is.

If House Prices are going up by similar percentages, yes you would be better off with a house. But this is because you are geared far more as you more than likely have borrowed to get that house. But because of this gearing you will be much worse off if it fell by the same percentage.

And as the end is nigh pointed out, capital gains are not yields!

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Without fully understanding the terminology, I assumed that the point is profit.

My point is this: when both types of investing are enjoying times of plenty (stocks etc. and hpinflation), the comparison may not be as generous. If they both realise that profit in time. Just an observation from his use of the word yield and the high values.

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Tommy, as Jason asked, what do you mean? It would be very bad to BTL now because, if 99% of the people on here are correct, then yields are insignificant because of capital errosion. You appear to be confused with yields vs. capital or asset price growth. Yield is how much an investment pays you, usually expressed as a percentage, relitive to the price that you paid for the investment. Your inital post appears to relate to price movements, not yield.

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as a basic rule of thumb.

rental income as a percentage of purchase price=yield.

so someone who bought a 3 bed place for 50k who rents it out for 5k a year achieves 10% yield.

doesn't matter about the capital appreciation,that isn't taken into account in yield,until it's sold to a new buyer.

ok lets assume the same prop is sold for 90k a couple of years later and can achieve the same rental value.....that's only 3 and a bit % yield.

the big mistake BTL seem to be making is assuming that as the capital price falls the yields increase(if you spin it correctly you can't fault the argument)

but at what point does the yield come unstuck?....the point where capital DEpreciation outstrips rental income!!!!!

RISK VS REWARD IS THE EQUATION THESE GUYS NEED TO LEARN...FAST.

on paper the yield of said property increases,but that is at the expense of fall in value of the house.....BTL need to do their sums properly!

Edited by oracle

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If you are relying on prices increasing you are a SPECULATOR.

If you rely on the income from your purchase you are an INVESTOR.

If you rely on income from only one investment, you have all your eggs in one basket.

Edited by Jason

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If you are relying on prices increasing you are a SPECULATOR.

If you rely on the income from your purchase you are an INVESTOR.

If you rely on income from only one investment, you have all your eggs in one basket.

Well put Jason. Though there maybe some overlap with investors looking for capital growth.

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:) ok...What about people who have to use gold as a tradition eg. Indian weddings. Now they will have to pay a speculators price for a neccessity.

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I agree, e.g. Gold.  But when refering to housing, my point has been made.

Ahh, not quite so. I think we have generally agreed on the difference in speculating as oppose to investing. But......I invest with a view to providing an income stream. I would not look to invest in an asset class that would fall in value (obviously) thefore potentially cancelling the yield (or worse). I would agree that what we have seen in the housing market has been speculation. Few have put the emphasis on yield over the rising value arguement (to put it mildly). But I may consider, in the future, buying property as an investment. But I would have to think that BOTH the yield and the capital growth were right. When I buy a stock I look for the yield, the increase YOY of the yield if possible, plus if I think the stock will, in the least circumstance, hold up price wise for the period I intend to hold for. Indeed the classic ploy of reinvesting dividends only bears fruit with shareprice gain (ultimatley).

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The main reason for owning gold is preservation of capital and future purchasing power. Any capital growth from gold (the metal, not gold shares) is largely nominal i.e. caused by currency depreciation.

Your discussion demonstrates that the general public has completely forgotten what risk means and that higher yields are compensation for that risk.

The 25 year bull market in shares and financial assets is over, and this is signalled by extremely low yields compared to price/risk. This monstruous bubble has started to deflate but has still many years to go. Everyone is in such a mad scramble for yield. Many confuse capital appreciation for yield which is a fatal mistake. As is usual, the sheeple tend to extrapolate past trends in the future and will be slaughtered.

Got gold?

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  • 335 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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