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oldsport

My First Time

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After years on HPC I finally encountered a full on BTLer for the first time today.

Previously I'd only read about them on here. But everything I'd heard turned out to be true.

He was a young tradesman and he crammed in every (and I mean every!) cliche into a five to ten minute minute conversation. Ending with saying that when he can live off his properties it will be "better than working like the minions". But there was a new one - apparently we've only had a recession because the politicians told us we were in recession - if people hadn't talked about the problems it would never have happened. And everything is Interest Only because "I'm using the banks money, not mine" - currently the rent far exceeds the mortgage so he's saving the excess for his next deposit. He actually seems a niceish chap - extremely good at his job and seems happy to work hard and clearly adores his family - and I wish him no misfortune on a personal basis and am not trying to poke fun at him. But the unshakeable belief, bordering on zealotry, was a real eye opener! I really get now what so many others on here have been saying about these types.

Edited by oldsport

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.

He was a young

I believe that is a problem with a lot of them they have never known a crash, they are a cross section of society some good some not.

If only we had a crash in 2007 then we would not have the problems that we are going to get in 2015

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It won't happen I know but I wish Banks would end these interest only mortgages and make customers go onto repayment and capital ones. Start with BTL ones.

Anecdotal: On my regular property searches I am see an increasing number of homes advertised with 'tenant paying £*** a month and expressed a wish to stay in the property' . Seems like the good days of BTL are nigh.

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I believe that is a problem with a lot of them they have never known a crash, they are a cross section of society some good some not.

If only we had a crash in 2007 then we would not have the problems that we are going to get in 2015

Yep the last real recession was in the early 90's in this country. This means that everyone under 40 has no real experience of economic reality, you may even push that age up to 45. That's a huge number of people who've only experienced the "good times".

At some point this economic paradigm will burst, when that will be I have no idea which means even more people will buy into this "reality" that prices only ever go up and if you work hard enough you can avoid a recession and bad things only happen because politicians talk about it. Voodooism at it's finest.

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Yep the last real recession was in the early 90's in this country. This means that everyone under 40 has no real experience of economic reality, you may even push that age up to 45. That's a huge number of people who've only experienced the "good times".

I don't think that quite nails it. Lots of people have experienced bad times. The issue, now, seems to be the 'failure to launch' of many people's adult lives.

Most young people who took the expected path have not experienced anything other than good times. Increasing gulf between the have and have nots. And by have I only mean those with respectable stable jobs, not the rich and wealthy.

Its a curse for those of us who are, by that definition, haves but have also witnessed and experienced life as a have not and are not prepared to pretend everything is rosy. We will not take undue risk because of what is around the corner.

As a tradesman you world revolves around property so it is no surprise they are zealots.

Edited by 7 Year Itch

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In order for this man to be wrong, at least one of two things must happen - IRs must rise sharply and/or a massive supply of UK housing must be built.

Then prices will drop sharply and the major British banks loan portfolios will bankrupt them (again), only this time the UK is at 90% public debt(by then it may be 100%+) so a bailout is going to be a bit trickier.

The BTL chap ought to be wrong but you might wait longer than you think to have the last laugh.

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..if people hadn't talked about the problems it would never have happened.

There might be something in that - but it's typical business speak. Everything is ok, projecting CONfidence is everything that is until the administrator turns up.

If there was no news and no discussion about it then all the part time work, tax credit and benefit survival, zero hour contracts, couples/both parents having to work ,some kids living at home almost for ever, lots of people involved in risky BTL ventures to try to get ahead, unemployment, congestion everywhere and all the other stuff etc would have been just the way things are and the days of single parent full time employment able to raise a family (of course it wouldn't have been all roses everywhere but you get the picture) would be forgotten.

It would be no recession just normal. Don't give them ideas.

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He was a young tradesman and he crammed in every (and I mean every!) cliche into a five to ten minute minute conversation. Ending with saying that when he can live off his properties it will be "better than working like the minions". But there was a new one - apparently we've only had a recession because the politicians told us we were in recession - if people hadn't talked about the problems it would never have happened. And everything is Interest Only because "I'm using the banks money, not mine"

Its a good idea to see this thing from other perspectives from time to time. My experiences have been similar to yours, it only takes a moments thought to consider what they say before you conclude they plainly don't know what they're talking about. They will throw in a memorised meme when your question requires a thought that leads them to an uncomfortable conclusion. From a psychological perspective it is interesting to watch them rationalise decisions that are not economically sound but to which they are now committed.

"using the banks money not mine" is another way of saying you have a loan. So, they have an interest only loan because they have a loan. Genius.

Its just bull, he doesn't have any more of a clue than most people in the street.

Just do the sums. Ive done it for some of the properties I have rented and the debtor was never making money. The yields tend to be 3-4% and the cost of borrowing, agent fees, voids and maintenance wipes that out. Without prices increasing they make nothing, and price increases need to be substantial to more than offset buying costs and opportunity cost.

Some did ok but only by buying long before the biggest asset bubble in history became apparent. So more luck than judgement. Unfortunately it is these people that tell those younger they have the secret to wealth! And so the memes become implanted and you've another numpty who can't respond rationally to reasonable questions about their 'investments'.

The reason being of course, they don't make sense.

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In order for this man to be wrong, at least one of two things must happen - IRs must rise sharply and/or a massive supply of UK housing must be built.

Then prices will drop sharply and the major British banks loan portfolios will bankrupt them (again), only this time the UK is at 90% public debt(by then it may be 100%+) so a bailout is going to be a bit trickier.

The BTL chap ought to be wrong but you might wait longer than you think to have the last laugh.

I wasn't making fun of him. And the way things are going I still don't think it's a certainty that he won't turn out to be the winner. I was mainly commenting on his mindset and unshakeable belief system which took me back somewhat - and wondering whether there a million or so others like him doing BTL?

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I wasn't making fun of him. And the way things are going I still don't think it's a certainty that he won't turn out to be the winner. I was mainly commenting on his mindset and unshakeable belief system which took me back somewhat - and wondering whether there a million or so others like him doing BTL?

Pareto.

I expect 20% of BTLers to take 80% of the winnings and crow about it, 20% of BTLers will be handed 80% of the losses on a plate and keep schtum.

The problem is the 60% who are fighting over meagre amount of winning and losses and will still be convinced they're geniuses and it'll all come good in a couple of years.

Me? I'm one of the 80% of young(ish) people fighting over 20% of the housing supply.

Edited by 7 Year Itch

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I wasn't making fun of him. And the way things are going I still don't think it's a certainty that he won't turn out to be the winner. I was mainly commenting on his mindset and unshakeable belief system which took me back somewhat - and wondering whether there a million or so others like him doing BTL?

I was on a train journey last week and a young couple were chatting loudly behind me. The girl was just finishing school and was planning to go off and train to be a banker. Her father was in the building trade, and the parents were heavily into BTL. The girl liked new things and wanted a new car. When the lad suggested she'd get better value on something a couple of years old, she said - 'but I want a new one'. She was also talking about wanting a new build house. Her mum had told her they wouldn't be able to add value then by doing work, but she still wanted new. Thing is, she didn't have a well paid job or any savings so the car would be going on finance, and the deposit would presumably come from BOMAD. Massive debt wasn't a concern, just monthly payments. Scary sh*t. It can't end well. :ph34r:

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The problem is the 60% who are fighting over meagre amount of winning and losses and will still be convinced they're geniuses and it'll all come good in a couple of years.

More like 80% I think.

A lot of them don't even know they are losing money. Even when they sell they don't know what their position is. How many sellers have you heard say they sold for 235k after buying at 230k and think they made 5k profit? How many won't reduce an asking price below the level at which they paid because they think that means 'taking a loss'? They love to ignore the details.. the actual cost of buying and selling, the opportunity cost of tying deposit cash up, the market rent not even covering the interest only mortgage in many cases! etc etc.

There are many out there making or losing a couple of hundred quid in a year in exchange for tenant and letting agent hassles who actually think they are on to a good thing.

What makes me laugh is when a person operating at that level of ignorance looks down their nose at you for renting whilst they're subsidising your living costs. I suppose we should be grateful for that ignorance but then again it leads them to overpay for property that could have gone to someone who wants a secure home.

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Pareto.

I expect 20% of BTLers to take 80% of the winnings and crow about it, 20% of BTLers will be handed 80% of the losses on a plate and keep schtum.

The problem is the 60% who are fighting over meagre amount of winning and losses and will still be convinced they're geniuses and it'll all come good in a couple of years.

Me? I'm one of the 80% of young(ish) people fighting over 20% of the housing supply.

London seems a bit different. Those who bought before 2006 are hitting rental yields of 6-8% depending on whether sky high valuations are real. At the moment I know plenty of people who are paying back their repayment mortgage and have 6-8% yields on top. I guess the difference is that they had paid 25% deposits too. There are plenty of people to rent in london and rents went up 30-50% in some areas.

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London seems a bit different. Those who bought before 2006 are hitting rental yields of 6-8% depending on whether sky high valuations are real. At the moment I know plenty of people who are paying back their repayment mortgage and have 6-8% yields on top. I guess the difference is that they had paid 25% deposits too. There are plenty of people to rent in london and rents went up 30-50% in some areas.

Thought they were falling due to the HB changes?

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Thought they were falling due to the HB changes?

Seem to be steady in our area, which I'd have thought is fairly prime HB.

Believe me, I'll let you know (well, the forum) if they start dropping noticeably.

Edit to add - actually, you might be right. I'd not checked for probably a month, and, whilst not necessarily cheaper, I'm seeing some better quality. What's odd is that supply is down.

Edited by tomandlu

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Thought they were falling due to the HB changes?

I cant see them dropping in my area ( zone 6 ) as local housing allowance for a one bedroom is £167.61 per week or £726.31 per month, nice floor for rents and as if by magic most one bedroom flats coming on to the market within 3 miles of me are at £700.

I resent housing benefit as it makes my rent higher than it should be, im paying into a system that makes my unsubsidized housing cost rise to a ridiculous level whilst enriching rentier scum.

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I was on a train journey last week and a young couple were chatting loudly behind me. The girl was just finishing school and was planning to go off and train to be a banker. Her father was in the building trade, and the parents were heavily into BTL. The girl liked new things and wanted a new car. When the lad suggested she'd get better value on something a couple of years old, she said - 'but I want a new one'. She was also talking about wanting a new build house. Her mum had told her they wouldn't be able to add value then by doing work, but she still wanted new. Thing is, she didn't have a well paid job or any savings so the car would be going on finance, and the deposit would presumably come from BOMAD. Massive debt wasn't a concern, just monthly payments. Scary sh*t. It can't end well. :ph34r:

Welcome to the future, you won't anything just merely rent it. Most people can't afford to buy a car but they can afford to rent one for 3 years and then get a shiny "new" one. This is now slowly becoming the model for housing, you can't afford to buy a whole house but will be able to buy 50% and rent the other 50% and get to be a owner. It's a great system, not for the people but for the bankers. Perpetual interest payments they want with you getting to own very little.

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I expect 20% of BTLers to take 80% of the winnings and crow about it, 20% of BTLers will be handed 80% of the losses on a plate and keep schtum.

Too true, whatever the odds. The housing market has become a casino and the same rules apply. The winners will shout about their good fortune to anyone who will listen. The more improbable their success the more noise they will make. If they're smart they'll walk away with their winnings, although many will be tempted to double up and eventually lose the lot. The losers will keep quiet and won't chance their arm again. As the saying goes, the best way to make money from gambling is to own a casino. The housing casino is owned by the banks and the government. Help to Buy is little more than a free buffet and a Celine Dion concert to lure in the gullible.

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Welcome to the future, you won't anything just merely rent it. Most people can't afford to buy a car but they can afford to rent one for 3 years and then get a shiny "new" one. This is now slowly becoming the model for housing, you can't afford to buy a whole house but will be able to buy 50% and rent the other 50% and get to be a owner. It's a great system, not for the people but for the bankers. Perpetual interest payments they want with you getting to own very little.

The most important component of the 'rent-a-life' system is already well established, and has been for some time.

Collectively we rent almost all of our very medium of exchange from the commercial banks. On almost every electronic pound in circulation, someone somewhere is paying interest to the originating commercial bank.

Instead we could and should issue publicly (collectively) our own debt-free, persistently circulating money supply, adequate to run our productive economy.

For more information and what to do about it, see:

http://www.positivemoney.org

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I wasn't making fun of him. And the way things are going I still don't think it's a certainty that he won't turn out to be the winner. I was mainly commenting on his mindset and unshakeable belief system which took me back somewhat - and wondering whether there a million or so others like him doing BTL?

Well let's hope it's less likely we'll have people offering every excuse for buyers at super-high prices and investors, if we get a sudden softening in prices. They've got access to as much information/education as anyone else - maybe he's made the right call and renters/savers are the forever mugs.

It's not like there isn't good cause to question whether current values can really be sustained. They're on the market/ been selling for double and treble+ what I think is good value in many instances.

It would have been better to just allow the crash in 2008 onwards, and perhaps given a reality-check to this young-man before he even began his portfolio-on-banker's-money. Whilst allowing those who made sound calls (other than QE/0.5%/mortgage-rescue/FLS ect intervention) to get a look in, rather than be years later and further priced out. It was daft last time around with the excuses for other people's decisions to buy at crazy high prices. "They were lured in to it"... "Just wanted a home".. yeah whatever. They're still hard at buying at high and higher prices almost immediately after a credit-crunch. Explain that one away. Oh... "It's not earning anything in the bank." Of course + renting is dead money, and deflation overly rewards savers.

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I've met plenty of BTLers - mixed bag.

Those who got into the game in the '90s, now in their 50-60s, wear a kind of uniform: slim-fit jeans with pointy brown shoes, tailored jacket with gleaming white button-down shirt to set off the Caribbean tan, and the grey hair is sculpted into a platinum tinted helmet. They read the DM on their iPads.

Later entrants have done okay. Many are ex-public sector, some have cuff 'n collar tattoos.

The losing BTLers have the eyes of furious sheep, locked in a cosmic struggle with the Tenant.

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Welcome to the future, you won't anything just merely rent it. Most people can't afford to buy a car but they can afford to rent one for 3 years and then get a shiny "new" one. This is now slowly becoming the model for housing, you can't afford to buy a whole house but will be able to buy 50% and rent the other 50% and get to be a owner. It's a great system, not for the people but for the bankers. Perpetual interest payments they want with you getting to own very little.

Berlin 'borrowing shop' promotes the benefits of sharing

http://www.theguardian.com/world/2014/mar/17/berlin-borrowing-shop-benefits-share-leila

Edited by Saving For a Space Ship

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Too true, whatever the odds. The housing market has become a casino and the same rules apply. The winners will shout about their good fortune to anyone who will listen. The more improbable their success the more noise they will make. If they're smart they'll walk away with their winnings, although many will be tempted to double up and eventually lose the lot. The losers will keep quiet and won't chance their arm again. As the saying goes, the best way to make money from gambling is to own a casino. The housing casino is owned by the banks and the government. Help to Buy is little more than a free buffet and a Celine Dion concert to lure in the gullible.

+1

Very nicely put! :lol:

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