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gerkin

Is It Time To Str ?

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I have lived in my 2 bedroom terrace for about 8 years. Since my child is now about school age we decided to move close to a school. Put my house on the market, which we improved over the years, and it sold in 2 days. I am quite amazed since its not modern nor perfect and has its niggles and quirks. Anyway, I was looking for a Semi and all the properties I had noted in the past month had all sold. One semi was still left and I took a look and calling it a shoebox would be insulting to a shoebox. My 2 bed 1890s terrace was bigger than this 1990s semi. Unreal. You cannot even sling a cat around. And it was on for 250K.

I am seriously thinking of STR because I cannot see how this can sustain. Any ideas ? Am I being foolish ?

This is in Kent by the way.

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In the real world it's actually pretty hard to make money by shorting...and that includes houses. But that's not the position you're in, you've actually sold so you're not looking at STRing, you're looking at renting versus buying. And right now in Kent I'd be in no rush to buy.

I don't personally believe we're looking at an imminent material fall in nominal house prices, but neither do I believe continued house price inflation is much in prospect. The next interest rate move will certainly be up, albeit by not very much, and MMR is here to stay, so renting in the South East offers far better value than buying. If you're careful about hunting around for the right landlord you should get reasonable security, and you can use the time to build up a bigger deposit.

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A lot of people on here would disagree with me, but I would personally say that to STR is an exceptionally bad idea. For it to work, you probably need a 20% drop in the market starting pretty much at the exact moment you sell. If silly HPI goes on for just a few Months after you sell, you can easily find yourself looking at needing a 30%+ price drop for it to work. Who knows how long tptb can keep the plates spinning, and how much further things will inflate before going pop. As a homeowner, you've actually got a hedge against all that, and personally I would be very reluctant to risk that on a gamble that you need to time just right to make work. A lot of very clever people have lost a heck of a lot of money trying to do just that.

That's just my view of course, and doubtless others will completely disagree. Ultimately, you have to make the choice that you feel is right for you, and deal with the consequences either way.

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I have lived in my 2 bedroom terrace for about 8 years. Since my child is now about school age we decided to move close to a school. Put my house on the market, which we improved over the years, and it sold in 2 days. I am quite amazed since its not modern nor perfect and has its niggles and quirks. Anyway, I was looking for a Semi and all the properties I had noted in the past month had all sold. One semi was still left and I took a look and calling it a shoebox would be insulting to a shoebox. My 2 bed 1890s terrace was bigger than this 1990s semi. Unreal. You cannot even sling a cat around. And it was on for 250K.

I am seriously thinking of STR because I cannot see how this can sustain. Any ideas ? Am I being foolish ?

This is in Kent by the way.

STR is for people with big ***** and no commitments. Especially if you really actually want to own a house, which most people seem to.

You have to weigh up the positives against the negatives. The positive is you might get a cheaper/better place. The negative is that you might get forced into buying a worse place at the wrong time by outside factors (usually the spouse) after being subjected to several years of verbal bombardment and misery.

I reckon you've got to be mentally prepared for at least 5 years waiting, but maybe you could do a poll to get the wisdom of the crowd. IIRC the last poll for a bottom placed it in 2014.

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I have lived in my 2 bedroom terrace for about 8 years. Since my child is now about school age we decided to move close to a school. Put my house on the market, which we improved over the years, and it sold in 2 days. I am quite amazed since its not modern nor perfect and has its niggles and quirks. Anyway, I was looking for a Semi and all the properties I had noted in the past month had all sold. One semi was still left and I took a look and calling it a shoebox would be insulting to a shoebox. My 2 bed 1890s terrace was bigger than this 1990s semi. Unreal. You cannot even sling a cat around. And it was on for 250K.

I am seriously thinking of STR because I cannot see how this can sustain. Any ideas ? Am I being foolish ?

This is in Kent by the way.

ask hamish

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I think 4% is the cut off. If divide the annual rent by the cost of buying the house and it comes to less than 4% rent if it come in above 4% buy. You will have to look around for an investment to put your money if you rent.

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I was down in Kent last week and looked at some house prices in the area I grew up.

They actually struck me as worse value for money than the ludicrously overpriced houses near me in Cambridgeshire.

Yes they were cheaper and the housing is generally more attractive but where are the well paying jobs existing to support those prices.

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I was down in Kent last week and looked at some house prices in the area I grew up.

They actually struck me as worse value for money than the ludicrously overpriced houses near me in Cambridgeshire.

Yes they were cheaper and the housing is generally more attractive but where are the well paying jobs existing to support those prices.

I think what you have to do is buy the crap house near the good job first.....then you can buy the better house near the crap jobs. ;)

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If you've got a school-age kid, are you willing to risk being turfed out in just 2 months and having to change schools at such short notice?

I haven't got school age kids, but I wouldn't like to be turfed out in 2 months, so I always make sure I have at least 6 months left on my rental agreement.

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STR.

I don't understand the above (DeepLurker) when so many others rent, having to cope with possible hassles, who haven't STR'd.

It's not much of a reason against STR. Good landlords welcome good paying tenants, except for chancer landlords.

My vote is to STR, in anticpation of better buying value, depending upon price range of the market you're looking at re-entering.

Edited by Venger

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If you've got a school-age kid, are you willing to risk being turfed out in just 2 months and having to change schools at such short notice?

Utter FUD ******** I'm afraid. If you're going to apply such a strategy you need to live somewhere that can accommodate such uncertainty. Renting in a location with no rental supply is like buying with a 10x income interest only mortgage.

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A lot of people on here would disagree with me, but I would personally say that to STR is an exceptionally bad idea. For it to work, you probably need a 20% drop in the market starting pretty much at the exact moment you sell. If silly HPI goes on for just a few Months after you sell, you can easily find yourself looking at needing a 30%+ price drop for it to work. Who knows how long tptb can keep the plates spinning, and how much further things will inflate before going pop. As a homeowner, you've actually got a hedge against all that, and personally I would be very reluctant to risk that on a gamble that you need to time just right to make work. A lot of very clever people have lost a heck of a lot of money trying to do just that.

That's just my view of course, and doubtless others will completely disagree. Ultimately, you have to make the choice that you feel is right for you, and deal with the consequences either way.

Needing a 30% drop after a few months on the sideline?

Do I really have to be the one calling you up on this shit?

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I would not advocate STR as a strategy in itself per se but if you need to relocate for whatever reason then why not. Moving house is not a decision to be taken lightly after all. When you consider the small number of properties on the market at any one time and the limited window of opportunity afforded to you by the timing of your own transaction, renting for a period has to be the sensible approach in buying something more suitable for your circumstances.

If stepping off 'the ladder' is so detrimental for someone with a decent job and sum of equity, how will those who have yet to start work ever manage?

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I would not advocate STR as a strategy in itself per se but if you need to relocate for whatever reason then why not. Moving house is not a decision to be taken lightly after all. When you consider the small number of properties on the market at any one time and the limited window of opportunity afforded to you by the timing of your own transaction, renting for a period has to be the sensible approach in buying something more suitable for your circumstances.

If stepping off 'the ladder' is so detrimental for someone with a decent job and sum of equity, how will those who have yet to start work ever manage?

I completely agree with this. A few times I've moved somewhere and thought (or rather the missus has) the area was great only for perceptions to change completely 6-12 months later. Nothing beats living in an area before committing to buy.

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Misleading title, I was thinking anyone deciding to STR now has missed the top! But seems like you might of top-ticked it. Nice.

Surely the game is to look at both rentals and secondary market and then you can directly compare. Assuming you are staying in your current location this should be quite manageable.

Still think if you have means to buy something suitable then it's hard not to justify. I mean the wheels might be coming off but I have seen little to persuade me that TPTB are not still intent on rigging the market. And I see little in global financial markets suggests that bond holders are unhappy with the UK ponzi.

Also where will you park your equity? Stocks are more overvalued than houses, bonds are the same ponzi trade as property with worse risk reward. If you go for gold, the only diversifier, and get it wrong and you lose on not owning a house and being in gold!! Big balls indeed!

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I personally would not STR if I had kids (which I do).

I would. First sniff of trouble and I am out of this country. I'm not sending my children out to die for those ****s.

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There really isn't a single answer to this. I think my 4% cut off is about right.

For example my house is worth £185,000 and would cost 8844 a year to rent. so 8844/185000x100 = 4.8%. an OK return

Because I have a low rate tracker it makes the figures even better. I have £120,000 in equity and £65,000 at 0.67% interest a year comes out at £435 so now it works out at ( 8844-435) / 120,000X 100 = 7%

7% return isn't bad

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Amazing how these 'niggles and quirks' get overlooked when the market is rising. Sounds like the OP might have had damp issues, roof issues basically a lot of trouble. Managed to offload the liability at a profit and wonders whether it is time for a landlord to take the strain and worry. Houses are depreciating liabilities that require big money just to maintain the current condition, new or old....and we treat them as investments. Only way that works is if they beat inflation by some margin.

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A lot of people on here would disagree with me, but I would personally say that to STR is an exceptionally bad idea. For it to work, you probably need a 20% drop in the market starting pretty much at the exact moment you sell. If silly HPI goes on for just a few Months after you sell, you can easily find yourself looking at needing a 30%+ price drop for it to work. Who knows how long tptb can keep the plates spinning, and how much further things will inflate before going pop. As a homeowner, you've actually got a hedge against all that, and personally I would be very reluctant to risk that on a gamble that you need to time just right to make work. A lot of very clever people have lost a heck of a lot of money trying to do just that.

That's just my view of course, and doubtless others will completely disagree. Ultimately, you have to make the choice that you feel is right for you, and deal with the consequences either way.

We sold in Nov 07 and brought back in Dec 09. People ask us how we timed it so perfectly, after a few beers I would wax lyrically about my skills as an investor. The truth is three things helped us

1. There were a lot of accidental landlords so I rented two big houses (4 and 5 bed in good areas) for £1550 and £1650 per month respectively

2. We punted £150k of our capital on gold and if you look at the charts it had a good run around then

3. for half that time we had the rest of the equity in accounts in Iceland which as we all know ended in tears

So I whole heartedly agree with you JT4, it is a massive risk and in the current climate I can't see any way of easily de risking it.

We were lucky although it took several verbal beatings on here to drum that in.....:)

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There really isn't a single answer to this. I think my 4% cut off is about right.

For example my house is worth £185,000 and would cost 8844 a year to rent. so 8844/185000x100 = 4.8%. an OK return

Because I have a low rate tracker it makes the figures even better. I have £120,000 in equity and £65,000 at 0.67% interest a year comes out at £435 so now it works out at ( 8844-435) / 120,000X 100 = 7%

7% return isn't bad

Youd get better digging up an old PPI claim...they pay 8% on your refund.

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