Demented Btl Dolts Strike Again

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Just spoke to a local EA who sold some houses to BTL landlords on a development in Carmarthenshire recently. 135,000 per property - rent??? £400-450 per month and landlords tend to experience relatively regular void periods in that area.

Hang on a mo!!!!!!!. I could buy a property in Bristol for 160,000 and get 7-800 a month. So who the hell are these demented BTL dolts who are 'investing' in these places? All I can say is long may they continue - all those repos flooding the market will take things down to a more affordable level. Roll on Autumn 2006!

Edited December 20, 2005 by gruffydd

[BuyingBear]

Just spoke to a local EA who sold some houses to BTL landlords on a development in Carmarthenshire recently. 135,000 per property - rent??? £400-450 per month and landlords tend to experience relatively regular void periods in that area.

Property only ever goes up in value, especially small inner city 'apartments', didn't you hear? Buy as much as you can, don't miss out!

[AteMoose]

The demand in these city centre appartments has been driven by investors, there falling over each other trying to buy as many as possible, FTBers dont want to live there because there too small and you cant start a family, you have additional mounthly costs, and you have less rooms to sublet.

The high BTLer demand has driven up prices further as they always sold quickly, this in turn has made developers focus and build more of these properties. Other forums suggest high voids, and recent stories of investors grandparents being moved into these designer city centre flats because it was impossible to rent them out.... AT the moment this doesnt matter because recent gains in the 'value' has covered the voids...

Edited December 21, 2005 by moosetea

[Goat]

£450 PCM equals a 4% gross yield on £135,000!

Basic rule for valuing property as an investment. Divide the rent receivable by the required yield, which should be in the range of 8% to 12%.

Using this method the properties are worth a maximum of £67,500 and possibly as low as £45,000. Any valuation higher than this relies upon finding somebody else even more stupid than you.

Congratulations BTLers, you have just set fire to £90,000!

[The Womble]

The impact of an oversupply of 1 and 2 bed flats will most likely be that house builders stop building them. This will mean eventually fewer homes available.

[Goat]

The impact of an oversupply of 1 and 2 bed flats will most likely be that house builders stop building them. This will mean eventually fewer homes available.

Or they will concentrate on building 3-5 bedroom homes instead.

[Si1]

£450 PCM equals a 4% gross yield on £135,000!

Basic rule for valuing property as an investment. Divide the rent receivable by the required yield, which should be in the range of 8% to 12%.

Using this method the properties are worth a maximum of £67,500 and possibly as low as £45,000. Any valuation higher than this relies upon finding somebody else even more stupid than you.

Congratulations BTLers, you have just set fire to £90,000!

I don't often contribute here because largely the other bears say exactly what I am thinking - but I will make these 3 contributions in the face of this farcical specific situation shown here:

(1) the crash has clearly started (I've surmised from elsewhere), with p/e like this for these properties it's breathtaking, and some stupid people are going to get VERY burnt

(2) I'm sorry, I know this 'investment' scenario is likely life-destroying for these people, at least for a decade or so, but since these people have temporarily priced me out of the market with their own gambling, then, in the face of their forthcoming financial ruin: HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA (quick breath) HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA (feeling better now, thanks)

(3) it's actually a pretty appalling situation this, people really are likely facing ruin. I'd like to feel sorry for them, I do indeed have pangs, but we are after all responsible for our own financial decisions, so it's all a bit tough, really. How on earth did any sane financial institution allow itself to fund such silliness? (I actually know the answer to this, all to do with short-sighted medium/short-term management, it's a rhetorical question)

[Marina]

I don't often contribute here because largely the other bears say exactly what I am thinking - but I will make these 3 contributions in the face of this farcical specific situation shown here:

(1) the crash has clearly started (I've surmised from elsewhere), with p/e like this for these properties it's breathtaking, and some stupid people are going to get VERY burnt

(2) I'm sorry, I know this 'investment' scenario is likely life-destroying for these people, at least for a decade or so, but since these people have temporarily priced me out of the market with their own gambling, then, in the face of their forthcoming financial ruin: HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA (quick breath) HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA (feeling better now, thanks)

(3) it's actually a pretty appalling situation this, people really are likely facing ruin. I'd like to feel sorry for them, I do indeed have pangs, but we are after all responsible for our own financial decisions, so it's all a bit tough, really. How on earth did any sane financial institution allow itself to fund such silliness? (I actually know the answer to this, all to do with short-sighted medium/short-term management, it's a rhetorical question)

Someone needs to sue an Estate Agent for effectively providing them with investment advice based on bolleaux. Their reply would be 'we are not regulated to offer investment advice.' My advice would be 'you put yourself in the position of acting as an intermediary between vendor and buyer - but you do everything you can to present the housing market as a wonderful - one-way - investement opportunity. So, I am going to sue you for continuously mis-representing the market for your financial gain.

People who find agents talking the market up should put the wind up them - 'You're not qualified to offer investment advice are you? Well I'd keep my mouth shut about where you think the market is heading and why I should not miss out on this opportunity. If I buy-in based on your distortion of the market - and I lose out financially - I will look to you for financial compensation.

Next year I am going to make trouble round here. EAs keep putting up signs like '90% sold' that I know are lies. They are trying to sucker people into buying properties by convincing them it must be a safe bet because 90% of the properties are sold. This is blatant mis-selling in my opinion and I will be taking it up with Trading Standards.

[BuyingBear]

Congratulations BTLers, you have just set fire to £90,000!

Plus 25 years worth of interest on £90k!

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

This just keeps getting even more insane - having been shocked by the example I posted originally, here's another - same area - a small estate of houses - spotted two had recently sold - 140,000 - Bumped into the EA - Mr ***** told me that a BTL had bought them at full price and was renting for 600pcm - phoned letting agent - both still empty - "They wont achieve that kind of rent but they just insisted on it" (this is in West Wales where if you're earning 14k per annum you're considered rich!

JEEEEEEEEEEEESUS I think I'm living in some kinda lunatic asylum!

Edited December 21, 2005 by gruffydd

[Goat]

Yep, some of these BTLs are just mental.

I reckon my landlord must be making 4.5% after agents fees, that won't even cover his mortgage, and the place needs probably about £10-20,000 worth of redecoration, he only bought it three years ago!