Tempted by BTL after crash

[Warlord]

3 minutes ago, Bluestone59 said:

Hassle, oh yes.

Another landlord of my acquaintance said "don't buy to let, buy to sell". But he paid cash. (During 2000s).

I lasted a matter of weeks and that at a time I really needed the modest amount it was paying.

I would hate to be a BTL scumlord.  There are lots of other things you can do with your money .

[Clarky Cat]

Bear in mind that the government are going to be looking for more tax at some point. Landlords aren't a particularly popular subset of society and they also conveniently have large, illiquid assets. Any landlord taxes are easily sold as "helping hard pressed families to buy their first home".

[Society of fools]

50 minutes ago, spyguy said:

I call BS on this.

One, there's few Jap students these days.

Two, AFAICT *all* Chinese students stick to Uni run halls. or at least,  Uni link property providers.

Chinese dont tend to go into student flophouse.

Plus, I dont think youll be seeing many Chinese student next year, or the next,.

And, finally, student housing is not BTL.  

Perhaps I should have mentioned that this is in Australia, in one of the east coast cities. I left there a long time ago.

But plenty of Asian students still rent houses in Australia and share, usually in the same national group.

The Chinese students who have rich enough families even buy residential housing for the son or daughter sometimes. 

4 hours ago, qejunkie said:

How is it looking for this September?

Not sure actually. My understanding is that those Asian students who weren't out of Australia when the borders came crashing down were allowed to stay, though obviously tuition was somewhat interrupted, as it has been elsewhere. He hasn't complained, so I gather they must still be in situ. 

 

4 hours ago, Warlord said:

He should go to the pub instead...cheaper!

He doesn't have any friends. But he has occasionally invited a couple of his ( usually Chinese) tenants to go to the theatre with him.

Theatre in Australia tends not be particularly well attended since the nation is largely full of philistines but he rarely has a rejection to the invite and apparently has a good time. 

[captainb]

8 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

If prices crash 60% which is pretty apocalyptic what makes you think you would be able to

[RomfordDon]

18 minutes ago, captainb said:

If prices crash 60% which is pretty apocalyptic what makes you think you would be able to

If prices crashed 60% I would finally be able to afford my own home with mortgage. Forget BTL. I just wanted to know if some of the more wealthy people on this site would get in on a big dip.

[mspL4]

9 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

No, 'cos it's morally and ethically wrong.  I could buy another house right now for cash if I wanted to, rather than getting a next to nothing return on my savings, but I sitll couldn't bring myself to do it.  I can understand moreso if it were Flats.  People don't tend to live in Flats forever.  Usually before they start a Family, or after they've flown the nest, but not depriving a Family, (who could admittedly be the Family From Hell) of a home.  And those who carve up perfectly good homes, stick a bed in the front room and call it "4 Bedrooms" are despicable, morally redundant and quite possibly a psychopath...

[captainb]

3 minutes ago, RomfordDon said:

If prices crashed 60% I would finally be able to afford my own home with mortgage. Forget BTL. I just wanted to know if some of the more wealthy people on this site would get in on a big dip.

Fair enough. Was more the conditions that need to get such a fall need be dire. Rampant inflation and high mortgage rates. 

 

[iamnumerate]

2 hours ago, Society of fools said:

Perhaps I should have mentioned that this is in Australia, in one of the east coast cities. I left there a long time ago.

But plenty of Asian students still rent houses in Australia and share, usually in the same national group.

The Chinese students who have rich enough families even buy residential housing for the son or daughter sometimes. 

Not sure actually. My understanding is that those Asian students who weren't out of Australia when the borders came crashing down were allowed to stay, though obviously tuition was somewhat interrupted, as it has been elsewhere. He hasn't complained, so I gather they must still be in situ. 

 

He doesn't have any friends. But he has occasionally invited a couple of his ( usually Chinese) tenants to go to the theatre with him.

Theatre in Australia tends not be particularly well attended since the nation is largely full of philistines but he rarely has a rejection to the invite and apparently has a good time. 

A weird life - has he thought of going to evening classes or something to make friends.

BTW why did you come here?  I would have stayed in Australia.

[Ah-so]

I would not buy one intentionally, but it is quite likely that if nature takes it normal course of events, I will end up with with a second house. In the circumstances, I could sell or hang onto it for a few years until it can house grown-up offspring. 

[robmatic]

11 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

I bought a flat in 2010 and then became an accidental landlord when I emigrated in 2013/2014. 

Despite buying at a good time and only having a modest mortgage (40% LTV) the cash returns aren't great. Agency fees and repairs/maintenance are a real drag when you're paying someone else to do the work. I presume most of the stereotypical leveraged BTL landlords are basically innumerate but they have lucked out with capital growth, unfortunately.

However, it is at least a steady income that broadly speaking increases in line with wages and is potentially worth it at the right yield if you have the cash.

[winkie]

12 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

No Never....for many reasons.....if prices dropped 60% and those that are renting now are continuing to rent at today's rents something very wrong has happened to the economy and society.

[Society of fools]

1 hour ago, iamnumerate said:

BTW why did you come here?  I would have stayed in Australia.

That's an interesting topic iamnuerate actually, and probably for another website. 

As many migrants will tell you, the grass actually is much greener on the other side based on your profession and also your heartfelt interests. 

Say you're British, you have an excellent degree in mining or alternatively, you are a doctor, (just a plain GP),  or you're even just a garden variety plumber or electrician. You also love the sun, the beach, cheap fresh steak and you don't mind everyday street conversation where every second word is ****** and you'll be surrounded by urban architecture in places like Sydney and Perth compared to which Los Angeles looks like ******ing Prague. 

 I will guarantee you that when you move to Australia your salary will double in real terms and your quality of life will be far better than anything you could find in Britain. (That is, you would have before the Aussie housing bubble really took off that is) 

There's a flip side to that coin as well, which sees thousands of Australians head the other way.

I had an excellent degree in corporate Law and a good MBA, I also spoke three languages besides of English fluently, and had a wife who loved fashion, theatre, cold weather, and Medieval buildings. What the ****** would we do in Australia except bounce off the walls and wonder what it was all about ? 

The natural home for people such as myself is definitely in Europe, of which the UK is the easiest country to migrate to. My salary tripled when I came to London compared to Sydney, and the responsibilities I had in the British corporate world far outweighed anything I could have ever strived for in Oz. Its a smaller economy Down Under , and there's less room to rise up there before you hit the " you need to know somebody to progress further" ceiling. 

[Kosmin]

13 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

In that scenario other housing related investment strategies might be better. For example, buy shares of housebuilders and related sectors. These have big advantages over BTL. They will probably provide higher returns and you will pay less tax and fees on them. Also if you know when to sell you can do so. If you knew it was time to sell in January when you first heard about the coronavirus, you wouldn't have been able to sell a house before March but you could have sold your shares that day.

[spyguy]

5 hours ago, Society of fools said:

Perhaps I should have mentioned that this is in Australia, in one of the east coast cities. I left there a long time ago.

But plenty of Asian students still rent houses in Australia and share, usually in the same national group.

The Chinese students who have rich enough families even buy residential housing for the son or daughter sometimes. 

Not sure actually. My understanding is that those Asian students who weren't out of Australia when the borders came crashing down were allowed to stay, though obviously tuition was somewhat interrupted, as it has been elsewhere. He hasn't complained, so I gather they must still be in situ. 

 

He doesn't have any friends. But he has occasionally invited a couple of his ( usually Chinese) tenants to go to the theatre with him.

Theatre in Australia tends not be particularly well attended since the nation is largely full of philistines but he rarely has a rejection to the invite and apparently has a good time. 

Bit of an oversight...

 

Oz faces a lot more than a voids of student lets.

 

 

[captainb]

11 minutes ago, Kosmin said:

In that scenario other housing related investment strategies might be better. For example, buy shares of housebuilders and related sectors. These have big advantages over BTL. They will probably provide higher returns and you will pay less tax and fees on them. Also if you know when to sell you can do so. If you knew it was time to sell in January when you first heard about the coronavirus, you wouldn't have been able to sell a house before March but you could have sold your shares that day.

People on this website love to trade with hindsight.

If you knew it was time to sell when you first heard about CV?

Did you also know it was NOT time to sell at first mentions of swine flu , SARS , Ebola and MERS?

 

Not to say that owning shares does not have its advantages - tax efficiency in an ISA for one, but nobody gets to trade with hindsight. 

If we take british land trading at £3.90 lower than the price in 1996... yes you got dividends but you would also get rent in a BTL.

Shares are not as easy to get right going fowards as they look going backwards.

Edited July 3, 2020 by captainb

[Kosmin]

1 hour ago, captainb said:

People on this website love to trade with hindsight.

If you knew it was time to sell when you first heard about CV?

I just used that as an example because it was topical. I perhaps should have said if you need, for a personal emergency, some money in a hurry, it's easy to sell shares instantly and settlement should take less than a week. Selling a house takes months.

1 hour ago, captainb said:

Did you also know it was NOT time to sell at first mentions of swine flu , SARS , Ebola and MERS?

We actually don't know that Ebola wasn't the right time to sell. Say a landlord bought several years before Ebola and was sitting on a big capital gain and was scared that Ebola was going to turn his gain into a big loss. Obviously that turned out to be wrong, because Ebola didn't become a pandemic. But we don't know that the coronavirus won't have such a big impact that it wipes out his gain as he feared Ebola would.

I do take your point that people often do have an impulse to sell as they think some terrible piece of news is going to cause a crash. But if this makes property superior to shares (because you can wish you could sell your BTL in a hurry, but you realise you can't, so you just try to put bad news out of your mind, whereas you might sell your shares), then shares in a pension are even more superior (assuming you are still several years from being able to access your pension).

 

1 hour ago, captainb said:

Not to say that owning shares does not have its advantages - tax efficiency in an ISA for one, but nobody gets to trade with hindsight. 

My point has nothing to do with hindsight. Housebuilder shares are a lot more volatile than house prices. They will provide higher returns than property. If property provides returns in the long run, equities will provide higher returns. If you time if right you will earn higher returns in either, but highest in equities.

They fall further when prices fall and they rise higher when prices rise.

Persimmon was £3 in 2001, £14 in 2008, £4 in 2008, £33 in February and £22 now.

Barratt Developments £2, £8, 60p, £8, £5.

1 hour ago, captainb said:

If we take british land trading at £3.90 lower than the price in 1996... yes you got dividends but you would also get rent in a BTL.

That's why you diversify. Low returns on British Land pale in comparison to the enormous gains you'd make from holding other equities. 

Furthermore you keep buying whenever you have new cashflow, so the importance of market timing is reduced. There is no way of doing this with property.

1 hour ago, captainb said:

Shares are not as easy to get right going fowards as they look going backwards.

Is dollar cost averaging in index funds difficult? (If you buy a sensible index fund you will beat the majority of professionals! Easy!)

I gave the example of buying housebuilders after a crash as advice to someone who was considering buying a BTL after a crash. Perhaps I should have been more explicit: "If you are convinced that house prices represent good value after a big fall, I would recommend at that point buying the similarly good value housebuilder shares instead. You might be wrong about your timing. But the expected return of your risk-adjusted investment in shares is higher and has other benefits such as liquid and greater ability to avoid tax. So the net return is even more higher than the gross return, which is what matters."

Edited July 3, 2020 by Kosmin

[iamnumerate]

2 hours ago, Society of fools said:

That's an interesting topic iamnuerate actually, and probably for another website. 

As many migrants will tell you, the grass actually is much greener on the other side based on your profession and also your heartfelt interests. 

Say you're British, you have an excellent degree in mining or alternatively, you are a doctor, (just a plain GP),  or you're even just a garden variety plumber or electrician. You also love the sun, the beach, cheap fresh steak and you don't mind everyday street conversation where every second word is ****** and you'll be surrounded by urban architecture in places like Sydney and Perth compared to which Los Angeles looks like ******ing Prague. 

 I will guarantee you that when you move to Australia your salary will double in real terms and your quality of life will be far better than anything you could find in Britain. (That is, you would have before the Aussie housing bubble really took off that is) 

There's a flip side to that coin as well, which sees thousands of Australians head the other way.

I had an excellent degree in corporate Law and a good MBA, I also spoke three languages besides of English fluently, and had a wife who loved fashion, theatre, cold weather, and Medieval buildings. What the ****** would we do in Australia except bounce off the walls and wonder what it was all about ? 

The natural home for people such as myself is definitely in Europe, of which the UK is the easiest country to migrate to. My salary tripled when I came to London compared to Sydney, and the responsibilities I had in the British corporate world far outweighed anything I could have ever strived for in Oz. Its a smaller economy Down Under , and there's less room to rise up there before you hit the " you need to know somebody to progress further" ceiling. 

Interesting, I would have thought if you like sport or wildlife Australia would be amazing - if you can cope with the heat.

I have never been there.

In some ways it seems a bit strange that so many people go both ways.  I would not be surprised if it is net migration were zero.

[Former postman]

15 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

Absolutely not. Not even if I had a million quid and I could buy 10. I work hard for my money as I know many other people do. It would be going against all of my principles to steal it from them. 

[Society of fools]

52 minutes ago, iamnumerate said:

In some ways it seems a bit strange that so many people go both ways.  I would not be surprised if it is net migration were zero.

In this globalised world, and because both the United Kingdom and Australia run large immigration programs, many people now get their new  passport in either country and then leave.

So people can in fact end up going three ways. 

I haven't lived in the UK since 2012, I'm in the Arabian Gulf region now, where a British passport is far more respected - and generally gets a much higher salary offer- than an Australian one. 

And I work with a Pakistani and a Chinese guy who both have Australian passports. 

None of us are certain if we'll ever return either to our country of origin or our new country of citizenship, but the new passport helps with the choices.

They are thinking about retiring to Thailand or to Bali, where Australians are favoured

I was thinking about retiring to Gibraltar. I shouldn't have too much trouble doing that with a Brit passport. 

[Gigantic Purple Slug]

Becoming a BTL landlord has been steadily eroded in terms of benefits.

Back in the day lets weren't regulated so heavily, and for accounts purposes taxation was much better. Capital appreciation meant that you could pretty much buy a property and leave it empty and still make a ton.

Now you've got to maintain all the certificates, follow all the regulations. You don't get the accounts benefits. tennants are probably more lairy and the capital appreciation is shot.

Unless you have some particular advantage, like being a builder and being into patching the places up at low cost, or have low cost legal access then for me I am not sure why anyone would want to do it.

And remember prospective landlords, shit always seems to hit the fan with the CH when the weather gets cold around Christmas. So while everyone else is sitting on their arses eating mince pies, you will be rushing around trying to get frozen pipes fixed and boilers working.

[PeanutButter]

18 hours ago, RomfordDon said:

After the crash would you be tempted to get into BTL? Let’s say prices fall 60% would you be tempted? Do it as a limited company or some other model?

You’re trolling, right?

Speaking as a despicable landlord I’d have to say no, I am not looking at buying another property no matter how low they go. And landlords should be licensed and required to hold tenant insurance. Too many people see it as a get rich quick scheme or substitute pension. 

You’re dealing with a fundamental factor of your tenants’ happiness, take it seriously or gtfo.

[Martin_JD]

I recently sold a buy to let.  The numbers just don't really stack up anymore after the tax changes, unless of course you're a cash buyer.  It's alot of hassle and there are easier ways to invest. 

[GregBowman]

18 hours ago, ForGreatLager... said:

No, because I’m not parasite, leaching off other people’s work and exploiting their need for shelter whilst using the constant threat of eviction to get what I want. You?

That wasn't the question, I have employees I picked up a new motorbike today whilst they were earning me the money to pay for it working am I exploiting them ?

[Bluestone59]

3 hours ago, Gigantic Purple Slug said:

 

And remember prospective landlords, shit always seems to hit the fan with the CH when the weather gets cold around Christmas. So while everyone else is sitting on their arses eating mince pies, you will be rushing around trying to get frozen pipes fixed and boilers working.

Exactly this.  Boiler packed up between Xmas and new year. Tenant said he'd had no hot water for 2 weeks, I replied if he'd told me 2 weeks ago at the time, I could have got it fixed 2 weeks ago! 

No chance of a tradesman so went round to see what I could do. 2nd bedroom was a huge mound of clothes awaiting ironing.  Kitchen window sill had some gone off red fruit with a huge white fungus billowing out the top, momentarily I thought it was some Xmas Santa decor thingy. 

On top of the toilet cistern was a pack of jammy dodgers, for no obvious reason at all. Unless something to do while you're otherwise occupied.

The guy was seriously weird and awkward to deal with. Dunno what things would have been like when he finally checked out, I didn't hang around in the job to find out. 

[ForGreatLager...]

2 hours ago, GregBowman said:

That wasn't the question, I have employees I picked up a new motorbike today whilst they were earning me the money to pay for it working am I exploiting them ?

The question was asking if anyone would be tempted to get into BTL if there was a 60% crash in prices. I clearly answered ‘no’  because I’m not the kind of person who would do that, much the same as several other people did. You’re also trying to compare apples and oranges.