Jump to content
House Price Crash Forum
Sign in to follow this  
BillyShears

Time To Try And Raise The Rents

Recommended Posts

Distilling argument in a number of threads. Just thinking out loud to see who corrects me (if anybody). If someone invests money somewhere there is always some sort of risk. Investments with higher returns generally have higher risks.

Property investments such as BTL have several types of risk. Property prices could go down. There could be major damage to the property. And costs could go up making BTL a less attractive or even loss-making proposition.

Extreme BTL'ers may ignore the risk of property prices going down because "property always goes up." Major damage will be covered by insurance. So what do they believe about their costs going up.

If they believe that if their costs go up then they can just put the rent up, then in effect they believe that their tenants bear this third kind of risk and don't realise that they could be the ones that end up bearing it.

True? False?

Billy Shears

Edited by BillyShears

Share this post


Link to post
Share on other sites

IMO the risks for BTL is all to the downside. Without capital appreciation of susbstantial amounts there is nothing to gain. Rent controls are in the offing as people become poorer (more debt, lower employment etc.) and everyone believes there will be a HPC, even if not later rather than now. Higher IR are coming and the market is flooded with 2 bed flats. Where is the upside?

TTRTR ought to recognize that the top came a year ago and that savvy investors sell high and buy low.

Share this post


Link to post
Share on other sites

Distilling argument in a number of threads. Just thinking out loud to see who corrects me (if anybody). If someone invests money somewhere there is always some sort of risk. Investments with higher returns generally have higher risks.

...

True? False?

Billy Shears

True

I follow Emerging Markets. Returns can be excellent over a period of time but paper profits can be wiped out in a couple of days. One major factor to take into account is liquidity. How can you realise those paper profits? When things go belly-up how quickly can you get out?

Share this post


Link to post
Share on other sites

True

I follow Emerging Markets. Returns can be excellent over a period of time but paper profits can be wiped out in a couple of days. One major factor to take into account is liquidity. How can you realise those paper profits? When things go belly-up how quickly can you get out?

Ah.... liquidity. Shares can be sold today but those houses sticking on the market for month after month. Even "priced for a quick sale" ones would take weeks wouldn't they?

Billy Shears

Share this post


Link to post
Share on other sites

Ah.... liquidity. Shares can be sold today but those houses sticking on the market for month after month. Even "priced for a quick sale" ones would take weeks wouldn't they?

Billy Shears

There is also the phenomena of leapfrogging the crash in order to sell. Once the market starts to crash people will be trying to sell at current prices--only those who get ahead of the crash will actually be able to move their properties due to the competing sellers. This is what fuels a crash.

Share this post


Link to post
Share on other sites

Ah.... liquidity. Shares can be sold today but those houses sticking on the market for month after month. Even "priced for a quick sale" ones would take weeks wouldn't they?

Billy Shears

yes if you sell shares at the market bid you won't be gazundered. A deal is a deal.

- and you can hedge shares with derivatives.

Edited by Sisyphus

Share this post


Link to post
Share on other sites

Ah.... liquidity. Shares can be sold today but those houses sticking on the market for month after month. Even "priced for a quick sale" ones would take weeks wouldn't they?

Billy Shears

Hi Billy,always enjoy your posts.Indeed didn`t those houses stick back in the 90`s.I remember one guy who tried to shift his house by selling raffle tickets!We tried for a very long time to move home and despite around 15k of improvements we sold @ 2k less than we gave forit some 9 years later.With rental returns in some cases being negative,when IRs go up{and I am sure they will} it will be the btl brigade that have purchased in the last 2 years all bailing out @ the same time.Pretty good HPC trigger I would think!

Share this post


Link to post
Share on other sites

Hi Billy,always enjoy your posts.Indeed didn`t those houses stick back in the 90`s.I remember one guy who tried to shift his house by selling raffle tickets!We tried for a very long time to move home and despite around 15k of improvements we sold @ 2k less than we gave forit some 9 years later.With rental returns in some cases being negative,when IRs go up{and I am sure they will} it will be the btl brigade that have purchased in the last 2 years all bailing out @ the same time.Pretty good HPC trigger I would think!

If a landlord wishes to sell, what happens to the tenants? If they have signed a fixed term contract without a break clause, presumably they can't be ejected unless the property is being repossessed?

Ursa Minor

Share this post


Link to post
Share on other sites
Guest Guy_Montag

Distilling argument in a number of threads. Just thinking out loud to see who corrects me (if anybody). If someone invests money somewhere there is always some sort of risk. Investments with higher returns generally have higher risks.

Property investments such as BTL have several types of risk. Property prices could go down. There could be major damage to the property. And costs could go up making BTL a less attractive or even loss-making proposition.

Extreme BTL'ers may ignore the risk of property prices going down because "property always goes up." Major damage will be covered by insurance. So what do they believe about their costs going up.

If they believe that if their costs go up then they can just put the rent up, then in effect they believe that their tenants bear this third kind of risk and don't realise that they could be the ones that end up bearing it.

True? False?

Billy Shears

If I was going to move into this line:

Buy during a slump (when everyone's going on about how property is old news, & there's no money to be made there, everyone got their fingers burned in the great crash of 2006/7/8/9).

Insure myself to the hilt.

Consider interest rates, if they are high get a short term fixed rate, if they are low get a long term fixed rate (10+ years)

Buy cheap(ish) properties, close to bus routes, that I can rent to single mothers & get it paid directly from the DSS.

Share this post


Link to post
Share on other sites

The lack of liquidity in a falling housing market are even worse than just agreeing a sale.

Once the sale is agreed (offer accepted) it will often take months before formal exchange of contracts.

This leaves the seller exposed.

If the buyer sees another suitable property at a lower price before contracts are exchanged then it is very likely that the buyer will try and negotiate further discounts or pull out of the sale.

Everything is in the buyers favour in a falling market.

Share this post


Link to post
Share on other sites

The hutch is sold complete with tenants.

The perfect BTL starter kit; everything you need in a box - literally. <_<

This happened to the place I was renting a few years ago. Landlord (decent guy, always punctual, always fixed everything at once) sold the place. New landlord then wanted me to stay with a large percentage increase in my rent. I told the new landlord to take a long walk off a short pier. Found another nice place in 24 hours.

Easy.

Share this post


Link to post
Share on other sites

The hutch is sold complete with tenants.

The perfect BTL starter kit; everything you need in a box - literally. <_<

OK, but presumably its harder to sell, since only current or aspiring landlords will buy (whereas if the place is sans tenants somebody may buy as a home). Are these sorts of going concerns on the market for longer?

UM

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.