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Waiting Patiently

"the Hell Of Buy-to-let" .............

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The Sunday Times April 30, 2006

Tales of a Landlady: Buy-to-go-bust

Is it too late to make money from rental property, wonders Rosie Millard

Here’s a cautionary tale to cheer you all up. Rupert Lee-Browne, who spends his working hours running a foreign-exchange company, and so is used to high finance, would like to tell everyone about the hell of buy-to-let...........................

..........SNIP...........

Anyway, says Stewardson, this advice is worthless. Why? “Because it’s over. It’s too late to get into buy-to-let. There have been too many television programmes showing people how to refurbish buildings, so it has pushed the market up to the point where there is no profit in it any more. Birmingham city centre is in a desperate state, with yields of about 3.5% and massive voids.”

Well, isn’t that just typical? That Carol Smillie and her Changing Rooms. She’s just gone and spoilt it, hasn’t she? We amateurs will clearly have to leave the UK to the pros and go off, along with Mr L-B, to the French Alps. Vin chaud, anyone?

timesonline

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Guest Winners and Losers

..........SNIP...........

timesonline

Yeah, saw this today. Only a matter of time before she started to beome turncoat. :rolleyes:

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seems these guys are getting their yields mixed up!..........

because by renting out a £100k property for £3600...the yield is 3.6% however big or small your BTL mortgage

because as well as paying interest on your loan there is the ''opportunity'' cost of the lost interest on your deposit/equity stake in the property.............but these guys are claiming that a mortgage of 60% means the yield is 6%...because the rent they're getting is 6% of their mortgage on the place....it is in fact 3.6% in such a case.

IT is the rent as a percentage of the property's current value that gives the true yield...

Edited by Michael

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seems these guys are getting their yields mixed up!..........

because by renting out a £100k property for £3600...the yield is 3.6% however big or small your BTL mortgage

because as well as paying interest on your loan there is the ''opportunity'' cost of the lost interest on your deposit/equity stake in the property.............but these guys are claiming that a mortgage of 60% means the yield is 6%...because the rent they're getting is 6% of their mortgage on the place....it is in fact 3.6% in such a case.

IT is the rent as a percentage of the property's current value that gives the true yield...

I picked up on that too... In their case a investment property with no debt would have a yield of??? Infinte %?

How many people this Sunday will be saying.. i'm ok, I have a 40% yield!

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I picked up on that too... In their case a investment property with no debt would have a yield of??? Infinte %?

How many people this Sunday will be saying.. i'm ok, I have a 40% yield!

The man in the street (including the BTL amateur) simply has no concept of opportunity cost and why this means that renting is cheaper than buying.

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Christ, what next, the last thing we need is for the Rosies of this world to get into trading Forex or the metals markets :rolleyes:

Though give it a couple of years, until they've missed the boat.

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Rosie Millard just enrages me to the core! In some of her past articles she has displayed a completely carefree attitude to debt and glosses it over so much she makes it seem fashionable.

Some on here may remember her attitude towards tenents :angry:

Ignorance on this scale is punished not rewarded.

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If Rosie Millard is qualified to write about property then I'm applying to the Times for a job as their ballet critic. Has she got a case for suing the Times for allowing them to let her hummiliate herself in public every week.

Utter drivel, almost the entire article, bar the rather obvious advice that since prices doubled and rents haven't gone up BTL isn't as profitable.

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seems these guys are getting their yields mixed up!..........

because by renting out a £100k property for £3600...the yield is 3.6% however big or small your BTL mortgage

because as well as paying interest on your loan there is the ''opportunity'' cost of the lost interest on your deposit/equity stake in the property.............but these guys are claiming that a mortgage of 60% means the yield is 6%...because the rent they're getting is 6% of their mortgage on the place....it is in fact 3.6% in such a case.

IT is the rent as a percentage of the property's current value that gives the true yield...

Yeah, that stuck out like a sore thumb.

The other key, says Jones, is to keep mortgages low. “We try to have only 60% loan-to-value mortgages, which makes the yields better.” There is also a critical mass in this game. If you have only one rented property and it is empty, that means a void of 100% on your portfolio. “Without doubt, it gets easier to make money the more properties you have,” says Jones

“I’d say the critical mass is six or seven,”

This Jones is a bit of a card?! Instead of having one sh!te, unprofitable investment, have six or seven, that makes much more sense. Especially if they have a mouthwatering yield of 3.5% (or 378% according to Rosie Millard calculations.)

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Guest Winners and Losers

If Rosie Millard is qualified to write about property then I'm applying to the Times for a job as their ballet critic.

:lol::lol:

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Are people thick? Do these people not take a hint? "I'm off to invest in Flaine! It's really on the up it is! Everyone loves skiing, and that"

Doh

I really hope Rosie Dullard and her mates all pile into French skiing resorts.

It would have the doubly advantageous effect of a UK BTL exodus and cheaper skiing holidays. ;)

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Christ, what next, the last thing we need is for the Rosies of this world to get into trading Forex or the metals markets :rolleyes:

Maybe we could write Rosie a letter and tell her the big money is now in credit derivatives, and collateralized debt obligations.

If she can make a success of those then there's plenty more opportunity in the world of synthetic products and structured finance.

Just get that PhD in applied maths, and you're on your way... <_<<_<

Edited by BandWagon

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“It has one and a half bedrooms and one bathroom. And a separate loo. I offered it at £1,600 a month, and got precisely zero takers,”

No sh*t sherlock !

hehehe

race ya for it

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I’d say the critical mass is six or seven,” says Bill Allerton, who has more than 20 individual lets in Sheffield. “
A lot depends on when you buy
and whether there is a huge mortgage attached. If you haven’t got much of a mortgage, you can probably make a yield of about 6% net, which is better than the bank.”
Yet Allerton agrees that profits are not easy pickings. “It’s a lot of effort: 50% of my income over the past two years has gone on refurbishments. Sheffield is now flooded with city-centre flats and very selective tenants. If you don’t keep your flats smart, you will have a very short life span in the buy-to-let business.”

It also depends on when you sell. Falling yields and capital value means you have missed the sell-by date. Stock Brokers always say not to become sentimentally attached to a particular stock and get rid of it if it is not performing. Same applies to BTL. Problem is that its harder to unload BTL when the market turns which is why so many will lose so much as the correction deepens.

Edited by Realistbear

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I really hope Rosie Dullard and her mates all pile into French skiing resorts.

Yeah, but it would be such a shame to have a mathematical brain like hers burried, along with her holiday let, in the avalanches of an ever warming world. ;)

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If Rosie Millard is qualified to write about property then I'm applying to the Times for a job as their ballet critic.

*Pirouettes across thread*

*lands on ar$e*

Edited by libitina

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Guest horace

quote

`because as well as paying interest on your loan there is the ''opportunity'' cost of the lost interest on your deposit/equity stake in the property.............`

unquote.

But the opportunity cost applies to what ever financial decision made or not made.

I think it is aptly summed up in the addage `you can`t have your cake and eat it.` So I would disagree with Michael`s post unless I can be persuaded otherwise.

h.

Edited by horace

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The man in the street (including the BTL amateur) simply has no concept of opportunity cost and why this means that renting is cheaper than buying.

That why I just rented a 650K house for £1824 per month

Nice big house, moved in yesterday but apart from the yield or lack of it, I would imagine the landlord needs to allow at least 5k per year for maintainence (over say, a 5 year period)

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Maybe we could write Rosie a letter and tell her the big money is now in credit derivatives, and collateralized debt obligations. If she can make a success of those then there's plenty more opportunity in the world of synthetic products and structured finance. Just get that PhD in applied maths, and you're on your way...

then you can buy that dream 1 ex council bed flat in watford....

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Christ, what next, the last thing we need is for the Rosies of this world to get into trading Forex or the metals markets :rolleyes:

Though give it a couple of years, until they've missed the boat.

Why not send her a link to Dr Bubbs site?

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  • 335 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%



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