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Realistbear

V I S Say Btlers Are Still Adding To Their Portfolios

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http://uk.biz.yahoo.com/27062006/250/housi...-investors.html

Tuesday June 27, 08:01 AM

Housing Market Reports Don't Trouble Buy to Let Investors

LONDON, June 27 /PRNewswire/ --

- Property Can't Steal Away in the Night :o

Conflicting reports
about the state of the housing market have had no effect on buy to let investors. This is shown by the second quarter's survey Advertisement
- conducted last month from among the 10,000 subscriber landlords on the ARLA Buy to Let website - published today, 27 June 2006.
Nearly two thirds of all landlords expect to acquire further investment property in the next twelve months and even if house prices fall, nine out of ten will not sell. Instead, the expected lifespan of a buy to let investment is 16.2 years while the average age of investors is 46.
"We believe that investor landlords do their research and know and understand the investment market in residential property to rent.
They also feel secure in the knowledge that their investment cannot steal away in the night
," said Adrian Turner, Chief Executive of ARLA, announcing the latest quarterly survey results.

My sense is that the pro's got out a long time ago leaving the amateurs to buy in near the top. Buy low and SELL high--wait too long you lose. The attitude "my investment can't drop" as expressed above beggars belief.

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Probably right. My only other theory is that all the BTL’ers out there are earning so much money from regular jobs that they can subsidise their portfolios through almost anything and are looking at the very very long term investment*.

BTL certainly has its place; there is an army of renters out there who need professional landlords. The problem is that most of these people are not professional landlords, and by MEWing for a new property they have put their own homes and those of their tenants in a very interest rate sensitive position.

Lets keep an eye on what’s happening around the world, IR rises are the new black and I think we’ll be seeing some here at some point in the not too distant future. The real question is whether the mere threat of a rate rise will have any influence on an over-burdened and over-borrowed would be buyer.

Anyway, enough from me, cheers,

OD

*My confidence in this is less than brimming.

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Im sure there were many "seasoned" investors adding to their portfolios when the Nasdaq was above 5000.

I know one BTLer who is taking out cash advances on her credit card in order to cover the deposit on a new "investment". There are always enough greedy fools out there to be parted from their money, so this report doesn't really surprise me.

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I know one experienced BTL landlord, who has four empty properties, for sale.

He struggles to find tenants, when he does they fall behind with the rent and they often wreck the place when they leave. He has started dropping the prices on the properties

and so far still no takers.

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"Nearly two thirds of all landlords expect to acquire further investment property in the next twelve months and even if house prices fall, nine out of ten will not sell. Instead, the expected lifespan of a buy to let investment is 16.2 years while the average age of investors is 46."

This punctures my impression of all those teenage property developers. If the average age is 46 then there are going to be a lot of BTL investors coming up to retirement age or have already reached retirement.

Remember what happened with the stock market-based pension business when retirees found their investments worth less than expected following the market corrections post-dot.com.

I can see a lot of BTL investors wanting to cash out in the period 2006-2010 and finding that their asset really hasn't grown as expected.

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I know one BTLer who is taking out cash advances on her credit card in order to cover the deposit on a new "investment".

There are many fools out there. A dear friend of mine who bought his own house two years ago, took a cash advance of 5K from me to pay towards a part of his deposit and still owes me 2K is now looking to buy a BTL investment property. He thinks that the house he baught two years ago has gone up in value by 25% so he is in a good position to withdraw some equity from his house, payback some of his personal debt and invest the rest in BTL. What a wonderful world we live in.

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Housing Market Reports Don't Trouble Buy to Let Investors

Is it any wonder?

I work just part time in a care home, and two weeks ago a pensions advisor came round to give one to one advice. As I am semi retired I chose not to see him, as did all of the staff, except one. She is a care worker who works long hours on a very modest wage. At present she lives in rented accommodation.

His advice to her for a golden future was a BTL on an IO mortgage. I asked her why she did not think of buying the house she was renting. Her reply was, she could not afford a mortgage on it, but the rent was very reasonable.

Gentlemen I rest my case

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There are many fools out there. A dear friend of mine who bought his own house two years ago, took a cash advance of 5K from me to pay towards a part of his deposit and still owes me 2K is now looking to buy a BTL investment property. He thinks that the house he baught two years ago has gone up in value by 25% so he is in a good position to withdraw some equity from his house, payback some of his personal debt and invest the rest in BTL. What a wonderful world we live in.

You'll be one of them unless you get that 2K back smartish. Your mate's taking equity out of his house that you helped fund right now, so get it back right now.

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Most of the present BTLers are idiots. We sold ours and are saving up in cash to buy again when property crashes. We can then buy at any point in the next 15 years when property is lower, and if we got it wrong and property doesn't crash, we don't end up in debt. By contrast anyone buying at todays prices is not likely to get big returns, and may well end up with negative equity and debt.

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You'll be one of them unless you get that 2K back smartish. Your mate's taking equity out of his house that you helped fund right now, so get it back right now.

yep I will take it back soon. The thing is that he is a very dear friend who has helped me in bad times. The problem with him is that he is not prudent when it comes to economics, I am not worried much about my 2K, I am more worried about him as about 20% of his income comes from overtime which he is most likely to lose when recession kicks in, but he is not factoring it in atm. He seems to be very convinced that nothing is going to go wrong.

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http://uk.biz.yahoo.com/27062006/250/housi...-investors.html

Tuesday June 27, 08:01 AM

Housing Market Reports Don't Trouble Buy to Let Investors

LONDON, June 27 /PRNewswire/ --

- Property Can't Steal Away in the Night :o

....They also feel secure in the knowledge that their investment cannot steal away in the night," said Adrian Turner, Chief Executive of ARLA, announcing the latest quarterly survey results. [/indent]

What Adrian Turner fails to recognise is that your investement doesn't have to "steal away in the night" to make you a big loser.

Look at the stock market pre 87 and then look what happened. Did the investment "steal way in the night"? Too right. Did it matter in the long run? No. But now read this:

"Hartington Street was once one of the most desirable addresses in Derby but has deteriorated in the last 20 years.

The formerly splendid Victorian terrace houses have been split up into flats and bedsits, with many properties boarded up and covered in graffiti, while litter and fly-tipped rubbish are also major problems.

A recent cleaning of the alleyway behind the street recovered 1,100 needles which had been left there over one weekend."

Woman, 69, jailed for council tax protest over 'Crack Alley'

Is it conceivable that this area has performed well over the same period?

Bottom line: if the value has gone, be it over night or over 20 years, it has gone. Period.

Edited by Sledgehead

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You guys live in a little closet world of your own construction.

In London years ago lots of areas had big Victorian houses complete with servants' quarters etc - turned into flats and generally making the area run down. At the time it was done it made economic sense because you could get more rent for 4 flats than you could for one huge house. Times change (tricky concept but there it is).

Many of those areas, over the last 20 years have seen the exact opposite happen. And big Victorian houses sell for over £1m and many have been re-converted from flats back to family homes. The same may well happen in Derby. Ever heard the expression 'gentrification'?

Who said 'the pros got out long ago'. Pure, undiluted fantasy. The pros stay in for the long term because the rent now more than covers the mortgage and their investments are cash positive. Why would you sell something that makes you say £400 a month - month in, month out, year in, year out - and which has doubled in value since you bought it. Even if you were convinced prices were going to 'correct' you'd be nuts to realise your gain.

This is why the market is NOT crashing - no matter how many times you say it is.

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I can see a lot of BTL investors wanting to cash out in the period 2006-2010 and finding that their asset really hasn't grown as expected.

How do you work that one out? The standard retirement age is 65, going up to 68. The above report tells us that the average age for BTL-ers is 46. My maths isn't great, but this tells me that on average, these people will be reaching pensionable age in 20 years.

But no, of course on this forum, where people pluck speculation masquerading as fact out of their backsides, these BTL-ers will be wanting to 'cash out' over the next 4 years.

It's simple. If someone is planning to retire in, say, 10-20 years time, they will look for the best time to sell up. If there really is a crash, they won't sell at that point, will they? They will wait for prices to recover, as they inevitably will. If they wait 5 years, all it means is that the renters will have paid off another 5 years worth of mortgage for the owner. That's what you overlook. I have a small flat up north that I've got on the market. If it sells, fine. If it doesn't, I'll coninue to rent it out and continue to watch the mortgage balance dwindling. At some point the market will give me what I want. It's only when I HAVE to sell that this model falls down. And I don't HAVE to sell.

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You guys live in a little closet world of your own construction.

In London years ago lots of areas had big Victorian houses complete with servants' quarters etc - turned into flats and generally making the area run down. At the time it was done it made economic sense because you could get more rent for 4 flats than you could for one huge house. Times change (tricky concept but there it is).

Many of those areas, over the last 20 years have seen the exact opposite happen. And big Victorian houses sell for over £1m and many have been re-converted from flats back to family homes. The same may well happen in Derby. Ever heard the expression 'gentrification'?

Who said 'the pros got out long ago'. Pure, undiluted fantasy. The pros stay in for the long term because the rent now more than covers the mortgage and their investments are cash positive. Why would you sell something that makes you say £400 a month - month in, month out, year in, year out - and which has doubled in value since you bought it. Even if you were convinced prices were going to 'correct' you'd be nuts to realise your gain.

This is why the market is NOT crashing - no matter how many times you say it is.

Ever heard of profit taking ? Many of the 'pros' aren't buying now, and bought when prices were low. Our BTL was bought at 28k and sold at 75k. Not bad. Try getting that sort of increase on todays BTL prices ! There is no chance of that happening again. The market is at or near its top.

As to the rent covering the mortgage, I wonder how many BTL's won't when interest rates go up. There are plenty of BTLers on various forums who already don't cover the mortgage when the real costs of renting (late payments, damage, repairs) are added in. Very few people renting out property don't run into problems with tenants. Ours was a model tenant until he decided to fall off the wagon and almost burn the place down twice when cooking lunch. Try getting insurance for that !

BTL an investment buying at todays prices ? I think not. I'd rather save some money up, sit back and wait for the crash then buy. If I'm wrong it doesn't matter.

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It's simple. If someone is planning to retire in, say, 10-20 years time, they will look for the best time to sell up. If there really is a crash, they won't sell at that point, will they? They will wait for prices to recover, as they inevitably will. If they wait 5 years, all it means is that the renters will have paid off another 5 years worth of mortgage for the owner. That's what you overlook.

You are right, but a crash is not everyone having to sell, indeed most HOs will weather the storm and come out smelling of strawberries, but a significant proportion of over-leveraged, debt-ridden, sucker-rally-joiners will be forced to sell, which means that prices will drop. This is EXACTLY the scenario unfolding in many parts of the US right now.

At some point the market will give me what I want. It's only when I HAVE to sell that this model falls down. And I don't HAVE to sell.

No-one can predict the future, and I wish you nothing but the best, but you cannot tell me with total certainty that you will not need to sell in the next 5 years.

tc

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  • 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%



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