Jump to content
House Price Crash Forum

Still Think Btlers Are In It Short-term . . . ?


tenroom
 Share

Recommended Posts

I'd sooner rely on my own ability to buy a decent flat/house in an area or location that'll remain attractive to renters and won't be that hard to sell (timing permitting) come the onset of retirement than entrust it to a shyster in a suit . . .

and THAT is the whole problem and the reason why this bubble keeps inflating

you, and all the naive BTLers think they have a natural talent in seeking out quality property. and the more prices keep rising, the more it validates this claim, when in reality it is nothing to do with skills, just luck.

the same thing happened in the dot com boom, everyone suddenly becomes an expert stock picker, until of course it all comes crashing down and they lose everything. But with property its far more risky, at least with shares you don't have to wait months to sell and have mortgage payments to meet in the meantime!

Link to comment
Share on other sites

  • Replies 67
  • Created
  • Last Reply

Top Posters In This Topic

Popular Days

Top Posters In This Topic

The desire to 'hold' for the long term and the reality are two very different things. I sold all my BTL a while back precisely because I thought that the long term picture was not good and I did NOT want to be caught up in the mass stampede for the exit when we entered a high IR, tightening credit environment. I sold all of my BTL to young families often at 15-20% BMV. I had done well out of it and didnt want to rake more in at the expense of the next generation.

A BTLer done good. Well done you!

I agree with your comment about 40-50% of prices being down to speculation.

And when people stop buying because they think prices are going to go up and you remove that 40-50% speculative money the housing market will fall a long way before being supported by the average man and his average wage.

Link to comment
Share on other sites

True, but when you retire the property will be owned outright and for the most part someone else had paid for it. Where I live a two beroom flat can be retend out for £800 a calender month. Say you own four, so you earn equivilent of £3200 a month in rental income . How much money would I have to have in my pension pot to generate this amount of monthly income. I rekon around £750,000 and I would have had to put in all the cash myself. You dont sell up just leave them to your children.

I am missing something really obvious?

Yes you are, the majority of BTL mortgages are; interest only, have only 10- 20% deposit, and at least 50% have been taken out since 2004 when the fad caught fire. There is no plan to 'pay them off'. Now the majority of BTL mortgages have 7% charges receiving what, 5% yield at best? Each 100K borrowed brings in (at best) £400 in rent. It was never viable simply a dream sold to suckers. Look at the B&B stats on just who took out the loans, either guys in the industry, in one form or another, or folk without any previous business skills, or smarts looking for the sure fire, can't lose business idea. It's not a pension for most, they had no pensions for the most part and conveniently wrapped that media inspired description as a comfort blanket around themselves to insulate their minds v their poor decision making.

BTL is an anchor for most unless they cut lose and sell now. <_<

Link to comment
Share on other sites

It's a good job that the landlords aren't in it for the monthly rental income, 'cos they're making a pretty huge loss on it in some areas of the country.

I was looking recently in SE Wales, and 3/4 bed houses in good areas are advertised on Rightmove for around £225k, but the rent is around £650-£700 per month (c.f. an IO mortgage on that amount is £1100).

http://www.rightmove.co.uk/viewdetails-144...1&tr_t=rent

http://www.rightmove.co.uk/viewdetails-585...=2&tr_t=buy

Same here mate, reams of 200K houses/flats for sale or 500 of our English pounds per month - get in there, 2.5% yield! I asked around a bit, as this is a new phenomena to the pit of madness. Anyhow, the view of agents is that it's guys that have bought something bigger with a big big loan over the past 18-24 months and kept their 'other place' to rent out rather than traditionally sell up. Not quite working out as they expected. Another dynamic to add to that there new paradigm thingy :lol:

Edited by Converted Lurker
Link to comment
Share on other sites

True, but when you retire the property will be owned outright and for the most part someone else had paid for it. Where I live a two beroom flat can be retend out for £800 a calender month. Say you own four, so you earn equivilent of £3200 a month in rental income . How much money would I have to have in my pension pot to generate this amount of monthly income. I rekon around £750,000 and I would have had to put in all the cash myself. You dont sell up just leave them to your children.

I am missing something really obvious?

Yup, 'fraid you are missing something really obvious. The pathetic yields on most BTL property will just about cover paying the mortgage interest and won't even stretch to the voids, redecoration, etc. never mind repaying the capital on the loan. You could ofcourse repay the capital out of your own pocket, but if you can do that on 4 2 bed flats and still be solvent, you probably had enough money to just stick it all in a high interest savings account in the first place and still have a decent retirement fund in 30 yrs time!

Link to comment
Share on other sites

The pathetic yields on most BTL property will just about cover paying the mortgage interest and won't even stretch to the voids, redecoration, etc. never mind repaying the capital on the loan.

You mean there are still parts of the country where the rental yields are high enough to cover the mortgage interest? :lol:

Link to comment
Share on other sites

Yup, 'fraid you are missing something really obvious. The pathetic yields on most BTL property will just about cover paying the mortgage interest and won't even stretch to the voids, redecoration, etc. never mind repaying the capital on the loan. You could ofcourse repay the capital out of your own pocket, but if you can do that on 4 2 bed flats and still be solvent, you probably had enough money to just stick it all in a high interest savings account in the first place and still have a decent retirement fund in 30 yrs time!

Yes I agree, yields are bad and now wouldn't be a good time to buy for BTL pension investment. The boat has sailed. However there are a lot of BTL that got on board before it left and they will do well from this.

I sold my BTL for short term profit, I think there will will a correction and when yields return I will buy back. I have time on my side and these will part of my pension. As to Voids and maintenance, I will be handing the property over to the council who have a huge shortage of property and massive waiting list, thanks "right to buy". They Guarentee you rent even when the property is empty and they maintain the property for you. It's a no brainer.

A lot of people on this site are waiting for a HPC, Just not all for the same reasons.

Link to comment
Share on other sites

the main flaw with tenrooms post is that hes pressuming things will remain in favour of HPI for the next 20 years.

with a million new immigrants, controlled building and the sell off of social housing, sure things look really, really good for property investors at the moment.

but i know with the nations debt, the national output and the growing rosperity of the euo zone, many of the 1 million visitors will be returning to their home countries. social change will increase the housing stock, and debt problems will prevent the wastage of funds into blind HPI as people knuckle down just to get by.

the next 20 years houses will half. no one will want them and to have bought them under the illusion that they will always rise ABOVE inflation takes a real dumbass to believe it.

my favourite drive is past the flat that a fool bought in 2005 for 140k, which has a sorry a4 print in the window for the last TWO years "For sale £120k'

i just love to drive past it thinking how some greedy baffoon has already lost 20k and we havent even got started yet. while he has all his finances locked up in a decreasing asset, ill be eating and holidaying with mine while he goes hungry for years and years.

and rightly so.

Link to comment
Share on other sites

Guest Yeahbutnocrash
err, the years before a crash in property have resulted in spectacularly poor returns for those who got in at that time, especially thru leverage.

what you say here is wrong. You seem to be suggesting that property is a good buy irrespective of price. If this is indeed what you feel, then that's just plain weird. Property is no more a magic investment than stocks and shares, oh, and discounting costs, labour etc, shares, so far as I know, have generally ourperformed property over the long term, suited shysters and all. Again, discounting leveraged risk, but that's your perogative I guess....

(ps, I don't feel that shares and related vehicles are a good buy right now either, but that doesn't make property any better)

You seem not to have recognized what is probably the most significant point with btl in this area

This is that with btl you can aquire your assets using other peoples money

Link to comment
Share on other sites

Sure there will be . . . just not as big a correction as up North.

no matter how much I hear this it still makes me smile :lol: For example In L'Pool you can buy entry level places for 50k and get 380 pcm, crashes by 20% still get 380 pcm and you're down 10K. London same metrics you're down 50K but the rent will nowhere reach a yield approaching 8%, more like half if you're lucky. If Londonium crashes by less in percentage terms it'll still crash more in real terms - pound notes :rolleyes:

Link to comment
Share on other sites

Guest Yeahbutnocrash
If you sell your BTL (in order to realise the capital gains) surely you then do not have an asset to pass on to your heirs? If you don't sell, I don't see much point in having one, unless you are in it for rental income and we are already in a situation where the rental income on most BTL property purchased now will be outperformed by the guaranteed return from gilts.
The technique taught by some property investment 'experts' and so probably to a lot of the new wave of BTLers is to 'never sell' their investment properties

And instead of selling they should re-mortgage to get the equity out

Edited by Yeahbutnocrash
Link to comment
Share on other sites

Guest Yeahbutnocrash
OMG, Inside Track speak... :o:lol:

That's right... you recognise the terminology as I do also - That does not mean it's incorrect

They are right in saying the rent can go towards paying a mortgage off so that is one of the main reasons it's different to other investments such as shares for example

It is the leverage factor that has contributed to making btl a good investment

ie. In the past you only needed to put 15% down and eventually you'd own the entire asset....

Link to comment
Share on other sites

It is the leverage factor that has contributed to making btl a good investment

ie. In the past you only needed to put 15% down and eventually you'd own the entire asset....

I have a friend who used to borrow six-figure sums to buy shares in companies for a few days or weeks. When they went up he sold them, paid off the debts and pocketed the profits. He made a killing... until the day the shares he picked dropped big-time and he barely avoided bankruptcy.

Ah, the joys of leverage!

Link to comment
Share on other sites

the main flaw with tenrooms post is that hes pressuming things will remain in favour of HPI for the next 20 years.

with a million new immigrants, controlled building and the sell off of social housing, sure things look really, really good for property investors at the moment.

but i know with the nations debt, the national output and the growing rosperity of the euo zone, many of the 1 million visitors will be returning to their home countries.

Your anecdotal may well be very appropriate to your neck of the woods up there in Manchester but down here, in West London, we simply don't have these concerns. It's never been a bad idea to get involved in property in Central London. Your assertions on immigration don't hold much water. How many waves of immigration have been deemed temporary ? My own parents came here in the Windrush from the Caribbean in 1960. Everyone and the dog thought they'd be here for a few years, make enough money to build a nice house back home and then piss off. Didn't happen, did it ?

Every day, as a recruiter, I'm speaking to immigrants from Eastern Europe who've heard that companies can't hire C# software developers for love nor money. These guys aren't looking at staying for a year and then leggin' it, they're talking about buying a home eventually cos they love the culture, the way of life etc.

social change will increase the housing stock

How do you back up a statement like that when all the evidence points to more single occupant dwellings, not less.

Link to comment
Share on other sites

Only time will tell and of course there may come a time when BTLers are forced to sell but I would still like to see some stats of the number of fixed rates taken out as I think this will be crucial in weathering the storm. In the article it refers to someone who fixed for 5 years in 2005 so is comfortable until 2010. In Ringwood I nearly held onto my previous property as rental property is at a premium with limited housing stock. The EA even called me back to say he would underwrite me 12 months rent without void as he couldnt get enough rentals.

Just depends on where you are in the county but Ringwood is strong. That said my friend rented a flat in Bmouth 2 months ago and he said he had a choice of literally hundreds!

Link to comment
Share on other sites

Only time will tell and of course there may come a time when BTLers are forced to sell but I would still like to see some stats of the number of fixed rates taken out as I think this will be crucial in weathering the storm.

If you borrowed 350,000 pounds to buy an 'executive flat' and prices are dropping 10-20% a year, why would a fixed interest rate make you feel any better about losing 35-70,000 pounds a year?

How many people are going to choose to hold onto a rapidly declining asset no matter how fixed their interest rate may be? Anyone who can afford to and had a clue would sell out as fast as possible and buy back for less later.

Link to comment
Share on other sites

Your friend is a looser, there are plenty of people who have made lots of money using leverege with shares
Indeed there are: they got lucky.
just as some will win with BTL and some will loose.

At least you admit that 'some will lose'. However, when a crash comes, the majority of BTLs will lose because they can't dump houses as fast as a leveraged stock speculator can dump shares.

Link to comment
Share on other sites

It's never been a bad idea to get involved in property in Central London.

you seem to speak a lot of "never" and "always". Never and always are a very long time indeed. There are plenty of occasions when central London property might not have been a good bet... 1666, 1941 to name two obvious ones :P

Link to comment
Share on other sites

Guest Yeahbutnocrash
Indeed there are: they got lucky.

At least you admit that 'some will lose'. However, when a crash comes, the majority of BTLs will lose because they can't dump houses as fast as a leveraged stock speculator can dump shares.

IMO the recent btlers who bought the wrong type of properties or have overstretched their finances are in the most danger so obviously some of these may lose - That's just common sense

However your comment as from 'when the crash comes etc...' is pure guesswork - Do you actually realise that?

Link to comment
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...
 Share

  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • 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.