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Unbelievable Drivel From A Btl Author

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I almost choked on my breakfast this morning when I read this article on the otherwise rather sober InvestEgate website:

http://www.investegate.co.uk/invarticle.aspx?id=865

Well, looking at yields, it seems demand from tenants for rented homes is continuing to place upward pressure on rents for the sixth month in a row. The private rented sector is buoyant

unsubstantiated claims about a "strong rental market"

In a recent survey by Paragon, 63% of residential property investors reported that tenant demand was either stable or growing and that they were responding by growing their buy-to-let portfolios.

In a recent survey by the Turkey federation, Turkeys overwhelmingly voted against Christmas.

Gross rental yields have been stable at about 6% for the past year (with net yields probably averaging about 4.4%,) which is of course about the same as some top shares are paying.

Arrrggghh. Apart from the fact that 1.6 percentage points cost off the gross rental yield is wildly optimistic, comparing the yields from a risky, higly leveraged property portfolio to those of professionally run large companies is rather daft. Property should pay much more.

The fact that rental yields are holding up is of course, in the face of rising house prices, thus providing further evidence that demand for buy-to-let is well underpinned.

Come again?

But the best part is this:

Of course, a 4.4% net yield is less than the average buy to let mortgage rate, which, once you factor in lenders' increasingly daft "arrangement fees" is actually around 6.5%.

So, while landlords are losing money on the "current account" and are hoping that capital gains will continue – which is much the same as investors in the stock market are doing.

???? :blink: Yeah, but not on a negative yield! Since when do shares require me to pay money in every month in the hope of a capital gain?

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I almost choked on my breakfast this morning when I read this article on the otherwise rather sober InvestEgate website:

http://www.investegate.co.uk/invarticle.aspx?id=865

unsubstantiated claims about a "strong rental market"

In a recent survey by the Turkey federation, Turkeys overwhelmingly voted against Christmas.

Arrrggghh. Apart from the fact that 1.6 percentage points cost off the gross rental yield is wildly optimistic, comparing the yields from a risky, higly leveraged property portfolio to those of professionally run large companies is rather daft. Property should pay much more.

Come again?

But the best part is this:

???? :blink: Yeah, but not on a negative yield! Since when do shares require me to pay money in every month in the hope of a capital gain?

--KINEL!!! I can't wait to see ar$eholes like this fall flat on their faces...Hopefully not dragging everyone down with them! :unsure:

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According to a Paragon survey, yields are even higher than that. :P

Maybe if they took all their customers "original" purchase price and current rents. You'd have some 10%ers from 2000 mixed in with the 3%ers who have bought recently, but on "curent value" they'd be struggling to get to 4.5%... damned lies and statistics an' all that.

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But you can't compare BTL (rent by house value) yields to Company yields (dividend by share value).

Why?

Because a company doesn't give all it's profits out as dividends! They hold some back to expand their company.

So, they need to compare BTL yields against the price to P/E Ratio (earnings ratio of a company).

Oh, and Paragon have been saying rents have been rising by ludicrously unbelievable amounts.

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Stock market investors generally aren't hugely leveraged though and only stand to lose, at most, their initial investment.

The majority of BTL investors don't buy outright so the investment is leveraged. They could win big if things turn out right, but also stand to lose more than their initial investment - a lot more risky than buying stocks in a company.

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