Is Anyone Contemplating Buying? Dare I Mention.

[kingsgate]

Do prospective landlords really get the calculators out?

Or do you suppose some people just fall into it by circumstance. That 25 year old who bought a shitty terrace after the last crash, let it out while working away, got an "other half" and they bought a house together while still letting the first because they could.

I just don't *get* this yield calculations business.

Too many "New to it all" BTLers also *don't get* "this yield calculations business"!!!

That's why they happily bought places in the last few years where the rent wouldn't even pay the f'ing mortgage! And are now stuffed.

It's not that hard to work out if a place represents a good investment buy or not.

My money is staying in the bank (or in several banks!) for the present time.

[Selling up]

It's not that hard to work out if a place represents a good investment buy or not.

Exactly. I like the rule of thumb on a thread yesterday: Add a couple of zeros to monthly rental income to see what price gives a 12% yield.

So I'm renting a house for £400pcm, good price would be £40,000. Not the £100,000 my landlord paid.

[VacantPossession]

Houses are for living in not yielding ...

Thank goodness for that comment....terse and straightforward.

DOM: The part purpose of this website is to enlighten people into being educated about property NOT being a constant opportunity to make a "yield" or a fast buck. Frankly, posts like yours are totally nauseating. Housing is not there for you to descend, vulture like, when you feel the time is right to make a gain. The WHOLE reason for the ludicrous inflation of property and the knock on effects to the economy are precipitated exactly by the attitude of you and all the accumulated spivs who just cannot get their heads around a SIMPLE concept: House are for LIVING in or, at most, making a small profit as an addition to WORKING FOR A LIVING. I assume you do work for a living? If so, just stick to it, and stop seeing property as an "opportunity".

Sheesh!

VP

[DementedTuna]

Thank goodness for that comment....terse and straightforward.

DOM: The part purpose of this website is to enlighten people into being educated about property NOT being a constant opportunity to make a "yield" or a fast buck. Frankly, posts like yours are totally nauseating. Housing is not there for you to descend, vulture like, when you feel the time is right to make a gain. The WHOLE reason for the ludicrous inflation of property and the knock on effects to the economy are precipitated exactly by the attitude of you and all the accumulated spivs who just cannot get their heads around a SIMPLE concept: House are for LIVING in or, at most, making a small profit as an addition to WORKING FOR A LIVING. I assume you do work for a living? If so, just stick to it, and stop seeing property as an "opportunity".

Sheesh!

VP

You might want to take another look at that, investors who are interested in yield are not the problem, it's the ones that who expect capital appreciation that are.

If houses bought by BTL landlords were only bought at sensible 10% yields, houses would cost half of what they do now. It's the price-ramping itself that has been destructive. Houses in the last 6 years have been bought on the gamble that the price will rise and never ever ever fall.

Edited September 12, 2008 by DementedTuna

[redgenieuk]

I hear you. But for yields to hit 10% would mean the average three bed house around here would be £75K. I don't see it happening unless IR hit 8%.

If people like you made effiecient use of their capital, it would happen everywhere.

Now stop being a plank and go and find a decent return.

You can get 7%+ gross with no risk, 10% with some and even higher for longer term no doubt.

[Bardon]

Bit early to enter for investment in UK I wouild say a 10% yield is a good signal but you may not get a nice family homes in nice areas on 10% yields even at the bottom but if there is 10% elsewhere good indicator for you to make a move.

Just finished a new one here is oz at 5% in a growth area. Got some major tax problems right now and have a bonus that I need to put somewhere other than income and considered buying a house through pension fund, now that they can borrow, a 5% yield on a house that I can buy with pension fund has a huge ROI and I save 30% tax on the deposit, crazy but true.

Still to early to enter in UK I think.

[Converted Lurker]

Many of you who have been here for a very long time will have stuck with the plan - cash in a crash, and accumulated a substantial pot.

I've been looking around recently and finding gross yields of 6.5 - 7% in areas of rural Devon where decent rentals are in demand.

Although these yields sound pretty ordinary I see IR being cut at the first opportunity, making the return more appealing.

With a large deposit some properties look tempting for the first time in years.

IMO the yield relative to the base rate and average price to earnings are the sensible way to value property whatever the reason for purchase.

Discuss.

spent an hour in a Liverpool agent's office this morning, approx. 4 miles from the city centre. Lost count of the folk that were looking in the shop window. Manager had *sold* 9 this week, 6 she believes will complete. Seeing canny investors coming back in, they're offering 20% below market value and it's being accepted. She's actually refusing any new instructions unless they're sensible. These 20% market guys then make it look as though they're putting in 20% deposits when they're really financing the full 100%. They're only looking at properties typically below 80K (a doddle to come up to valuation) and intend to keep offering 20% below whatever the market does. At this level the yields are really working - average 350-400 quid a month rent in for 50K financed....

[meow]

On a related note to the OP, is anyone predicting a housing bull trap before this whole things unwinds?

[Bloo Loo]

On a related note to the OP, is anyone predicting a housing bull trap before this whole things unwinds?

some suggest we may have had it, after a peak in 2005.

[Bardon]

spent an hour in a Liverpool agent's office this morning, approx. 4 miles from the city centre. Lost count of the folk that were looking in the shop window. Manager had *sold* 9 this week, 6 she believes will complete. Seeing canny investors coming back in, they're offering 20% below market value and it's being accepted. She's actually refusing any new instructions unless they're sensible. These 20% market guys then make it look as though they're putting in 20% deposits when they're really financing the full 100%. They're only looking at properties typically below 80K (a doddle to come up to valuation) and intend to keep offering 20% below whatever the market does. At this level the yields are really working - average 350-400 quid a month rent in for 50K financed....

There is opportunity out there after all eh, still say on those numbers to marginal on 30k in and 50k finance but one mans trash is anothers treasure.

[Converted Lurker]

There is opportunity out there after all eh, still say on those numbers to marginal on 30k in and 50k finance but one mans trash is anothers treasure.

One of the issues that makes this correction different is that there is so much cash already awash in the economy (and buying houses appears to be everybody's second job) there may be lots of activity chasing the market right down to the bottom. Have to say if these guys keep buying through the next 15-20% leg down they may be financing on average 40k for each 60k purchase inside a year. At 400 quid rent a month I can't see much wrong with the proposition, from a financial point of view, if they buy up let's say 100 properties over the next 18 months or so.....at 150 quid a month rent profit per month on each.

Also, if they've pay down their mortgages to nowt over the next 20 years then their...ahem...."in it for the long term" strategy might work out.

[CharlieChuck]

One of the issues that makes this correction different is that there is so much cash already awash in the economy (and buying houses appears to be everybody's second job) there may be lots of activity chasing the market right down to the bottom. Have to say if these guys keep buying through the next 15-20% leg down they may be financing on average 40k for each 60k purchase inside a year. At 400 quid rent a month I can't see much wrong with the proposition, from a financial point of view, if they buy up let's say 100 properties over the next 18 months or so.....at 150 quid a month rent profit per month on each.

Also, if they've pay down their mortgages to nowt over the next 20 years then their...ahem...."in it for the long term" strategy might work out.

I'm seeing houses in derbyshire sell for 60-70,000 ish (mainly at auctions) the rent at 400-450 does just about work, but the problem is these houses were selling for 15-20,000 10 years ago, sometimes even lower. Wait until we start getting job losses en masse, these houses will sell at nearer 30,000 again.

[Converted Lurker]

I'm seeing houses in derbyshire sell for 60-70,000 ish (mainly at auctions) the rent at 400-450 does just about work, but the problem is these houses were selling for 15-20,000 10 years ago, sometimes even lower. Wait until we start getting job losses en masse, these houses will sell at nearer 30,000 again.

perhaps, I'm seeing houses at auction in l'pool now selling at 2004/05 prices, next leg down is 2002/03. One other issue of note was the sub text of the govt's recent raft of measures, including the payment of mortgage interest relief, (iirc was it 13 weeks as opposed to 30?) You can bet that with a massive increase in unemployment/folk on benefits, then the opportunity to get direct payments from housing associations/DSS etc. will rise.

[Justice]

Just finished a new one here is oz at 5% in a growth area. Got some major tax problems right now and have a bonus that I need to put somewhere other than income and considered buying a house through pension fund, now that they can borrow, a 5% yield on a house that I can buy with pension fund has a huge ROI and I save 30% tax on the deposit, crazy but true.

I was thinking about using a pension fund to buy a house myself.

Can you give more details as you seem to be well ahead of me on this one

Edited September 12, 2008 by Justice

[workingnomad]

Many experts are predicting that prices will rise again very soon, perhaps as early as spring 2009, so now is a good time to get in!

[CharlieChuck]

perhaps, I'm seeing houses at auction in l'pool now selling at 2004/05 prices, next leg down is 2002/03. One other issue of note was the sub text of the govt's recent raft of measures, including the payment of mortgage interest relief, (iirc was it 13 weeks as opposed to 30?) You can bet that with a massive increase in unemployment/folk on benefits, then the opportunity to get direct payments from housing associations/DSS etc. will rise.

I'm pretty sure the DSS would pay 400-450 a month for a 2/3 bed house, the thing that worries me is local people on low pay will still not be able to afford to buy a house because any that come up for sale at auction are being snapped up by people outside of the area, who intend to rent them out. There's already too many empty rented places around (and I'm seeing more every month). Rents are going to get lower and there's going to be more voids, so these landlords will have to offer less for future houses, so they're really shoooting themselves in the foot.

[mattyboy1973]

Many experts are predicting that prices will rise again very soon, perhaps as early as spring 2009, so now is a good time to get in!

[loon]

Many experts are predicting that prices will rise again very soon, perhaps as early as spring 2009, so now is a good time to get in!

What experts? What grounds do they cite for their predictions?

[loon]

DOM: The part purpose of this website is to enlighten people into being educated about property NOT being a constant opportunity to make a "yield" or a fast buck. Frankly, posts like yours are totally nauseating. Housing is not there for you to descend, vulture like, when you feel the time is right to make a gain. The WHOLE reason for the ludicrous inflation of property and the knock on effects to the economy are precipitated exactly by the attitude of you and all the accumulated spivs who just cannot get their heads around a SIMPLE concept: House are for LIVING in or, at most, making a small profit as an addition to WORKING FOR A LIVING.

Admirable sentiments perhaps, but complete guff.

It's been said before, but I cannot stress this enough - ignorance drove the house boom. Folks that can work a yield, work the income multiples, assess risks and the like, long ago realised that HPI was unsustainable and out of control. It was the people who didn't get this, that continued to borrow and out-bid already crazy asking prices, that drove the boom.

[ReggiePerrin]

Blimey another herd of bulls coming into season It's unbelievable that there are still people willing to risk everything on property investment ... crazy.

[workingnomad]

My IFA said prices would rise again for houses due to lack of new housing being built. He said flats were a different story and to steer clear of them. He has over 30 years experience as an advisor.

I believe him more than the average punter on here.

[ReggiePerrin]

My IFA said prices would rise again for houses due to lack of new housing being built. He said flats were a different story and to steer clear of them. He has over 30 years experience as an advisor.

I believe him more than the average punter on here.

Good for you, and him, I'm sure your IFA advised you last year that the credit crunch was coming, that property prices would fall by 12% in 6-9 months from their peak...

So why are you posting here if you don't believe most of us? Or are you really saying you don't believe people who don't agree with your views?

edit: typo

Edited September 12, 2008 by ReggiePerrin

[Goat]

Many experts are predicting that prices will rise again very soon, perhaps as early as spring 2009, so now is a good time to get in!

Another f***ing bored EA by any chance?

What experts, or for that matter what planet?

[Converted Lurker]

My IFA said prices would rise again for houses due to lack of new housing being built. He said flats were a different story and to steer clear of them. He has over 30 years experience as an advisor.

I believe him more than the average punter on here.

How does the bit in bold qualify him exactly?

[lets get it right]

My IFA said prices would rise again for houses due to lack of new housing being built. He said flats were a different story and to steer clear of them. He has over 30 years experience as an advisor.

I believe him more than the average punter on here.

Good for you. I've never met an IFA worth a damn. They all spout from the same hymnsheet and just re-gurgitate tripe.

So, go out and buy some houses. Perhaps your IFA will put you in touch with a lender that shares his optimistic view of the world.

There are nearly a million empty houses in the UK. Some shortage.

As your IFA says, flats are a different storey.