Buying properties for investment

Research the areas that you are considering. In my opinion Londons crashing right now, Ive said this elsewhere on here a) anecdotal evidence is saying that many potential tenants are able to barter down the rates of letting ( I heard of someone only last night who has a room in a houseshare on V expensive clapham common, mass victoria house, double en suite for only £350 a month- Ive never heard of rents so low here in London) b) massive amount of voids c) lots of ex BTL properties on the market in London ( particulalry smaller 1/2 bed flats) with vacant posession. those flats are no more expensive than they were when I was looking to buy about 2 years ago.

If you were going to BTL somewhere you dont really "care" about then Id personally rent out to HB/ via a housing association to limit voids ( Im a social worker so Im comfortable dealing with the "clientside"!) . Aside from that, really, I wouldnt bother, unless you could afford the void periods, and make enough to cover those void periods when the place is rented then, OK, but personally I wouldnt bother at the moment - but I guess it depends where you are.

If you believe prices are at or near their peak, why buy now? Surely it makes more sense to buy in at the bottom of the market cycle and watch your capital gains rise... this is, of course, a matter of opinion (when and if a HP correction will occur) and one that you must make your own mind up about. Past performance is no indication of future gains and this is certainly true of the housing market. Do you really anticipate further rises before falls that will wipe out any deposit you will have put down and possibly put you into negative equity? Do some research and don't believe the spin from bulls or bears. Anecdotals are always the best indicator!

Re: BTL, it's true that many areas have a glut of rental properties owing to so many BTL investors and that you may have 'missed the BTL boat' in terms of entering the market right now...
Remember the 1920s stock market crash anecdote: when the shoe-shine boys on Wall Street were talking about their stocks portfolios, it was time to get out.

NastyMatt wrote:

van persie - Jackboy never said he thought the market was at or near the peak. He said lots of people have said it is.

And if you'd read my post carefully, you'll have noticed that I stated this as a matter of opinion.
"If you believe prices are at or near their peak, why buy now? Surely it makes more sense to buy in at the bottom of the market cycle and watch your capital gains rise... this is, of course, a matter of opinion (when and if a HP correction will occur) and one that you must make your own mind up about."

Plus, just because something is at it's peak it does not mean it will crash or adjust.

Again, I merely posed the possibility of this.

Jackboy - all you can do is get as much info as possible and make your choice.

Quite right.

I have a friend who has been bleating on about a crash for 7 years in that time he has spent near £80k on rent. Even if it crashed tomorrow he'd still be £80k out of pocket.

Depends how big the 'crash' was and how he was funding his rent; if you SOLD TO RENT for example, and had 300K earning interest at, say 3.5% net, you'd cover rent @ nearly £900 per month without touching your capital whilst watching property prices slide...assuming a correction were to occur. That is why many have gambled on this happening and are waiting with the cash. Risky, but the rewards could be huge.

If you beleive that in 25 years time your property will be worth 2 - 3 times what it is now.... then buy. Otherwise stick your money in a high interest account.

The question is, does Jackboy do his research and make a decision to buy now and ride out any possible prices falls or anticipate prices dropping, thereby saving himself a small fortune. As a homeowner myself, I wouldn't be averse to a crash; it'd allow me to buy a family home a lot cheaper than it'd cost me right now. Trading up is very costly..!

mystic_trev wrote:

I'm taking serious offers for this. Could be just whay you're looking for?

http://www.rightmove.co.uk/viewdetails-9897806.rsp?pa_n=8&tr_t=buy&chnl=overseas

:rotfl: :rotfl: :rotfl:

NastyMatt wrote:

Van Persie I did read your post but by saying "surely it makes more sense to buy at the bottom etc etc" was implying Jackboy knew the market was high.. other wise why state the obvious??? i.e. Only a buffoon would buy at the peak before a "crash" to increase their capital.

Anyways.. that doesn't matter.

OK, Matt. Just to say that I agree that only a buffoon would buy at peak...the trick is calling the top and indeed the bottom; an exercise which has proved difficult to say the least. A pal of mine sold to rent about 3 years ago, convinced that the market had topped out. His flat went on to 'make' another 10-15% before levelling off in value. The housing market is a fascinating beast as it is servile to emotions and whims like no other asset bubble - who could have forecast such huge rises since 1997?

Secondly, yes your right about selling now and making money on the interest while renting and allowing for a the crash(if). But my example (£80k renting mate) does not have a house to sell or £300k sitting in the bank for the last 7-8 years paying his rent. So he is clearly out of pocket as he did not buy in at the lovely bottom of the cycle!!

Matt

Point taken. But how's this for a scenario:

He pays £800 per month rent.
He then buys a house at 300K.
He pays £800 per month IO mortgage, hoping for capital growth.
The market crashes, wiping out (conservatively) 0.75% per month from the value of his house - around 2250 quid a month capital loss.
It bottoms out and the house next door can now be bought for around 200K.

So even without a bean in the bank paying interest, he's 100 grand better off waiting for a crash. The big (100 grand) question, of course, is will the crash happen..? Interesting times ahead, methinks...