Should I Buy to Let at these prices????

blackice_2

Now I have the money to buy to let, I am put off by the stupid house prices if I buy a 2 bed for £120K I can rent it at about £500 PCM yet the mortgage would be £750 PCM plus other costs like decorating/boilers etc etc...

What should I do? or have I missed the boat on the property market?

deemy2004

Since theres a likelyhood of a capital loss over the coming years, and your yeild is less than your mortgage, then it does not make sense to buy to lett at this moment in time.

You can earn a 5% or so gain risk free

dougk_2

Its down to personal opinion.

Be sure though if house prices go down they will go up again! I personally do not think there will be a big drop in prices as there is good employment and low interest rates.

Media hype is what is causing the current dip IMO.

Also it appears that if everyone is selling to stash the cash and renting then demand for rental properties will increase and so will the rent paid (according to some articles rents are already rising in some areas).

You should view BTL as a long term investment

mkdoodle

Now I have the money to buy to let, I am put off by the stupid house prices if I buy a 2 bed for £120K I can rent it at about £500 PCM yet the mortgage would be £750 PCM plus other costs like decorating/boilers etc etc...

What should I do? or have I missed the boat on the property market?

If you have the money, why do you need a mortgage? Property prices don't really matter to most people who have borrowed to let - they're in debt for the long run.

Pakard

Read this for a change.

Inflation rises as utility charges soar
http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=621931§ion=finance

than this

;D House prices fall fastest since 1992
http://www.timesonline.co.uk/article/0,,2-1360437,00.html

than this

;D UK house-price falls gather momentum
http://news.ft.com/cms/s/36f7b962-3749-11d9-a8bb-00000e2511c8.html

and what about this one

UK economy 'slowing faster than forecast'
http://edinburghnews.scotsman.com/business.cfm?id=1326162004

All this was never mentioned on any BBC1, BBC2, ITV , CH4 or CH5 news. Very strange behavior. They are trying to protect as from a very bad news. We want more on Iraq more on Bush more killings ahhh yeahhh >:(

Rather than the BoE seeking to avoid a housing market crash, they are infact seeking to engineer one aware that the consequences of a further escalation of the asset price bubble (whether deflationary or inflationary) will be far more damaging in the future than it would be if popped now. ;D

And every EA repeat this sentence

...the professionals on the ground believe that confidence will not deteriorate further over the coming months as the underlying factors, jobs and the wider economy, remain stable

I would not buy anything now.

bjmaca

Read this for a change.

Inflation rises as utility charges soar
http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=621931§ion=finance
than this
;D House prices fall fastest since 1992
http://www.timesonline.co.uk/article/0,,2-1360437,00.html

than this
;D UK house-price falls gather momentum
http://news.ft.com/cms/s/36f7b962-3749-11d9-a8bb-00000e2511c8.html
and what about this one
UK economy 'slowing faster than forecast'
http://edinburghnews.scotsman.com/business.cfm?id=1326162004
All this was never mentioned on any BBC1, BBC2, ITV , CH4 or CH5 news. Very strange behavior. They are trying to protect as from a very bad news.  :D  :D  :D We want more on Iraq more on Bush more killings ahhh yeahhh  >:(
Rather than the BoE seeking to avoid a housing market crash, they are infact seeking to engineer one aware that the consequences of a further escalation of the asset price bubble (whether deflationary or inflationary) will be far more damaging in the future than it would be if popped now. ;D
And every EA repeat this sentence
I would not buy anything now.

You have to ove the Doom and Gloom of this post.

Please note my take on this:

Read this one first

http://uk.biz.yahoo.com/041108/22/f665p.html

and how about this one

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

The press are great at showing the doom and gloom when in reality the market is still forging ahead. I know if on average there is only a 1.1% growth this is 12+% per year much better then what you get at the bank. Capital growth is here to stay.

As for Mike Black.

Do not touch the deal you mentioned as it costs you money each month. There are plenty of buy to let deals out there that give you positive cashflow and capital growth. So why go into a deal with that sort of negative income per month. The whole idea of getting into the property market is to make money.

Also as a tip go for interest only mortgages as yoiu will only pay £600 per month on £120k instead of £750.

BJMACA

John_M_Business

"NONONONONO!" (is that clear enough for you)

I don't think you should go for an interest-only either because the whole point of buy to let is that you eventually own the property and are still generating income through it.

In fact, if you can't even cover your costs with interest only then you're effectively spending money month-on-month to service a flat that you still don't really own (your bank does!).

So, really NOT a good idea.

8)

dougk_2

I disagree . You do not necc. have to own the property at the end.

The idea of BTL varies depending on your circumstances. In my case BTL is rather Let To BUy... i.e. I am letting my house in order to buy another with my partner, but then keeping the original as a fallback.

If your rent covers the interest payments and running costs and the house you buy costs 100k and you then sell it for 200k 10 years later then you have made money at 10% per year (less any CGT payable). As an investment that is not bad.

Not I read that since the 60's house prices have risen over 5000% so a long term investment is best!

John_M_Business

But then you're just 'hedging' the market AND you're spending more on an uncertain investment.

Not sure that it is good advice, but each to their own!

bjmaca

The reason to use interest only mortgages is that your payments are less and you have the opportunity to earn passive income. There are a number of options when playing the property market. The way I do it is to live off my earnings hence the reason why I need to have properties with positve cashflow.

Why pay more for a property on a monthly basis when in fact it is going to take you 15 - 25 years to pay it off. I do not hold properties for more than 4 years so this is a waste of cash. You are better paying less per month and covering yourself with insurance in case you cannot make payments etc. This is not only cheaper but more sensible.

silverlady_2

Now I have the money to buy to let, I am put off by the stupid house prices if I buy a 2 bed for £120K I can rent it at about £500 PCM yet the mortgage would be £750 PCM plus other costs like decorating/boilers etc etc...

What should I do? or have I missed the boat on the property market?

You would not get a BTL mortgage with those figures,most want rent 130% of mortgage repayment