BTL instead of selling?

stevetodd

dopester wrote: »

How many properties do you have again?

I think you'll find we have entered a period which is going to see an epic reversal on the capital growth you thought you had amassed.

Want the Halifax/Nationwide chart of the last 12 months? Remember it when you keep parading your capital growth.

Not only am I a chartered surveyor, I own 5.5 properties (one jointly with my wife) do you really think I would be unawre of what that graph shows lol. I can tell you something else too, that graph will look the same for next year and also the year after that too (but not such a steeper slope that year). Then prices will stagnate for 1-2 years, so no increase until about 2012/2013.

When I first bought in the early 90's it was exactly the same and I heard it all then too, things like:
'property will never be the same again'
'people got too greedy and didn't notice prices reached an unsustainable level'
In the early 90's it was really bad prices fell about 35%-40% from 1990 to 1994/5, home owners were actually posting keys to their properties back through agents doors. I think this one may be as bad, which is great I will have about a 1-2 years window starting next year to buy another 3 houses. I tried to convince all my friends back in the 90's that then was the time to buy, but they were too concerned about what was happening and about to happen, they couldn't seem to able to take a 10 and beyond year view.

I don't expect property prices will probably not fully recover until about 2018, as I said I have seen this before.

dopester

stevetodd wrote: »

When I first bought in the early 90's it was exactly the same and I heard it all then too, things like:
'property will never be the same again'
'people got too greedy and didn't notice prices reached an unsustainable level'
In the early 90's it was really bad prices fell about 35% from 1990 to 1994/5, home owners were actually posting keys to their properties back through agents doors. I think this one may be as bad, which is great I will have about a 1-2 years window starting next year to buy another 3 houses. I tried to convince all my friends back in the 90's that then was the time to buy, but they were too concerned about what was happening and about to happen, they couldn't seem to able to take a 10 and beyond year view.

I think you are unwise to assume it will replay like the 90s. Yes... the time to think of buying is when people say "it'll never be the same again" and "property is dead forever" or whatever. However we aren't really even in to the crash yet, barely one year... and at least you're switched on to that fact.

Also in the 90s what did we have... property speculation before the announced abolishment date of MIRAS. Your crash figures don't tally with an article in the Daily Mail but I reckon yours are more accurate btw.

This time around we have so many more negative variables. A bank which has failed and been nationalised, other banks given emergency support, record levels of debt, people given many multiples x income to buy, a booming economy which has revolved around the furious levels of HPI for a decade, MEW-ers, generations of new landlords bought in on margin, and a spent-out Government which now will be taking less in receipts to run the country.

I agree with taking a long term view... just that our long term views are very different, as this is a lot to recover from in 10 years.

http://www.thisismoney.co.uk/mortgag...&in_page_id=57

The average house price peaked at £70,246 in May 1989 (a 28.8% increase on the year before), according to Halifax. It then fell very slowly, losing just 2.1% by the following May and another 0.4% in the next year (to May 1991). Declines then gathered pace with the worst monthly fall coming in September 1992 when values tumbled 3%.

After false dawns in 1993 and 1994, the market finally bottomed out in July 1995 at £60,965. That marked a 13.2% decrease over six years.

stevetodd

dopester wrote: »

Bet you wish you'd sold in early 2007 now. All those properties you have. Even if you have wisely factored in continued falls, it must sting a little, with tens of thousands or hundreds of thousands wiped off what you could have sold at.

Keep assuming the demand and rental levels will remain strong - good lad.

No I don't because of capital gains tax which was 40% in 2007! Tax must always be part of an exit strategy. Now its only 18% so thats 22% tax saved, I could sell them now and get slightly more NET equity out, but I am in for the long term not the short term. I have no intention of selling until about 2018-2025 (to coincide with a good market) they are an excellent source of income. Eventually of course I will sell when I retire but not until then, and that will be when prices are high again and not before if necessary I can wait anytime between 2018 and 2025 will suit, 7 years is a very wide window.

stevetodd

dopester wrote: »

I think you are unwise to assume it will replay like the 90s. Yes... the time to think of buying is when people say "it'll never be the same again" and "property is dead forever" or whatever. However we aren't really even in to the crash yet, barely one year... and at least you're switched on to that fact.

Also in the 90s what did we have... property speculation before the announced abolishment date of MIRAS. Your crash figures don't tally with an article in the Daily Mail but I reckon yours are more accurate btw.

This time around we have so many more negative variables. A bank which has failed and been nationalised, other banks given emergency support, record levels of debt, people given many multiples x income to buy, a booming economy which has revolved around the furious levels of HPI for a decade, MEW-ers, generations of new landlords bought in on margin, and a spent-out Government which now will be taking less in receipts to run the country.

I agree with taking a long term view... just that our long term views are very different, as this is a lot to recover from in 10 years.

http://www.thisismoney.co.uk/mortgag...&in_page_id=57

Of course you are entiltled to your opinion but then so am I, and I intend to once again back my opinion with investment, probably next year. You will see from the post above my selling year could be as late as 2025 (ie 17 years)

Of course I accept there is a risk (as there is with any investment where higher returns are sought), if there wasn't everybody would be doing it. But if I had played safe previously and just put my money in a high interest account I would not have this money to invest next year.

Incidently if I remember correctly the crash in the 90's hit London much much harder (and the Nationwide is uses national average indices) so although I do think nationally this crash will be worse, I do not think it will hit London worse than the 90's IMO about a total of 35% (I hope so anyway as I would be dissapointed if I wasn't able to buy into the market again cheaply)

Treading_Water

Back to the original question! As long as you are able to cover both mortgages should you need to, plus have some extra for emergencies I would say go for it.
With the equity you have you will be in a great position when the time comes to negotiate a good deal on the house you want to buy - at the same time it would not be a good time to sell your existing house - so renting is a great solution, as long as you are able to look at that property as an investment and not your old home!!!
Don't think of it as a means to make money, more as a long term investment.
Good luck.

stevetodd

Treading_Water wrote: »

Back to the original question! As long as you are able to cover both mortgages should you need to, plus have some extra for emergencies I would say go for it.
With the equity you have you will be in a great position when the time comes to negotiate a good deal on the house you want to buy - at the same time it would not be a good time to sell your existing house - so renting is a great solution, as long as you are able to look at that property as an investment and not your old home!!!
Don't think of it as a means to make money, more as a long term investment.
Good luck.

That's a very good point and one I admit to overlookng the fact that they will be in a great position to negotiate on the new house

dopester

stevetodd wrote: »

I'm from the Newcastle area originally but now live down South and rent out property in London (I rent 4 flats, my wife 2 houses and 1 house we jointly rent out).

Just out of interest, how many properties will you be happy with owning?

I hope you can withstand the powers of downwards leverage coming your way, deflation, unemployment, and salaries which are cut.

The system has a pressing need for people to build financial assets. Buying and selling houses to one another at ever more expensive prices is not a real sustainable economy, so keep that in mind as you project the win on all the extra properties you plan to buy.

Also it wouldn't surprise me if we saw a political solution. Depressions often come with abrupt political change, and radical redistribution. Someone owning lots of properties might not be looked upon sympathetically.

stevetodd

dopester wrote: »

Just out of interest, how many properties will you be happy with owning?

I hope you can withstand the powers of downwards leverage coming your way, deflation, unemployment, and salaries which are cut.

The system has a pressing need for people to build financial assets. Buying and selling houses to one another at ever more expensive prices is not a real sustainable economy, so keep that in mind as you project the win on all the extra properties you plan to buy.

Also it wouldn't surprise me if we saw a political solution. Depressions often come with abrupt political change, and radical redistribution. Someone owning lots of properties might not be looked upon sympathetically.

Thanks for your concern but please don't worry about me as Property is just part of my assets, the rest is in term bonds and the like, which are very safe (ie not all in one place and not with scarey banks that offer higher interest)

karenj

We want to rent our property privately, rather than through an agent (had loads of problems with them in the past). However, the only thing we don't know what to do is a credit check on a potential renter. Can anyone advise please? We do have a thorough AST.

geoffky

they should be credit checking you...i would be