Buy to Let now...or wait a year??

shellbell63

dopester wrote: »

You ought to try some mass-unemployment and wage deflation on for size. Coming soon all over the UK, and lasting a very long time.

http://news.bbc.co.uk/1/hi/england/7548284.stm

30 years from now?? Boy thats some recession!

Cleaver

mewbie wrote: »

I have misquoted you for my amusement. I don't have any particular point to make about your situation, it may be OK, wish you well with it.

Ta. You really think the majority (i.e. over half) of people who rent out a house will lose money out of it?

mewbie wrote: »

However. Find me a property for sale now that can make me money, do the sums and prove it, and I stand to be corrected, even humbled. You see I also loved the idea, the dream, but having done some simple calculations I could see it was no more than a geared gamble.

Doubt there are any out there to be honest. As I've said in a couple of my other posts, I wouldn't want to buy a house specifically to let it out. I don't think you'd make any money in the short to medium term, and would probably end up losing money. Don't want to judge anyone who fancies giving it a whirl though.

My posts on this thread were to simply explain why we got in to renting a house, our thinking behind it and our figures for the curious.

experience08

mewbie wrote: »

Let's drop the BTL expression altogether, it sounds too new and exciting even now. Let's call it what is really is, being a landlord. Never a glamorous occupation at the best of times.....

As you say, BTL is the "exciting" word for an an old profession.... but that's what it is, a "profession"...some people think they can buy a place and they will be rewarded with untold riches without any of the headaches a professional landlord would expect everyday.

mewbie_2

Cleaver wrote: »

Ta. You really think the majority (i.e. over half) of people who rent out a house will lose money out of it?

I hadn't really thought about the figures in that sort of detail. But let's try it based on what we know. Last ten years, ever increasing numbers of people become BTL's. Some still buying even now. So new entrants to the market, ie. non professional landlords easily outweighs the old school landlord? Here comes a total guess for new BTL landlords since 2000.

10% - bankrupt. Lose BTL and home.
20% - BTL repossessed. Keep personal property. Just.
20% - negative equity on BTL, and personal property due to mewing. Survive, broke, for many years.
20% - negative equity on BTL. Get rid of BTL as soon as possible taking the hit. Survive, recover, lesson learnt.
20% - losing money as prices drop. May still have equity remaining. Didn't want to be a landlord anyway. Sell when they can. They may have gained on the way up, if they didn't subsequently mew to buy another one.
10% - made money in early years, reasonable equity, genuinely in it for the long term. Losing money currently but can afford to take the hit and hang on. If they don't lose their main income - ie. job.

I reckon 70% will lose out. If we have a serious recession then those figures could be much higher.

I know its a guess!! But it was interesting to think about it.

IveSeenTheLight

Dithering_Dad wrote: »

Not sure what return you need from the ISA to match this, but I do know that you now have £278310 in cash and need to invest it somewhere to avoid paying tax on the interest.

You said in another post that the 30k in an ISA over the years would get you 87k.
I think I would prefer the 278k from you calculations if I decided to sell

IveSeenTheLight

Dithering_Dad wrote: »

I tried to break it down as such and just don't see the returns.

I think you have not found the right property in the right rental area.
One of the properties I bought for just less than 150k rents for £850 per month.
I market under the current market rate so ou could get higher, however my strategy means I have no void periods (well 2 weeks in the last 20 months where one tenant left on the 16th and the next started at the start of the month).

How does an extra £250 per month figure in your calcs?

Dithering_Dad

IveSeenTheLight wrote: »

I think you have not found the right property in the right rental area.
One of the properties I bought for just less than 150k rents for £850 per month.
I market under the current market rate so ou could get higher, however my strategy means I have no void periods (well 2 weeks in the last 20 months where one tenant left on the 16th and the next started at the start of the month).

How does an extra £250 per month figure in your calcs?

Well, as you've supplied no financial information other than what the house cost and what you rent it for, this does nothing for my calculations. That's the whole point of my posts. How on earth can one see what the profit is if 80% of the information is missing?

Perhaps instead of trying to score points off me, you'd be gracious enough to supply the information on this flat that I asked much earlier in the thread?

Please see a few pages back for the list of financial questions, it starts something like 1. How much were your purchase costs (i.e. legal, arrangement fees, gas n electric checks, any decorating & renovation, etc. etc. etc.

If you supply all that, then I'll be able to see how your £250pm factors into my calcs.

andrewmp

IveSeenTheLight wrote: »

I think you have not found the right property in the right rental area.
One of the properties I bought for just less than 150k rents for £850 per month.
I market under the current market rate so ou could get higher, however my strategy means I have no void periods (well 2 weeks in the last 20 months where one tenant left on the 16th and the next started at the start of the month).

How does an extra £250 per month figure in your calcs?

£750 in interest at 6%. Hardly worth the bother.

IveSeenTheLight

neverdespairgirl wrote: »

Deja vu - you've said this before:

Quote:
Originally Posted by IveSeenTheLight
I've not seen one point in history where the prices were less than they were 25 previously.

I think you'd find lots of 25 year periods thus in the 14th century.

.

You know, quite true, I have seen before and conceded your points.
Let's get pedantic, I said I've not seen.
Maybe I should be much clearer and say I've not seen anywhere in recorded history. Hows that?

Dithering_Dad

andrewmp wrote: »

£750 in interest at 6%. Hardly worth the bother.

I doubt IveSeenTheLight paid cash for the BTL, so the £750 at 6% wouldn't apply. Unfortunately we don't know what s/he put down as a deposit or what his/her mortgage interest rate is or how long that mortgage deal is for, how much it cost to arrange or indeed any other financial information.

The trouble is that we don't know the full financial picture and so can't possibly calculate what the real profit is. I can guarantee that it's not £250, especially when you factor the purchase costs into it. Even at a conservative estimate of £3000 to buy (including surveys, mortgage valuations & arrange fees, legal costs, etc) it would take 1 year of full rents to just cover the cost of the purchase.

If the BTL wasn't let from day one or there were some vacant periods in the first year (the rule of thumb seems to be to calculate for 10 months tenancy per year) then the purchase costs will be carried over into the second year of ownership.