How buy-to-let turned into a mug’s game

IveSeenTheLight

neverdespairgirl wrote: »

No, not a dig at all. I mean that I would do my own work, that I enjoy, rather than the LL-type work, which I wouldn't.

Fair enough, no problem. I apologise for mis-reading you, but I'm sure you can understand when read the two sentences together.

It did surprise me that you would have meant it that way, having read many of your posts.

I guess that's one of the problems with forums and posts is that it can be read in a manner you didn't mean

neverdespairgirl

A lovely way of saying my writing was as clear as a muddy pond (-:

IveSeenTheLight

neverdespairgirl wrote: »

A lovely way of saying my writing was as clear as a muddy pond (-:

Many a flaming spiral can be created by miss reading anothers posts.
You just can't see the tone or facial expressions in text

Anyway, far too happy for this forum, stick your muddy pond where the sun might shine

Microstar_2

IveSeenTheLight wrote: »

Being a LL is just another means of investment, like shares are and puting the money in a bank.

No it isn't, its nothing like putting money in shares or into a bank. That's the kind of half-baked thinking that has led so many BTL-ers into trouble.

When you're a LL you're actually running a small business. It needs to be thought of in those terms. You have 24/7 responsibility for other peoples' homes.
If you're doing it properly any income you received is certainly not 'unearned'. The rapid HPI of the last fews years has to be viewed from a distance - it was 'blip' and for the next few years being a LL will revert to what it has normally been - a not very easy way to make a modest income. Its certainly no effortless route to riches.

WTF?_2

Microstar wrote: »

No it isn't, its nothing like putting money in shares or into a bank. That's the kind of half-baked thinking that has led so many BTL-ers into trouble.

When you're a LL you're actually running a small business. It needs to be thought of in those terms. You have 24/7 responsibility for other peoples' homes.
If you're doing it properly any income you received is certainly not 'unearned'. The rapid HPI of the last fews years has to be viewed from a distance - it was 'blip' and for the next few years being a LL will revert to what it has normally been - a not very easy way to make a modest income. Its certainly no effortless route to riches.

Quite right - I think people looked on property as a 'money for nothing' scheme.

If you are letting a house out it's your job to manage and maintain the property. You also bear some risk from tenants not paying/paying late or damaging the property, doing a runner etc.

It's far from an cushy deal and unless you can get appreciably better returns on your capital than a typical savings account (NOT the case in recent times) I really don't see the point.

IveSeenTheLight

Microstar wrote: »

No it isn't, its nothing like putting money in shares or into a bank. That's the kind of half-baked thinking that has led so many BTL-ers into trouble.

When you're a LL you're actually running a small business. It needs to be thought of in those terms. You have 24/7 responsibility for other peoples' homes.
If you're doing it properly any income you received is certainly not 'unearned'. The rapid HPI of the last fews years has to be viewed from a distance - it was 'blip' and for the next few years being a LL will revert to what it has normally been - a not very easy way to make a modest income. Its certainly no effortless route to riches.

By no means did I intend to mean that it is an effortless route to riches and I agree it is to be viewed as a business

That does not deter the fact that is is still an investment.

I was responding to a post which I thought was incorrectly inferring that being a LL was a way of making unearned money which is why I referred to it as being an invesment similar to putting money into banks or shares

IveSeenTheLight

!!!!!!? wrote: »

unless you can get appreciably better returns on your capital than a typical savings account (NOT the case in recent times) I really don't see the point.

I've done very well from my BTL's in the last couple of years.
:beer:

Neillgb

IveSeenTheLight wrote: »

I've done very well from my BTL's in the last couple of years.
:beer:

As a matter of interest did you see your BTL's as,

1. A solid long term investment, in addition to other 'normal' ways of earning a crust.

2. A punt, you put your shirt on the line but your tenant pays the interest to keep the dice rolling.

3. A business with a solid business model based on hard work.

The reason I ask is because there seems to be a lot of resentment of BTL'rs
because they are perceived as being people that used other peoples money, both banks an tenants, to buy into a 'no lose' rising market.

To me there is something not quite right about BTL. It lies uneasily between a no nonsense business and somebody putting their shirt on red. Too lazy to work hard and not enough courage to risk a true punt.

Squirreler

I'm new to MSE and must admit to spending hours reading the posts here, particularly on the House Buying etc board. I'm fascinated by all the opinions on here.

My husband and I bought a house to let in October last year, with money left from the sale of my late Dad's house. The rent is £595 a month and the mortgage repayment is £412. I plan to sell it in about 20 years' time. Will this 'investment' have left me bankrupt by then?! We have a mortgage on our own home too but thought about it all carefully and I worked out the figures, and it seems like we can afford it. Am I wrong?

IveSeenTheLight

Neillgb wrote: »

As a matter of interest did you see your BTL's as,

1. A solid long term investment, in addition to other 'normal' ways of earning a crust.

2. A punt, you put your shirt on the line but your tenant pays the interest to keep the dice rolling.

3. A business with a solid business model based on hard work.

The reason I ask is because there seems to be a lot of resentment of BTL'rs
because they are perceived as being people that used other peoples money, both banks an tenants, to buy into a 'no lose' rising market.

To me there is something not quite right about BTL. It lies uneasily between a no nonsense business and somebody putting their shirt on red. Too lazy to work hard and not enough courage to risk a true punt.

Out of the options its mostly 1 with a touch of 3.

1) My properties are a solid long term investment.
They started off as an alternative pension plan, something I think is more reliable than standard pensions. I'm 35 now, so theoretically a 30-35 year investment. At the time of retiring, I intend to re-visit whether to keep on as a rental property or sell and utilise the capital. Other options are that they can be utilised by my children while going to university or even as a helpful start in life if needed.

Currently, my rent income is 2.33 times what the interest payments are and I market the properties under the local market rate.
I plough all rent income into repaying off the mortgages, which by current projection graphs show them paid off in aroud 8 years time. This is not a normal BTL business model, but one which will see me own the properties outright in a far shorter period.

Hopefully the above can briefly explain why they are viable without going to deeply into figures.

3) In general, my properties are very low work, mainly due to the initial hard work I put in place to ensure that the properties were as desireable as I personally would have wanted to live in. This is a risk, because tenants may not take as much care of the property as if an owner would, however I believe by making the property more desireable, I can attract and filter a better option of tenant. so far I have been very lucky in this fact.

Other than initial hard work, I have on a very few occasions had to respond to some small matters with the property. This I have been very happy to respond to immediately as this only helps to maintain the property.

I would say, intially I spent about a month of really hard graft renonovating and redecorating the properties before inital rental.
In the last two years, I've probably only needed to be involved in 5 or 6 days

In short, I put a lot of hard work in at the start and now it is relatively easy.
When and if I have to respond to my tenants, it's well worth my time for the financial benefit I will see in the long term.

You believe that BTL is "Too lazy to work hard and not enough courage to risk a true punt", well I can only tell you that I have a full time job that I work very hard at and have received a god reward from.
Deciding to invest some of that reward in BTL properties is far from being too lazy to work or stupid (rather than courageous) enough to put that reward on a gambling punt