Buying a Repo v Long term savings at low rate of interest

Beepster

Hi,

I have got some money saved up and due to the fact that interest rates have just dropped and will probably drop again I am thinking about whether or not to buy a repossession house as an investment. Here's some of my ideas:-

1. Buy two CHEAP repo homes (£25K each and from less affluent areas) and rent out at minimal amount (which would more than cover lost bank interest) or rent out to local authority.
2. Buy one CHEAP repo home (£50K each from a better area) and rent out at a level which would simply cover my normal savings interest or rent out to local authority.

My questions are:-

• What do people feel about the housing market? Do you think prices may drop as far as 1999/2000 levels
• Do you think interest rates are still to drop further?

I have researched quite a few property prices in various parts of the country and here are some examples - in fact there are many examples with this trend....

• 3 BED HOUSE SOLD (REGION POOR)
  • 1995 SOLD FOR 16,000
  • 2007 SOLD FOR 145,000
  • NOW ON AUCTION FOR 35,000
• 2 BED FLAT (REGION MID)
  • 1999 SOLD FOR 20,000
  • 2007 SOLD FOR 105,000
  • NOW AUCTION FOR 45,000
• 1 BED FLAT (LONDON)
  • 1999 SOLD FOR £45,000
  • 2007 SOLD FOR £280,000
  • 2008 AUCTION FOR £90,000

The above trends don't look good, so should I hold fire and hope for [EMAIL="90@s"]90's[/EMAIL] prices to return?

Look forward to reading your comments.

Beepster

jebervic

Beepster wrote: »

Hi,

I have got some money saved up and due to the fact that interest rates have just dropped and will probably drop again I am thinking about whether or not to buy a repossession house as an investment. Here's some of my ideas:-

1. Buy two CHEAP repo homes (£25K each and from less affluent areas) and rent out at minimal amount (which would more than cover lost bank interest) or rent out to local authority.
2. Buy one CHEAP repo home (£50K each from a better area) and rent out at a level which would simply cover my normal savings interest or rent out to local authority.

My questions are:-

• What do people feel about the housing market? Do you think prices may drop as far as 1999/2000 levels
• Do you think interest rates are still to drop further?

I have researched quite a few property prices in various parts of the country and here are some examples - in fact there are many examples with this trend....

• 3 BED HOUSE SOLD (REGION POOR)
  • 1995 SOLD FOR 16,000
  • 2007 SOLD FOR 145,000
  • NOW ON AUCTION FOR 35,000
• 2 BED FLAT (REGION MID)
  • 1999 SOLD FOR 20,000
  • 2007 SOLD FOR 105,000
  • NOW AUCTION FOR 45,000
• 1 BED FLAT (LONDON)
  • 1999 SOLD FOR £45,000
  • 2007 SOLD FOR £280,000
  • 2008 AUCTION FOR £90,000

The above trends don't look good, so should I hold fire and hope for 90's prices to return?

Look forward to reading your comments.

Beepster

Blimey, care to tell us where these cheap houses can be found?, I have looked on auction websites and not seen any houses as cheap as the ones you have stated.

any websites or info would be appreciated

hethmar

Yes, Id like to know where a flat costing £90k in London is ?

When you say "now on auction" - these arent actually sold prices then.

sjcollett

I would say good luck trying to find a house at 25k, getting it rented and getting your rent in the bank!! I have houses in many areas, many budgets, many tenants and I know which ones I like...if you email me I have some extra auction info [EMAIL="sjcollett@yahoo.com"]sjcollett@yahoo.com[/EMAIL]

sjcollett

ps. i also forgot to say yes you CAN buy a flat in zone 1 london for 90k. i turned down one last week at 105k, rental would've been £1000 pcm. And I know it's a good area as I already own a flat there and have it rented at £1040. Why didn't I buy it? Good question - I have limited funds and right now my other business needs money rather than me buying another house! [which is really, really annoying!] But there are amazing bargains to be had - as i said in my previous post email me [EMAIL="sjcollett@yahoo.com"]sjcollett@yahoo.com[/EMAIL]

Jorgan_2

The BoE may well drop interest rates again, but I wouldn't expect the banks to pass much, if any of that drop onto their customers.

icebergx

'On Auction' means nothing, they're just low guide prices to attract interest. They'll probably sell for more and may have some sort of reserve.

hethmar

But £90k in London with a lease of how long? I sometimes get excited when I see prices for London places then at the bottom of the page you see the lease is 20 years or a lot less