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buy to let - buy now or wait!!!!!
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moonrakermagpie
Posts: 199 Forumite
Hi, I have veiwed a property several times, It is done out really well and good quality.
It is a mid terrace and was up for £200.000 a year or so, it is now up for £169.500, I have offered £150.000, and they have accepted.
I feel that I am their only serious bidder and I reckon I could beat them down some more, say £145.000.
I have a tenant ready to move in, and have a morgage agreed
My question is:- do I buy now or wait assuming prices are still going to drop a fair way yet.
Steve
It is a mid terrace and was up for £200.000 a year or so, it is now up for £169.500, I have offered £150.000, and they have accepted.
I feel that I am their only serious bidder and I reckon I could beat them down some more, say £145.000.
I have a tenant ready to move in, and have a morgage agreed
My question is:- do I buy now or wait assuming prices are still going to drop a fair way yet.
Steve
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Comments
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Buy at the bottom of the market not on the way down0
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do I buy now or wait assuming prices are still going to drop a fair way yet.
Tell you in 10 years time.
Seriously though, you have to look at the rental yield to decide if the potential is good. There is still possibly another 10-30% drop possible/probable in house prices. In the US they just keep going down. In the last UK house price crash they fell over 4-5 years. We are only little over 1 year so far. We havent really had a big increase in repossessions and newbie landlords selling up due to liqiudity issues come in to play yet. They may not do this time round but if unemployment does rise significantly, then it could be a much longer period of decline.
If the rental yield is good though, you could effectively ride it out over the long term.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
moonrakermagpie wrote: »Hi, I have veiwed a property several times, It is done out really well and good quality.
From your perspective or that of a prospective tenant?moonrakermagpie wrote: »I have a tenant ready to move in, and have a morgage agreed
My question is:- do I buy now or wait assuming prices are still going to drop a fair way yet.
Have you done your sums and is it going to be a viable business?
When calculating income have you taken account of voids in the tenancy? Have you accounted for things such as mortgage interest, insurance and maintenance? After all this do you have a net yield which makes this a worthwhile investment compared to a savings account?
Obviously you're leveraging yourself up in a falling market. You should require a good yield to compensate.
I'm no landlord. You might get better responses on the house buying forum. Or try another site - there's one called squealing swine or something.0 -
If it's an investment it makes no sense to buy now.Savings
£14,200 with £1100 M.I.A. presumed dead.0 -
If it's an investment it makes no sense to buy now.
Though I agree in once sense, in another with the market being the way it is, there are some real bargains around the market, what with house reposessions becoming quite common, asking prices on valuable properties have become very low, and if you have the cash it's not a bad long term investment. Of course short term its a different story, but there is still alot of investment potential.0 -
Wrong forum. This should be on the Housing Buying Forum, where they will tell you not to do it.....and so would I. The market has plenty of room to fall yet.
Why I'm telling you this when mine's still not exchanged on, I don't know.0 -
Are you looking for a long term btl or short term gain (not advised).
Foir the short term you are just interested in whether you can afford it and capital appreciation. You will know that is very risky and probably not advisable at the moment. I've seen predictions of 35% fall over the next few years.
More sensible looking at the long term you are interested in the price, rental value, maitenance costs and finance costs.
It can be beter to buy at a higher price if good mortgage deals are available at the time.
So if you can make a profit at that price then it's a good deal - could be better later maybe if the price drop but doesn't stop it being profitble at this price.
Biggest mistake is to not take into account voids and maintenance costs (and being over optimistic about rental values).0 -
Biggest mistake is to not take into account voids and maintenance costs (and being over optimistic about rental values).
If we are talking "biggest" mistake, I think that would be the complete misunderstanding of the level of risk mortgaged [new] buy to let landlords are taking when they enter into this sort of transaction. Any investment that puts your primary residence at risk potentially is very high risk.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
If we are talking "biggest" mistake, I think that would be the complete misunderstanding of the level of risk mortgaged [new] buy to let landlords are taking when they enter into this sort of transaction. Any investment that puts your primary residence at risk potentially is very high risk.
Maybe - but if you get your sums right then you aren't taking much risk. I would say the mistakes made are in the calculations and assumptions rather than valuing risk.
Consider mortgage costs (long term fixed), voids, maintenance and rental income (not estimated by the seller) and if that makes a reasonable profit you should be ok - you don't care about house prices - just rental values.
If you go into it with the rental income matching the mortgage payments then you need a large reserve to finance the project and may well never make a profit.
If you don't expect to make a short term profit due to capital appreciation then you will work out the cash flow and not have a problem (and would have realised the issues in the past few years).0 -
Maybe - but if you get your sums right then you aren't taking much risk.
I'm also not sure I buy into this long-term/short-term idea. Losing capital short term will still effect the long term outcome.0
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