Seeking your opinions on a genuine dilemma...

msquandary

Dithering_Dad wrote: »

I'm not a BTLer so I may be incorrect here (hopefully some of our landlord contributors will correct me if I'm wrong) but if you have a BTL mortgage on both your properties, as long as the income from the rent meets your providers criteria (I think it needs to cover the mortgage completely and have a certain amount of surplus), then you won't have any problem re-mortgaging to another BTL mortgage. I don't think they look at your personal income.

They didn't used to - rental income used to be all they looked at but that is one of the things that they have now tightened up on, as I discovered to my cost earlier this year - most BTL providers now require employment income as well - the new belt and braces approach - there are some that don't but their interest rates/arrangement fees were so high that it wasn't worth me making a switch.

msquandary

monkeymaster wrote: »

No one can tell you what you should do, the best thing is to educate yourself so you are best placed to make the decision that is right for you.

Hi Monkeymaster - Yes I completely agree that only I can decide, however I am very pleased that I finally came out of lurking and posted this - I just wish I'd done it long ago. Writing it down and putting it out for discussion like this has really helped me to regain some perspective about the whole thing which I have to admit I had lost recently. It is also great to get the opinions of such wide range of people - I imagine those replying to me are from all across the UK with a whole range of ages, backgrounds, life experiences and perspectives. By only discussing this with people I already know I have been discussing it with people 'like me' - friends I used to work with, family etc. From their responses I was starting to doubt myself and feel that I was completely crazy even to think about selling .... from the balanced and varied responses I've had so far I can see I'm not crazy - it all depends on your perspective - alot of my current aquaintances are still doing very well indeed thank you - I don't think that what is going on out there in the world has made any impact at all....yet.

fc123

msquandary wrote: »

FC123. LTV as follows: Brighton £225k, mortgage £140,000. London flat - £280, mortgage £165k. Have used peak 2007 values rather than trying to guestimate current values

Nutrition sounds like a fantastic thing to retrain in...I would do it myself tomorrow if I could.....if the Govt have any cash left, I can see lots of opportunities for nutritionists in the future.

I would base your decision on the total value of mortgage debt that you are personally liable for.
Both props are on BTL mortgages and, therefore, are being run as a small business.

A simple business plan works out what comes in and what goes out plus takes into account any risks that this type of business has.
Things like tenants shafting you on the rent, lender putting up your fixed costs etc etc.

I know several Brighton EA's well enough to know that Brighton is deffo NOT going to buck the UK downward trend in prices...no matter what they may say to customers. I listed 3 main industries in Brighton.....the other is the London £££.
If you are local, you will know that the house prices overall in the area are crazy.

Others on this board can give you a rule of thumb valuation on your properties now based on LR price drops over the past year.

I would live in one and sell the other and base the choice on where I am studying (cheap, quick journey to uni).

I couldn't work out where you live now...not being personal....but are you in rented? That is, responsible for third set of overheads, albeit, your personal ones.

fc123

http://forums.moneysavingexpert.com/showthread.html?t=1325319

I just popped this thread on as it gives an indication of how proceedable buyers are thinking and behaving.
I would agree, absolutely, (and based on personal experience) that prices are now back to late 04/05 to get a sale.....but until something is actually SOLD......who knows??? Have you checked land registry figs for the areas the flayts are in...would give a better idea of current ''value''
Diff area of the UK are dropping at different rates with Mitchaa telling us that Aberdeen is still rising...perhaps other areas aren't dropping at all?

msquandary

fc123 wrote: »

I couldn't work out where you live now...not being personal....but are you in rented? That is, responsible for third set of overheads, albeit, your personal ones.

Not personal at all - I could hardly come on a forum to ask for advice in this way and not be prepared to disclose details! I'm holed up at the parents temporarily while I tie down my financial situation - no overheads, just the weekly shop! It's not ideal though so once I've settled things down a bit I will probably look to rent a room off someone while I study but don't want to do that until I've sold or got tenants into Brighton (is empty now....)

fc123

If Brighton is empty and you don't want to live in it yourself....you could try the market to sell? It will cost you a HIP pack but, say it doesn't sell, then you can be sure of the decision to rent it out again.

We rent in Brighton (and own in London) and rents are now beginning to drop here, even seafront...loads of stuff on.

Are you in London at the mo?

Dithering_Dad

I think you also need to sit back and remember why you decided to go into the BTL business. You wanted to suppliment your state pension with either the rental income from the BTL's (which will be mortgage free by the time you retire) or to sell the BTLs when you retire and reinvest the equity income elsewhere.

You're 38 currently, which means you have a further 29 years ahead of you before you retire. If you had your pension in shares rather than in property, you'd now be sitting on anything from a 25% to 50% drop - alarming, but you'd also know that eventually these shares will recover if you 'sit tight'. The same has happened with property, we're now in the downward part of the economic cycle, but even the most 'bearish' on this website know that the cycle will reverse and house prices will recover.

Indeed, some of the very bearish people are starting to consider buying - just as you're panicing and considering selling. This should tell you something. Don't be a 'mug punter' who buys towards the top of a cycle 'because everyone says you can't lose' and then sells towards the bottom of the cycle 'because everyone says you can't win'.

If your rents are covering the mortgage and you have no pressing financial problems, then sit tight and let your investments recover. You have 29 years until state retirement age. I would hazard a guess than even in 10 years time, your fortunes will look very different from how they look now. Certainly your mortgages will be much lower on your BTLs, so the proportion of your income from these will increase. The value of your properties will have recovered and you'll be thanking the Gods that you listened to your Old Pal Dithering Dad, and didn't fold when you had a winning hand.

fc123

I second bits of DD's post.

Work out how comfortable you are with running a BTL business ( which has a personally liable debt attached to it) alongside your retraining and setting up new business.

If it feels a bit daunting, them look into the possibilities of ceasing to be a BTL LL.

In the end, you can only decide from where you are now....who knows what is around the corner?...even things like babies may come along.....just a random exmaple...and then one's decsiions are made based on different concerns.

TDS_2

Dithering_Dad wrote: »

If your rents are covering the mortgage and you have no pressing financial problems, then sit tight and let your investments recover.

Agreed.

I'm not sure we're that near the bottom yet, but we're far enough from the top that you've left it too late to make the 'quick buck'. If finances allow, you should instead play the long game. Bear in mind though that there will almost certainly be further financial pressures as we pass through the recession. Make sure it's not a pinch at this stage, else you'll be selling at the absolute bottom. That is a 'mug punter'.

ruggedtoast

Have you considered the French Foreign Legion? You get a decent pension before you're 50, French citizenship, the chance to forget, and its a man's life too.

I'm assuming you're a man, if not I dont know what you can do.