FSA Warns of Dangers of BTL

HelpWhereIcan

Thrugelmir wrote: »

The tenants in this case had already been in situ for some 17 months before this was any indication of a problem. Normal practices such as references from employers etc had been obtained. Although risk can be mitigated as far as possible it can never be eradictated in the lettings market.

exactly and that is part of the reason that dunstonh and I are saying that btl is an investment class at the higher end of the risk scale and not as low risk as some like to make out.

People think it is simply a matter of collecting the rent and the value going up but you can end up with costs like this with no notice for no particular reason.

That could mean that, when she looks at owning a property for say 3 years and the net profit she has made over that time, your friend may decide that the yield/ROCE (including Capital Appreciation:rolleyes: ) she is receiving is not worth the risk she takes to get it - especially when compared to other investment classes she could have put the same money into.

She may be happy with it (most well run investors are) but she needs to be looking at the figures and making her decision on that basis and not the vanity of owning a property portfolio valued at £x.

To nick and ruin a well known saying:

Portfolio valuation is vanity, ROCE is sanity.

Just my own opinion - everyone is entitled to their own

Thrugelmir

HelpWhereIcan wrote: »

exactly and that is part of the reason that dunstonh and I are saying that btl is an investment class at the higher end of the risk scale and not as low risk as some like to make out.

People think it is simply a matter of collecting the rent and the value going up but you can end up with costs like this with no notice for no particular reason.

That could mean that, when she looks at owning a property for say 3 years and the net profit she has made over that time, your friend may decide that the yield/ROCE (including Capital Appreciation:rolleyes: ) she is receiving is not worth the risk she takes to get it - especially when compared to other investment classes she could have put the same money into.

She may be happy with it (most well run investors are) but she needs to be looking at the figures and making her decision on that basis and not the vanity of owning a property portfolio valued at £x.

To nick and ruin a well known saying:

Portfolio valuation is vanity, ROCE is sanity.

Just my own opinion - everyone is entitled to their own

She is guided by her father who has a property portfolio of some 150 properties ( residential and commercial) which he has built up ( and traded) from the early 90's after selling his original business.

RecoveringAlcoholic

Pobby wrote: »

Just to mention that a small loss can be also a large loss. A friend of mine in Ireland appears to cheerfully subsidise his tenant to the tune of 700 euro a month. I saw the madness of prices in Dublin when I was there last 3 years ago. Think he bought in 2007. Imo, property in the Dublin region even out paced some of the better parts of London.

I was in Dublin about the same time on a Ryanair €00.01c flight. The taxi driver from the airport spent the whole journey telling me how all his family were property millionaires.

It was obvious that it would all end in tears.