BTL dreams go up in smoke

Thrugelmir

IveSeenTheLight wrote: »

the_ash_and_the_oak wrote: »

Rental Yield is the percentage returned on any investment.

Rental Yield = Monthly rent x 12 / Property Value x 100%
i.e 4.8% = £800 x 12 / £200,000 x 100%

In your scenario, if the value drops to £150k, it is irrelevant that the person owes £200k. If they were to sell the investment is only worth £150k for them to invest elsewhere / pay off the loan

Therefore the rental yield becomes

6.4% = £800 x 12 / £150,000 x 100%

As the assett value decreases from £200k to £150k, the rental yield in this scenario increases from 4.8% to 6.4%

In this scenario, it would be better to hold on to the property rather than sell and have to make up the loss of £50k

Normally though, you will find that there are bigger deposits on BTL and the negative equity you are relating too will be the exception, not the norm

Rental Yield is defined by the purchase price of a property not by its current market value.

Current yield is exactly what it says it is.

ad9898_3

RomansProperties wrote: »

Also where else is the government going to put all these people

Well I believe we have quite enough housing stock, the problem is since 2004, BTL has proped up the chains.With 21 million houses and the government saying 'there is a shortage' , I would say that there are quite a few people out there who own more than one house. A lot of these people will be increasingly under pressure, and will sell or forced to sell, thus releasing houses back onto the market. There is no shortage, never was, and I suggest that over the coming 18-24 months we will see things for what they were.

RomansProperties

lostinrates wrote: »

[/list]When would these figures have been set?

Each LHA set the rates on the first of every month
So if you sign someone up after the first you get the new rate.
Also if you renew peoples contracts it will go on the new rate.

I only have 1 bed property in Leeds but for the last 10 months its been about £100 Per Week

ad44downey

stevetodd wrote: »

But his whole arguement is faulted! It is the LL's that are in the business for the long run that are going to get through this, yet he is foolish enough to ridicule the 'in it for the long term' comment. He obvioulsy does not appreciate the difference between somone who does prepare a business plan for the long trem and someone who merely speculates in the short term.

It was the "get a proper job" bit that I thought was most poetic

RomansProperties

ad9898 wrote: »

Well I believe we have quite enough housing stock, the problem is since 2004, BTL has proped up the chains.With 21 million houses and the government saying 'there is a shortage' , I would say that there are quite a few people out there who own more than one house. A lot of these people will be increasingly under pressure, and will sell or forced to sell, thus releasing houses back onto the market. There is no shortage, never was, and I suggest that over the coming 18-24 months we will see things for what they were.

I am not saying a shortgage of houses for people to buy, just a shortgage of government owned property to put people claiming housing benefit into

lostinrates

Incidently I have to say, I'm not noticing much of a fall in rents. I'm only half heartedly looking though.

IveSeenTheLight

Thrugelmir wrote: »

IveSeenTheLight wrote: »

Rental Yield is defined by the purchase price of a property not by its current market value.

Current yield is exactly what it says it is.

Only when considering purchasing the property.

This is what a landlord can expect to receive in rent, expressed as a percentage of the purchase price of the property.
http://www.finance-glossary.com/terms/Rental-yield.htm?id=12602&ginPtrCode=00000&PopupMode=

Otherwise people with BTL's bought pre 80's would have triple digit returns.
Its not viable to assess this way, hence you assess against the value

chucky

ad9898 wrote: »

To be fair, of course some LL's are doing ok, however I would suggest that anyone who amassed their portfolios after 2004 with high LTV's are staring into the abyss, the LL's in this particular boat won't be posting on this board

I consolidated in 2006 and re-invested in mid to late 2008 with properties with motivated sellers due to friendly estate agents. Both purchased at prices in my view at around 25% from peak. I have insulated myself I believe.

On one I lose approx £40 a month and the other makes a profit of over £1000 a month due to the rate cuts - this won't always be the case though once rates rise.

There are properties out there that will generate a very good yield; but the right choices have to be made even more in this market as options are limited.

chucky

lostinrates wrote: »

Incidently I have to say, I'm not noticing much of a fall in rents. I'm only half heartedly looking though.

One tenant moved out last month and had a new one in 2 weeks later.
Rental price I chose was about 8% down from the average around - so around early 2007 prices.

stevetodd

chucky wrote: »

I consolidated in 2006 and re-invested in mid to late 2008 with properties with motivated sellers due to friendly estate agents. Both purchased at prices in my view at around 25% from peak. I have insulated myself I believe.

On one I lose approx £40 a month and the other makes a profit of over £1000 a month due to the rate cuts - this won't always be the case though once rates rise.

There are properties out there that will generate a very good yield; but the right choices have to be made even more in this market as options are limited.

I have just started looking a bit more seriously, I saw (on the net) a 3 bed flat in battersea yesterday for only £245k (above commercial premises but still a nice location and nothing too off putting about the shop it was above). I would have viewed it but it's under offer.

I have quite a bit of cash freeing up from a fixed rate bond in mid March and I am not going to tie it up as I suspect that I may want to buy within 12 months.