Buying properties for investment

sashacat

you will never know when the market is at the top or the bottom until after the event, although, I accept there are indicators. I have property in 3 major cities, including London, and having just sold in London I am amazed at how the prices have increased...much more than I had expected. There are voids but it depends on the property and the type of person you are renting to. Aguy I know in Liverpool has just bought 25 all in the same development and they are all let out for good rents....and I didn't think they were a good buy but I was wrong.

Jackboy29

My personal feeling is that the market may stabilise in some areas with possible slight drops but wont actually crash. Or even if it does go down substantially it will be back up to past it’s pre fall level in a couple of years. As I am looking to invest long term I’m not overly concerned about the short-term fluctuations as long as it increases steadily over the long term. If you plot the log of house prices over the last hundred years or so against time you get a nice straight line of increase. In my opinion it’s still better to have my money in property than wait to buy after a crash that may never happen. Just was interested to see what other people’s opinions were. Regarding the rental income… Because interest rates are so low at the moment it looks to be to be easy to cover your monthly repayments. If you’re worried about properties being empty just lower you rent slightly, let it out easily and quickly because it’s cheap, and make money long term in capital gains.

That's what i was thinking anyway...

sukey13

You make your money when you buy - so always buy below market value.

Check out the rental market by sticking a dummy ad in the local paper - does the phone ring with potential tenants or not?

Ask letting agents their opinion on properties and areas before you buy also.

Do NOT wait for the crash. Noone has a crystal ball.

In the long run property will go up and if you buy for less than what it's worth you can always sell up and make a profit. And an even better profit if you can add value.

Don't neglect the possibility of creating extra cashflow by renting out rooms instead of the property as a whole. Just contact you local environment health officer at the local council to the property to get an idea of how much you have to spend on getting the property up to HMO regulations. Also you have to add in council tax and other bills.

Act now, do your research and buy low and sell high.

van_persie

Agree with sukey13 that you make your money WHEN you buy; I don't agree with her, however, that you shouldn't wait for a crash...if you believe one will happen. If you've done your research, looked at the history of the housing market and its related macro-economics - not to mention looking to the future and the likely raising of IRs, you would be justified in waiting, IMHO.
Particularly when the most bullish forecasts are for around 5% growth this year, barely in line with (true) inflation.

It's fine to say 'go out and buy somewhere at below market value now, and you'll make money in the long run', but consider that today's 'BMV' could be tomorrow's market price and you could spend the next x-amount of years waiting for the property to reach the price you paid for it before you benefit from capital appreciation.

Yes, property always goes up, but it's also cyclical. what you must decide is whether we are about to enter another bull-run propped up by BTL investors (highly unlikely, as there aren't any FTBs left!) or we're actually at the peak of one huge housing bubble that is about to go pop...

mystic_trev

Unfortunately the whole BTL things become a ponzi (pyramid) scheme. Those who got in early can't lose, those at the top of the pyramid (those who are buying now) will be the first to suffer and go bankrupt.I'm afraid the figs (yields) just don't add up.

sukey13

Everyone is entitled to their opinion.

But waiting for a crash is ridiculous. When will it happen?

The truth is there is a shortage of housing in this country and they can't build them fast enough. Still wont cover the deficit though.

Combine that with people living longer, more people divorcing, an exploding population rate and more and more people entering the country - the economics are just not right for a crash...

If you want to wait that is fine... I'll just supply all those people with a roof over their head ;0)

van_persie

Sukey13, there is a shortage of AFFORDABLE housing in this country. If there was a 'physical' shortage, why aren't there people living in tents?
And why are there SOOOOOO many properties for sale?
On Hometrack alone, over 633,000...
New-builds are going up and standing half-empty because there's so many of them.
This link may be of interest:
http://portal.telegraph.co.uk/property/main.jhtml?xml=/property/2005/12/17/pempty17.xml&sSheet=/property/2005/12/17/ixptop12.html

And to say the economics aren't right for a crash is incredibly short sighted.
Do you think housing is not over-valued?
Do you think IRs will not go up?
Do you not agree that the market is cyclical and cannot go up forever?

But then your last line gives you away...a crash would be catastrophe for investors, wouldn't it?

sm9ai

sukey13 wrote:

Everyone is entitled to their opinion.

But waiting for a crash is ridiculous. When will it happen?

The truth is there is a shortage of housing in this country and they can't build them fast enough. Still wont cover the deficit though.

Combine that with people living longer, more people divorcing, an exploding population rate and more and more people entering the country - the economics are just not right for a crash...

If you want to wait that is fine... I'll just supply all those people with a roof over their head ;0)

We are not really that much different to the last crash.

There is definatly not a shortage of housing. But with all the new builds going up there is a surpless.


Looking at your signature I can see why you have your point of view, interest rate rises would push your outgoings through the roof and do little for your income.

One other thing to note.

"How many multiple streams of income do you have?"

Surely you just have one, and its property. If house prices crash it will effect all your "streams" not just one.

wibble68_2

Jackboy29 wrote:

My personal feeling is that the market may stabilise in some areas with possible slight drops but wont actually crash.

sukey13 wrote:

Do NOT wait for the crash. No one has a crystal ball.

In the long run property will go up and if you buy for less than what it's worth you can always sell up and make a profit.

mystic_trev wrote:

Unfortunately the whole BTL things become a ponzi (pyramid) scheme. Those who got in early can't lose, those at the top of the pyramid (those who are buying now) will be the first to suffer and go bankrupt.I'm afraid the figs (yields) just don't add up.

sukey13 wrote:

But waiting for a crash is ridiculous. When will it happen?

The economics are just not right for a crash...

If you want to wait that is fine... I'll just supply all those people with a roof over their head ;0)

Is it that time of the month already?

Jackboy29

I'm always reading about housing shortages and how it's going to get worse over the next 20 years. In my opinion there are lots of different things still fueling the housing market like investors, parents helping children, inherited wealth, banks coming up with ways for ppl to borrow more like new 'lifetime' mortgaes etc. Maybe no-one know's 'exactly' why housing is still increasing in value, but it does seem to be increasing. The recent phenomena of greater personal debt is also something that makes me believe that interest rates will not increase substantially again. It's always in the paper about max'd out credit cards etc and personal experience seems to indicate ppl's personal debts have increased rapidly last few years. The bank of England knows with sooo many ppl having huge debts it would be crippling to increase rates substantially. Also, aren't rates in europe quite low at the moment i.e 2-3%?? I agree that the housing market is cyclic. But i'm inclined to believe that the cycle goes from substantial increases to modest increases, and not necessarily include massive down periods.