Buying properties for investment

Tassotti

mystic_trev wrote:

The fixed rate markets already going up,and likely to go up a lot further by the end of the year.

No they are not. Coming down all the time. Anyway, how can a fixed rate go up. It is fixed!!

mystic_trev

Tassotti wrote:

No they are not. Coming down all the time. Anyway, how can a fixed rate go up. It is fixed!!

Sorry Tassotti you misundertood what I was trying to say. Of course fixed rates are fixed, but Banks and Building societies have started raising the rates on the next "batch" of fixed rate offers. Refer to TMF Property forum there's curently a discussion about it on there!

Edit - Here they are the new 10 year fixed

Woolwich : Feb 12 4.67 %
Mar 12 now 4.78 %

Norwich & Peterborough Feb 12 4.68 %
Mar 12 now 4.88 %

Portman 5 year fix Feb 12 4.59 %
Mar 12 now 4.79 %

sm9ai

ChrisFTB wrote:

Hi there

If is the case that as well as live in Somerset, you buy property there also, the recent Halifax report must have made worrying reading...

"38 counties have seen a modest fall (an average of 4%) in prices over the past year with these counties being mainly in southern England and the midlands. Four of the 10 counties recording the biggest falls are in the South East, two in the South West and West Midlands and one each in the East Midlands and East Anglia. The biggest house price falls over the past year have been in Somerset (-10%), Oxfordshire (-9%) and Hertfordshire and West Sussex both with -7%. These falls, however, need to be viewed in the context of the substantial price rises recorded in these parts of the country during the last few years."

http://www.hbosplc.com/economy/includes/UKQ42005.doc

Chris

And also this released today.

Mind you, everyone kind of knows that anyway.

Tassotti

Hi Mystic Trev. Do you think that the lenders know something we don't..ie that BOE interest rates will rise?

I sincerely hope not. I remember rumours a couple of years ago that interest rates were going to double. At that time, I fixed all my borrowing.

If this does happen, then absolutly everyone will be screwed. Housing crash, recession and a repeat of the late 80's.

Like you, I have properties, which currently return a positive income. However, when the fixed rates end (about 4 years) I will be in serious trouble if the interest rates double.

Oh my god..why do I do this to myself?

eurows

House price rises exaggerated
Tuesday, 14 Mar 2006 12:50
House price prospects might be less bright than previously thought

Doubt has been cast on recent figures suggesting that house prices are rising again as the property market strengthens.

In the last few weeks Rightmove, Halifax, Hometrack, and the FT have all reported hefty rises in house prices in February - with the only sour note coming from Nationwide, which recorded a small loss on the back of a large rise in house prices in January.

But today National Homebuyers released data from independent chartered surveyors suggesting the market is actually far weaker than these house price figures imply.

Nine surveyors in ten thought the market was at best "static" - with the largest number describing it as a "buyers' market".

"Unfortunately, it’s going to be another challenging year for sellers," said Julian King, managing director of National Homebuyers.

"National Homebuyers deals with hundreds of customers who are still finding it difficult to sell their property. Whilst reasonably priced houses are selling well, too many vendors are given an inflated asking price, meaning their houses take longer to sell or stay on the market indefinitely."

Just 3.8 per cent of the 800 Royal Institution of Chartered Surveyors (Rics) members polled think the market is currently 'buoyant', while 2.1 per cent think there is 'reasonable demand', a paltry 3.1 per cent feel the market is 'satisfactory', and just 1.6 per cent think the situation is 'improving'.

By contrast, one surveyor in four (24.7 per cent) thinks it is now a buyers' market, almost as many (24.6 per cent) feel things are 'quiet', one in five (20 per cent) thinks the market is 'slow' and the same number thinks the market is 'static'.

But this picture changes regionally, with 30 per cent of surveyors in the south-west seeing the market as slow, and 35 per cent of surveyors in Wales seeing it as a buyers' market.

"In some areas of the country, only one per cent of surveyors felt that they were witnessing an upwards trend. It is clear from what surveyor’s told us, that the market is not as healthy as many would have us believe," Mr King noted.

However, there were pockets of the UK with a healthier market.

In the north-west of England three times as many surveyors see the market as buoyant than the national average, and just one surveyor in nine feels there is currently a buyers' market in the south-east.

We are all being conned into a false sense of security in order to prop up the banks and building societies profits. The truth will out. Don't expect the banks and building societies to help you out when it all goes tits up. They need you btl. You are the last bastians of the castle. With you gone it all falls flat.

mystic_trev

Tassotti wrote:

Hi Mystic Trev. Do you think that the lenders know something we don't..ie that BOE interest rates will rise?

The markets have penciled in a 0.25% rate increase by the end of the year. Shouldn't affect house prices which will probably remain bouyant with a "spring bounce" After that it's anybodies guess!!!!!

van_persie

Tassotti wrote:

Hi Mystic Trev. Do you think that the lenders know something we don't..ie that BOE interest rates will rise?

I sincerely hope not. I remember rumours a couple of years ago that interest rates were going to double. At that time, I fixed all my borrowing.

If this does happen, then absolutly everyone will be screwed. Housing crash, recession and a repeat of the late 80's.

Like you, I have properties, which currently return a positive income. However, when the fixed rates end (about 4 years) I will be in serious trouble if the interest rates double.

Oh my god..why do I do this to myself?

Your sarcasm is touching. Or are you genuinely realising that what goes up comes down - or in the case of IRs, the opposite!
There is a shift in the world's economy that is leading us to higher IRs and to avoid a run on currency and rampant inflation, we must follow.
Those who will be in trouble are those who've borrowed irresponsibly.
Those who've waited and saved will be rewarded.

Who was it that said that the meek shall inherit the earth..?

Tassotti

It wasn't sarcasm...genuine concern...

The meek will never inherit anything..apart from maybe a picture of their grandfather serving in the war.

Funny you say this actually, cos I always wondered about this saying. When I travel into London, I see a high rise, scumbag building which has graffitti saying "Meek" on the top of it.

I don't think anyone in this high-rise have any education, money-sense, or anything else. Most floors have at least one drug dealer, and are quite happy living in poverty. I, myself, prefer something better.

I do have genuine concerns about house prices dropping, interest rates rising. If there was a 25% drop in prices, my investments would only be worth 1.25 million.

Gutted

sukey13

eurows wrote:

It is simple why you think property is the only way forward.

You lack intelligence.

Any fool can borrow money and rent out houses. We will see where all these fools are when IR's go up and house prices fall.

The clever money left property last year and probably made a mint on the stock market. The fools are still there proping up a soon to fall market. The trouble is the fools don't know what to do next.

Thanks for that insult.

sukey13

van_persie wrote:

Sukey13,
Sorry about comments others have posted - it's not necessary.
I just like to hear what property investors think right now without the sniping and you present a compelling case.

Glad you agree that there is a shortage of AFFORDABLE housing, however, the fact that you think housing is not overvalued is somewhat contradictory and puts you at odds with virtually every economist in the UK; the market is cyclical and has never 'levelled off'. It's up or down, I'm afraid.
Just out of interest, if you believe prices have levelled off, what would your yields be with 0% capital growth?

Why do you think IRs will not go up? I am genuinely keen to know why.

And why should being a millionaire make you go out and buy property at today's crazy prices? If I had 10 million I wouldn't put a penny of it into property right now - there are many more investments with better returns right now.

From what you are saying, it would seem that many of your investments were made pre-2002, which should help you ride out any price correction without dipping into negative equity, (assuming correction of around 25%). Am I right?

Have a good day...

Van Persie,

Firstly thanks.

Yes you are right the market is cyclical. I think that prices may have levelled off around these parts (I cannot speak for the whole of UK as I only operate in the Somerset and Dorset area). Possibly prices may dip down in the future or then again they could rise if you listen to this lot

http://www.thisismoney.co.uk/mortgages/house-prices/article.html?in_article_id=405905&in_page_id=57

but I am not worried about that as I wouldn't be selling my investment properties anyway. I would simply buy more property. I am not counting on capital growth the buy to let property yields. I have a HMO with 8 rooms that isn't even full yet and makes £2600+ a month. After bills, council tax, cleaners, gardeners, letting agent - did manage it but it became to time consuming - that generates over £1300 pcm. Another property gets £500pcm, mortgage £370. Others £750 rent, £500 mortgage, etc.

I don't think IR will go up unless something catastrophic like a war breaks out. Unemployment and interest rates are low compared to historic levels. I think the first time buyer market has been fuelled by the stamp duty barrier being increased to £120K, with talk of it being extended to £150K.

"House price growth depends on the economy and the major things that affect house prices are employment and interest rates. Overall, the economy is looking good considering growth measured by gross domestic product has slowed to 1.7% in the third quarter of 2005, below the expected rate of 2.5%. The number of people employed has increased by 221,000 with 28.76 million in work for the year to November 2005 even though unemployment also rose.

Household income is strong as well with average earnings increasing by 3.6% over the past year. Interest rates are still historically low and are less volatile than they have been in the past. Much of the chaos in the early 1990s was caused by a substantial hike in interest rates which contributed to falls in house prices and negative equity.

House price movement is something the Bank of England will be looking at rather seriously - if prices get too hot it will dampen them down with higher interest rates. However, it is a difficult balancing act because, with a high level of indebtedness in the country, higher interest rates could push many over the edge into debt they cannot control, eventually leading to a rise in repossessions. But for the moment, debt is being repaid and lending on loans and overdrafts is flat."http://www.moneyworld.co.uk/features/feature-which-way-019072.html

I still believe that the restricted supply of properties will continue to force property prices to climb, all be it realtively slowly.

If I was a millionaire I would plough all of it into property. Property is the best cash on cash investment there is. Putting it v. simply, if I buy a £100K property with £15K of my own money and spend £5K doing it up, then sell for £140K I have made well over 100% return on my money.
If I could buy lots of property and sit on that investment for 10+ years it will all be worth substantially more than the initial deposits I would have put down as in the long run property goes up in value. There are property investors that I'll pay 15% on their money back to. Some ask and get 33% back on money loaned. If you can buy a property worth £130K for £100K and remortgage all your money back out instantly and the rental still gives you £150 - £200 month cashflow, I think that is a great investment.

No, bought and sold all property prior to 2002. Latest investments have been purchased 2002, 2003, 2004, 2005 and 2006.

Hope some of that makes a little sense?

P.S. I used to have lots of shares. I never made anywhere near the return I make with property on those shares. But yes, over the long run you may be OK. Some shares are in companies that are actually investing in property. Shares are just small investments in companies. Some go completely **** up and lose all money invested in them, e.g. the £4500K my husband had in the IT company he worked for, should have sold them, but didn't. I now prefer to have more control over money.