BTLs, are you planning to sell?

the_ash_and_the_oak

Dithering_Dad wrote: »

A good investor is one who knows when to hold. Anyone can panic and sell their stock/house for a loss.

My gparents bailed early (2004). my parents tried to bail late (2007-2008). Has worked out v well so far for gparents but agree parents should hold now even in event of further falls (would prob think differently if they had a flat rather than a 'nice house in a nice area' tho imo)

edit: this refers to their own houses - not BTL

the_ash_and_the_oak

purch wrote: »

The rent went up about 15% in 01 or 02 I think, but has remained pretty much the same ever since.

Supply of quality Apartments/Flats has increased loads in that area over the last 7 years, and whilst leasing hasn't been a problem you have to take into account your competition, and brand new will always attract a premium.

That tallies w me also - been renting since around 2002 I think - they've gone up and also down when I've moved but broadly speaking have been around the same during this period. were scheduled a rise this spring but it hasn't materialized

Dithering_Dad

the_ash_and_the_oak wrote: »

I agree about the 15% rates that were had last time around but I'm kinda feeling comparatively they weren't that high given that rates had often been north of 10% as far back as 1984 imo

That's why I put in the bit about the decade of low interest rates funded by cheap credit. I think we will go back to 'normal' interest rates around 8%, which is only 2% away from double digits.

I was only a kid when rates went to 15%, but I remember the fear etched on my parents face when they saw it on the news. I was chatting to my mum about it the other day and she said they would have lost the house had they stayed up there for long - she reminded me that BoE base rates were 15%, mortgage rates paid by ordinary people were obviously higher.

They also didn't have the range of mortgages we have now, so didn't have the opportunity to get a long-term (say 7 years at 5%) fix and take advantage of the situation due to low mortgage rate and high savings rate.

Thrugelmir

Dithering_Dad wrote: »

Depends on how much further you think the shares will fall. To have bought the shares in the first place you will have paid a fee to the broker and stamp duty on the percentage value of the shares. If you sell the shares you will again have to pay a brokerage fee. If you then re-buy the shares, you will once again pay brokerage fees and stamp duty. In order to make any money on the transaction, you will have to re-buy the shares at a price that factors in two purchases and one sale, plus a percentage gain that's high enough to make all this worthwhile.


The same is true for housing. Anyone who STRs in order to re-purchase an equivalent house for less money needs to be very sure of his calculations and factor all of the estate agency, mortgage redemption fees (if any), mortgage arrangement fees, legal fees, removal costs, rental fees, rental agency fees, etc., etc. or he could end up buying an equivalent house for more than he sold his STR one. At the very least he could make such a poor profit that it wasn't worth the hassle in the first place.

A good investor is one who knows when to hold. Anyone can panic and sell their stock/house for a loss.

My original point is that a good investor knows when to take a profit or cut a loss. Market forces determine the value of investment assets whether they be shares or property. When a share falls in price and continues to fall. Yes, the dividend yield increases if the dividend is maintained. But that's the risk premium for potentially suffering further capital losses. BTL property became a fad, like the DotCom boom.

Dithering_Dad

Thrugelmir wrote: »

My original point is that a good investor knows when to take a profit or cut a loss. Market forces determine the value of investment assets whether they be shares or property. When a share falls in price and continues to fall. Yes, the dividend yield increases if the dividend is maintained. But that's the risk premium for potentially suffering further capital losses. BTL property became a fad, like the DotCom boom.

I agree with you, but the time to cut your losses in either the housing market or the stockmarket has long since gone. BTL was the usual bandwagon, like dotcom where by the time the ordinary folk started investing, it was too late.

I think BTL's time will come again, as ordinary folk (like the OP) think that it's fashionable to bail from BTL into the next 'big thing', smart money will be quietly building up their portfolios.

btw, my own 'general' rule of thumb (not always followed) is to sell on a 20% loss or a 10% gain. It'll not make me into a millionaire, but it stops me from being destitute too

the_ash_and_the_oak

the_ash_and_the_oak wrote: »

My gparents bailed early (2004). my parents tried to bail late (2007-2008). Has worked out v well so far for gparents but agree parents should hold now even in event of further falls (would prob think differently if they had a flat rather than a 'nice house in a nice area' tho imo)

Should point out I'm referring to the houses they live(d) in - not BTL. We haven't had any BTL in the family (will edit orig post also)

Thrugelmir

Dithering_Dad wrote: »

That's why I put in the bit about the decade of low interest rates funded by cheap credit. I think we will go back to 'normal' interest rates around 8%, which is only 2% away from double digits.

I was only a kid when rates went to 15%, but I remember the fear etched on my parents face when they saw it on the news. I was chatting to my mum about it the other day and she said they would have lost the house had they stayed up there for long - she reminded me that BoE base rates were 15%, mortgage rates paid by ordinary people were obviously higher.

They also didn't have the range of mortgages we have now, so didn't have the opportunity to get a long-term (say 7 years at 5%) fix and take advantage of the situation due to low mortgage rate and high savings rate.

For those able to afford to purchase a house back then. High inflation meant that the value of debt quickly diminished. Making it easier to step up the property ladder. As you suggest above we could well up with 8% interest rates but only a 2% to 3% inflation rate. A different scenario to where we are today.

themanbearpig

dgl1001 wrote: »

clearly you know very little about a) the average btl investor and b) ponzi schemes

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from money paid by subsequent investors rather than from any actual profit earned.

The housing market is a Ponzi scheme. Capital gains were made without doing anything to the property, and any profits were made by subsequent "investors".
This investment vehicle was peddled and ramped by our government, and therefore could never be known as fraudulent.

Thrugelmir

themanbearpig wrote: »

This investment vehicle was peddled and ramped by our government, and therefore could never be known as fraudulent.

Which one?

JayScottGreenspan

Dithering_Dad wrote: »

It's not really my date, but a consensus date pulled together from industry 'experts'. Whether they're right or not remains to be seen, but it sounds about right, and it'll fit into my personal plans really well if they are correct (I am stuck in my current mortgage deal until next April).

Gilt prices certainly reflect a similar view:
http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/gilt/default.stm

maturity: 07-Mar-12
yield: 1.94%


maturity: 07-Jun-12
yield: 2.12%

Which implies an annualised yield of ~4.18% between March 2012 and June 2012.