BTLs, are you planning to sell?

Dithering_Dad

macaque wrote: »

Professional investors look at information and use it to draw rational investment decisions. Amateur landlords tend to work the other way round. They make an investment decision and then try to intepret the information in a way that supports their original investment decision.

Your response is a classic example of back to front analysis so beloved by the BTL community. You correctly observed that current events will increase demand for rented accomodation. Demand on its own however is not enough. What you need is demand combined with affordability. Rukhsana Kashmiri is a victim of this type of analysis.


According the the National Landlords Association, over 30% of tenants are struggling with their rent. This is essentially saying that demand for rented accomodation at today's prices has fallen by a third.

As I said in an earlier post, if BTL is too high risk an investment for you (and from your remarks it certainly appears that way)then choose something else. I'm in agreement with you to a certain extent, it's too risky a venture for me too - but I'm basing this on the fear of having too much of my money tied up in a single illiquid investment, empty rental periods and tenants who refuse to pay rent and trash the place. You don't get any of those hassles with shares, plus if I want to invest in the property market I can put a few grand in one of the many property funds.

I'm not sure what the point is to spend time slating a particular investment strategy - examine it, see if it's suitable for you, if it's not simply move on and find something that is suitable. Seems poor use of your time that could be put into finding a more suitable investment and making some money.

StevieJ

I couldn't be bothered with the tenants :eek: there are a few on here

macaque_2

Dithering_Dad wrote: »

As I said in an earlier post, if BTL is too high risk an investment for you (and from your remarks it certainly appears that way)then choose something else. I'm in agreement with you to a certain extent, it's too risky a venture for me too - but I'm basing this on the fear of having too much of my money tied up in a single illiquid investment, empty rental periods and tenants who refuse to pay rent and trash the place. You don't get any of those hassles with shares, plus if I want to invest in the property market I can put a few grand in one of the many property funds.

I'm not sure what the point is to spend time slating a particular investment strategy - examine it, see if it's suitable for you, if it's not simply move on and find something that is suitable. Seems poor use of your time that could be put into finding a more suitable investment and making some money.

I came close to giving you a 'thanks' for that effort. Now that would have been a turn up for the books.

Thrugelmir

ds1980 wrote: »

Sorry felt the need just to come in on this point.....have been away for a while as these forums got ever so boring. There appears to be this saying of "professional" landlords or "professional" investors? What exactly are these? I have buy to lets and know what im doing but i certainly am not a professional in the matter?

At the end of the day there are people who know what there doing and people that don't. The way i look at it is that it's my money and i can do what i like with it.

The difference between the people that have an idea and the other people that don't is that we realise that our money is only the money we put into it in the first place and the money i get out (before tax) not the rest of which is borrowed and will comtinue to be this until it is either paid off or is given back to the bank.

Anything i do now i do myself because no one knows what will happen and most of it is down to luck no matter what anyone says. Yes you can create that luck but being in the right place at the right time will always, always be the biggest reason why anyone makes money. I am no different.

Could you tell me what a professional gambler is????

A professional person can be described as "a person having impressive competence in a particular activity".

Only ever seen one professional gambler in action in a casino. Played on a blackjack table with minimum $1,000 dollar bet. Only ever played with just him and the dealer. No other players. The guy had a credit line of $125,000 with the casino. Would stay a few days then move on, irrespective of whether he was up or down.

Got this information from the floor manager, who happened to be English and was standing next to me watching the action.

If you know your odds, Blackjack is the only casino game with marginal odds in favour of the punter.

GDB2222

Thrugelmir wrote: »

A professional person can be described as "a person having impressive competence in a particular activity".

Only ever seen one professional gambler in action in a casino. Played on a blackjack table with minimum $1,000 dollar bet. Only ever played with just him and the dealer. No other players. The guy had a credit line of $125,000 with the casino. Would stay a few days then move on, irrespective of whether he was up or down.

Got this information from the floor manager, who happened to be English and was standing next to me watching the action.

If you know your odds, Blackjack is the only casino game with marginal odds in favour of the punter.

It's also the reason that casinos don't like these card counters. Why would they employ a croupier just so he can play on his own unless the casino is going to make money out of it? Perhaps he was a shill, or perhaps he wasn't very good at it?

StevieJ

Thrugelmir wrote: »

A professional person can be described as "a person having impressive competence in a particular activity".

Only ever seen one professional gambler in action in a casino. Played on a blackjack table with minimum $1,000 dollar bet. Only ever played with just him and the dealer. No other players. The guy had a credit line of $125,000 with the casino. Would stay a few days then move on, irrespective of whether he was up or down.

Got this information from the floor manager, who happened to be English and was standing next to me watching the action.

If you know your odds, Blackjack is the only casino game with marginal odds in favour of the punter.

I think poker is also pretty good for card counting, I suppose it is any game where they don't shuffel the cards.

julieq

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.

:rotfl:

Is this a wind-up, or is it just financial numptyism of the highest order?

Low interest rates weren't funded by cheap credit, they were possible because of low inflation. As a matter of fact cheap credit tends to stoke increases in interest rates because it tends to stimulate spending (that's the point of having effectively zero rates now). Interest rates tend to track inflation because otherwise the value of a currency decreases relative to other currencies.

There is no reason at all why interest rates should revert to any particular historical level, but if they're going to go to 8% it's polite of them to stay a couple of points away from double digits, so we should probably thank them for being decent enough not to give us too much of a bloody nose.

I LOVE the uninformed speculation on this board. You'd think that people making such confident statements would bother to have a bit of a clue about what they were talking about.

BTL at present isn't particularly high risk. Shares are high risk.

julieq

Right, I have a nice cup of tea and I've stopped giggling at DD's masterly analysis of interest rates, so gather round and I'll explain how to make money from investments.

The gambling analogy is a good one. What characterises professional gamblers is that they make money consistently in an environment where the maths tells you they shouldn't. That's because the odds are stacked against them - in a casino the house has an advantage built into the odds offered so players will lose on average a small percentage of what they stake. If you're betting on horses the bookmaker will try to "overround" in a similar way so that they will make 15% of the cash staked whatever the result. Card counting gives a player a small advantage which reverses the overround on the card game, which is why it's profitable long term. Skilled gamblers on horses use their expertise to spot situations where a bookmaker has overpriced a bet and take those odds because they're higher than they should be, the potential return is greater than the probability of the result happening would indicate.

No professional gambler relies on "luck", it's a matter of statistics and probability. All bets can lose, but the idea is that the winning bets offset the losing bets, so provided they don't run out of cash they will make marginal profits.

The fundamentals of successful investing are the same. It's about mitigating risks by diversification, managing resources so you don't run out of cash, understanding and analysing risk, and not following the crowd into taking bets at poor odds. Crowds create poor odds, because any value in what they're doing gets dissapated very quickly. If everyone counts cards the casino loses and disappears, if everyone bets on the same horse, the odds go down. It's the same with any form of investment.

It's also about marginal profits, not one off big gains. A successful investor beats inflation and interest rates but potentially not by much. Everyone can get lucky on on offs and see their investment treble in value, but you can't make a living out of that. You make money by winning more than you lose, not by trying to win everything which is impossible.

This is one of the reasons why I find this board so naively charming. It's basically testosterone driven punting on whether the value of one asset class rises or falls. The investment strategy of the bears is pretty one dimensional: wait for the crash and make a killing by STR. It's like going into a pub on Grand National day and listening to the reasons the winning punters chose the horse: it's worked in hindsight, but it isn't likely to work again any time soon, and the feeling of infallibility it induces may cause any gains to be lost very soon.

What's interesting on this board too is the reliance on rehashing articles from the press rather than any actual analysis. Anyone who has ever dealt with a journalist will know they're not experts, they put a spin on what they hear to fit a particular agenda. So marginal drops are portrayed as "collapses" or "crashes" or "biggest fall since records began". You have to look at the actual numbers, not the headline.

Markets are cyclical, but people think in straight lines. If you see a lot of people heading for the door with any asset class it's time to start looking for reasons to take it from them. One of those reasons is as I've explained many times already is that capital growth is only a big deal if you have to rely on it, dividend income can be a very big factor too.

Shares at the moment appear to be rising, and house prices are falling, so the obvious thing to do is to try to get in at "the bottom" of the share market and ride the wave up. However dividend income from shares is depressed because of the downturn, and the capital growth is fragile. There is a high risk of volatility. A little punting on well chosen shares may be worth looking at, but investing in indexes would be hugely risky. On the other hand occupancy rates in housing are high and capital costs and competition for housing stock is low. Looks a reasonable bet to me. But if you're trying to win the big bet and calling the bottom of the market then you may well miss the opportunity.

gallygirl

purch wrote: »

I'm not....

Bought mine in 1991 & 1992 and I'm keeping em'

2 of them give me a yield of almost 60% on my initial investment !!!

You are not supposed to work out yield on that. You are supposed to work it out on current value. So, 2 years ago your 250k flat yielded say 5%. Now it's 'worth' 175k, on same rent, so yield is over 7%. It's a better investment . There's lies, damn lies & BTL analysis.

I sold 2 BTL's in Oct 06 & Feb 07. Seriously thinking of going back in with a yield in excess of 4% but which would clear a repayment mortgage with £80 pcm to spare, or IO with £130 spare (we're talking bottom end, 3 bed (with conservatory ), ok area, asking price 59k).

I think I may see a green shoot (better get the slug pellets out pronto )

Thrugelmir

julieq wrote: »

:rotfl:

Is this a wind-up, or is it just financial numptyism of the highest order?

Low interest rates weren't funded by cheap credit, they were possible because of low inflation. As a matter of fact cheap credit tends to stoke increases in interest rates because it tends to stimulate spending (that's the point of having effectively zero rates now). Interest rates tend to track inflation because otherwise the value of a currency decreases relative to other currencies.

There is no reason at all why interest rates should revert to any particular historical level, but if they're going to go to 8% it's polite of them to stay a couple of points away from double digits, so we should probably thank them for being decent enough not to give us too much of a bloody nose.

I LOVE the uninformed speculation on this board. You'd think that people making such confident statements would bother to have a bit of a clue about what they were talking about.

BTL at present isn't particularly high risk. Shares are high risk.

Low interest rates were funded by the availability of cheap credit raised on the wholesale markets. We are not talking about BOE base rate, but actual mortgage rates. The cheap money funded all the low tracker rates and fixed mortgage rates. The majority of the larger lenders have already based their SVR at base plus 2%. Nationwide BS has already announced that do not intend to follow the BOE base rate with their SVR. The reason being that they need to offer depositors attractive savings rates to raise capital.

A number of the points you made in your post show a lack of understanding of the financial markets. Low interest rates aren't in place to stimulate spending. In summary they are low to enable the banking system to function properly. Also interest rates don't track inflation they are set by the BOE in an attempt to control inflation.

Whilst a considerable number of us speculate. At least we it in an informed manner. Yes we debate and disagree as we cannot predict future events. And more than likely revise our views week to week.

I have learnt a lot myself from being on this board and would never disrepect someone for their views. As different views make markets function.

Are you a BTL investor?