STRs..did you ever doubt?

lostinrates

Not much purpose other than wondering to this but I have been awed at times by the conviction the STRs demonstrate. I have often wondered if you every doubted the wisdom of your decision to STR before HP falls started. I often think its easier for FTBs to wait than to be a STR ...giving up your ''own home''.

ad9898_3

lostinrates wrote: »

Not much purpose other than wondering to this but I have been awed at times by the conviction the STRs demonstrate. I have often wondered if you every doubted the wisdom of your decision to STR before HP falls started. I often think its easier for FTBs to wait than to be a STR ...giving up your ''own home''.

It would be interesting to see how many people did through conviction or did it because of other factors, I reckon a fair few people out there would have been 'lucky'.

michaels

My house is down 40k from peak say 2 years ago
Renting would cost av 700 pcm more than mortgage interest = 16,800
Moving would have cost say 5k excluding any valuation on time and effort and disruption
So from peak it would have been worthwhile - but so far there would probably have been a window of max 18 months where it would have been beneficial, otherwise I would still be 'down' on the deal.

With interest rates so low the rent/interest differential is about 900 pcm so depending how quickly house prices are falling (and they have actually risen a bit this spring) the maths doesn't seem to be getting any better for STR.

Plus of course if I were renting I might have had to move again a couple of times in the 2 years...

kennyboy66_2

Hats off to anyone who really was a STR'er purely because they backed their judgement and in effect made a huge bet on house prices, however I suspect the majority sold for one reason (eg moving area, divorce, up-sizing etc) and decided to defer their purchase.

Financially I could have been at least £50k better off (even after rental costs, stamp duty, moving costs etc etc) by selling in 2007 and buying sometime between now and next year.

Even if I had known this for certain 2 years ago, I would still not have STR as I like the house we are in, and would not want my kids to grow up anywhere else.

JanCee

kennyboy66 wrote: »

Hats off to anyone who really was a STR'er purely because they backed their judgement and in effect made a huge bet on house prices, however I suspect the majority sold for one reason (eg moving area, divorce, up-sizing etc) and decided to defer their purchase.

Financially I could have been at least £50k better off (even after rental costs, stamp duty, moving costs etc etc) by selling in 2007 and buying sometime between now and next year.

Even if I had known this for certain 2 years ago, I would still not have STR as I like the house we are in, and would not want my kids to grow up anywhere else.

I actually did this in 2007. We had been in the house for 20 years and decided to bank the equity and rent for a while. We only rented for 6 months before buying again(didn't really like being a tenant) but it was easier to negotiate a chunk off the price of the house we were buying in a falling market and because we didn't have a property to sell.

It is hard to say how much money we may have saved because the house we have bought will almost certainly have fallen in value, even taking into consideration the drop in price, but we did sell at the peak of the market, so in the region of £30k after fees - but that is just a guesstimate.

dazeruk

Sorry to sound stupid but what's a STR.

I've managed to work out most acronyms used on the site (FTB=first time buyer, I hope) but not this one.

chewmylegoff

dazeruk wrote: »

Sorry to sound stupid but what's a STR.

I've managed to work out most acronyms used on the site (FTB=first time buyer, I hope) but not this one.

Sell To Rent

zappahey

I'm in the other factors camp but I was pretty sure which way the wind was blowing at the time, so it made my decision on whether to sell or rent out the house during our absence.

The first time we went overseas we kept the house and rented it out because it was a house we really liked and expected to come back to.

This time, we were less attached to the house and could only see one way prices were going so we bailed out.

Do I fret that I may have made the wrong decision? Occasionally, but I just look at Rightmove and see what similar places are advertised at and then look at our growing bank balance, both of which provide reassurance.

JayScottGreenspan

The equation is very different for FTBs and STRs.

Assuming mortgage interest is roughly equal to rent (rental yields still <5% in many areas) and moving costs are ~£5k per time:
* STRs who did so purely for fininacial reasons need house prices to fall ~£10k before they are in the money
* STRs who were moving anyway when they sold need house prices to fall ~£5k before they are in the money
* STRs who were moving anyway when they sold and when they buy incur no extra costs by STRing
* FTBs who postpone moving into their starter home incur no extra costs by waiting
* FTBs who wait for falls and end up jumping straight to a bigger home save an extra £5k on top of any HP falls

Edit: all approximately, and subject to loads of caveats, obviously - but you get the general idea...

StevieJ

JayScottGreenspan wrote: »

Edit: all approximately, and subject to loads of caveats, obviously - but you get the general idea...

Yes one of them is a minor thing called interest rates.

leftieM

We STR'd after prices started to fall here but before it started to feed through to the indices. We also sold just before the banks clamped down on lending (end of 2007). We put the house on the market thinking it might take a year to sell but it took 4 months from start to finish.

I wondered if it was a bad decision. Our EA kept telling us that house prices would never fall below what we were selling for, and they sold a smaller house for more than ours, so I did wonder if we were being fools. We sold for 20% below peak. However, I trusted my judgement and we pushed on with the sale. Prices are now 40% down.

It wasn't purely financial. We'd been in our house for 6 years and for 5.5 of those I wished we hadn't bought it. However, with the massive boom in NI (post 2003 notably), we were priced out of buying something better without borrowing heavily.

When we sold up almost everyone thought we were nuts. Now they think we're financial whizzes. I don't like to think about how much we've made as the people we sold to are in negative equity for that amount - not good.