How many bulls are buying?

chucky

Thrugelmir wrote: »

Investing in shares and a BTL residential property ( or a few) is not comparable. For a number of reasons.

it was an anology comparing assets and yield.

Thrugelmir wrote: »

Yes with falling prices gross rental yields will increase on one measurement .Also where have you taken account of lost capital?

do you have to take account of it?
there is no margin call so until you sell or need to is it really that important?

sabretoothtigger

Really2 wrote: »

Why do the people who predict 70% falls call the people who say 20-30% bulls?

I only want one house!

I would love some proof that i have acualy said house prices are going to go up in the short to medium term.

Unless you are moving again short to medium term, why should you care when long term the best time to buy is right now

I dont know thats the case, unfortunately my ten year bifocal specsaver specials are in the shop. Its quite likely though imo

The difference I think is speculation for profit, people can do that if they like but maybe thats why they get so narky

Thrugelmir

chucky wrote: »

do you have to take account of it?
there is no margin call so until you sell or need to is it really that important?

Its a measurement of illusion. To believe that your investment now has a higher yield due to a fall in capital value. Its only worth is to a perspective purchaser when evaluating the property as an investment.

In my mind a loss is a loss. If I have a bad share or investment. I dump it. Move on. Its far less stressful than wondering if it may recover one day. There's often a better opportunity somewhere else. Property is illiquid.

chucky

Thrugelmir wrote: »

Its a measurement of illusion. To believe that your investment now has a higher yield due to a fall in capital value. Its only worth is to a perspective purchaser when evaluating the property as an investment.

you're not looking to sell - why would you be interested in the value of your property if it's providing you with a decent yield? frequently checking the value of your property is wrong and very short term.
knowing the part of the econimic cycle that you're on is much more important and also being able to sell at the right time making a profit. whatever people say property that has dropped in value now will have increased in profit (nominally) in the future.

Thrugelmir wrote: »

In my mind a loss is a loss. If I have a bad share or investment. I dump it. Move on. Its far less stressful than wondering if it may recover one day. There's often a better opportunity somewhere else. Property is illiquid.

yes a loss is a loss. as you say share's are not property but what you're saying is a bit too simplistic.

getting out of a loss making share is easy and you pay transaction costs on which are minor even if you re-invest in another share. getting out of a property is much more expensive - stamp duty, legal fees, mortgage fees, furniture etc etc. costs are major

if property was liquid and you could get into a new investment just like an equity it does make sense - this is why anyone looking to make money out of property short term has to very, very good.

Thrugelmir

Chucky, I admire your dedication to the cause of defending BTL. As you say selling at the top of any market is key. Strange that a considerable number of investors didn't realise that a year or so ago. Unfortunately most people aren't clinical enough to be satisfied with a good return and pocket a profit. They always want a little more. The fact that amateur BTL continued after the 2007 peak shows little understanding of how markets work.

Between 2003 and 2007 a quarter of all mortgages were advanced on an interest only basis. As FTB's were effectively driven from the market. One assumes a high majority were BTL investors. They in effect created their own market. Outbidding each other for property.

So where in the economic cycle are we now? I for one believe that we are in unprecedented terms.

What sets this recent property boom apart from previous HPI is how it arose. We are far from seeing the resolution of it either in a financial sense. The banks are far from secure.

Yes, I invest in shares (amongst other investments) but I don't churn them. As costs as you say reduce ones profit. Though I buy for the long term when the price is right.

Also been investing in Corporate bonds since last October when the markets crashed. On cost currently yielding 8.92% gross. Held in my ISA so tax free income one day. Reinvesting the income so compounding the return. Don't understand how gross 6% -7% on property is attractive? And thats when you own the property not with interest to pay and other costs to factor in.

Thanks for an intelligent discussion.

chucky

Thrugelmir wrote: »

Chucky, I admire your dedication to the cause of defending BTL. As you say selling at the top of any market is key. Strange that a considerable number of investors didn't realise that a year or so ago. Unfortunately most people aren't clinical enough to be satisfied with a good return and pocket a profit. They always want a little more. The fact that amateur BTL continued after the 2007 peak shows little understanding of how markets work.

So where in the economic cycle are we now? I for one believe that we are in unprecedented terms.

i'm just not dedicated to BTL and i'm not trying to defend it in anyway.
for me it's a good investment vehicle amongst other investments. i'm not trying to defend it just putting my view forward why i don't think it's a bad investment strategy.

i sold previous BTL's in 2003, 2005 and 2006. the reason was because i had pocketed a profit and i was happy with it. i thought it was a bubble and in no way did i predict that the crash was going to happen, it was by luck that i was safe and keeping to my strategy and not being greedy. some people as you say thought it would never end - they will have been burnt.

i have now got back in 2 times in the last year - not because we have reached the bottom in general terms but because they were at good prices and they were good long term investments. an example of bidding is one property that i did not buy was being looked at by someone else too. they offered on it as well - it didn't suit my price so i left them to it

Thrugelmir wrote: »

Yes, I invest in shares (amongst other investments) but I don't churn them. As costs as you say reduce ones profit. Though I buy for the long term when the price is right.

Also been investing in Corporate bonds since last October when the markets crashed. On cost currently yielding 8.92% gross. Held in my ISA so tax free income one day. Reinvesting the income so compounding the return. Don't understand how gross 6% -7% on property is attractive? And thats when you own the property not with interest to pay and other costs to factor in.

i also invest in shares and again have not bought shares because they're a good yield but because they have been at a good price and are a good yield. i've not been brave enought to go into bonds as i don't understand the complexities - maybe the recent BTL investors should have followed the same logic. any books or anywhere you would suggest to find out more about them?

the comment about 6%-7% being attractive is right but have you considered the tax efficencies of BTL if done properly? not telling you to do it but it's something that if done well does give you more than that 7% yield gross of course.

Thrugelmir

Ah. I didn't realise that you've held rental property previously.

I'm certainly not anti property as an investment.

My current view is based on the fact that in more recent times the market has become totally distorted. Until the dust settles. Which may take a few years. The point at which to invest again will rise like a phoenix from the ashes.

I tend to read as much as I can in the local library. FT, economist, Investors Chronicle to name a few plus books written by sucessful business people. Don't take it all as gospel though. My mantra is too understand whatever I invest in. As at the end of the day a profit is what counts. Have burnt my fingers in the past. Though gains outweigh losses.
I prefer cash yields as opposed to capital growth. As i can use the cash to diversify my portfolio further.

chucky

Thrugelmir wrote: »

My current view is based on the fact that in more recent times the market has become totally distorted. Until the dust settles. Which may take a few years. The point at which to invest again will rise like a phoenix from the ashes.

thanks for the insight.

here's where i sort of have a problem with the current markets.
cash generates little yield currently and i'm always looking for other options to invest in as cahs isn't going anywhere for now. i always have in the back of my mind can invest in the same thing next month a little bit cheaper.

it's just like knowing where to get out when you have enough profit but in reverse.

Thrugelmir

chucky wrote: »

thanks for the insight.

here's where i sort of have a problem with the current markets.
cash generates little yield currently and i'm always looking for other options to invest in as cahs isn't going anywhere for now. i always have in the back of my mind can invest in the same thing next month a little bit cheaper.

it's just like knowing where to get out when you have enough profit but in reverse.

Maybe patience is the key. Lock away cash on fixed term deposits maybe, over various time periods.