Bears, Buy to Lets landlords and House Prices.

Graham_Devon

julieq wrote: »

If you can get 7% in a bank account, show me where.

If you think house prices will be 30% down on today in 7 years, then I'm afraid I don't agree with you. Just on the basis of normal levels of historic inflation there's a 30% riser over that period.

And you complain we don't follow your argument?

Your just back to the 7% yield while totally ignoring everything that has been said.

7% isn't that realistic either, is it.

As I said in my first post, you may convince yourself by concentrating on a tiny part of the whole investment, but you won't convince us.

mbga9pgf

julieq wrote: »

If you can get 7% in a bank account, show me where.

If you think house prices will be 30% down on today in 7 years, then I'm afraid I don't agree with you. Just on the basis of normal levels of historic inflation there's a 30% riser over that period.

No, they wont be, I didnt say that. I said REAL prices will not be at 2007 values in my lifetime. You need to do some research love and see what I am on about.
In real terms yes, prices will be 30% lower. If you want to prove me wrong, go ahead. Fact is, until the 2001 boom, prices tracked wages with few minor deviations. post 2001 was madness that we will never see a gain thank god.

As I said, I am earning 3.5% COMPLETELY risk free. Compounded annually. With annual HPI negative 12% and the spring bounce now over.
Show me I can go out today, buy a BTL and make 7% return after accounting for

management fees
Mortgage costs for a BTL mortgage product
allowance for the 25% of tenants currently in default
costings for projected rental drops

and I will doff my hat. But then again, I dont think you will be able to prove it will you?

julieq

Who said anything about 2007 prices?

I said prices NOW. You invest from current value, not past value.

You don't need to agree with me, but don't patronise me. If you're happy with your "risk free" 3.5% then get on and take it.

mbga9pgf

So, your answer is no then? Prices have a way to fall from here too you know...

I said prices NOW. You invest from current value, not past value.

Tell that to your mates over at inside track that bought in 2007....

Want to tell me why so many of your BTL chums are going BR at this moment in time?

Graham_Devon

Well thats that then. Another "talk everything up but ignore every question" mini debate.

What was the point really!!?

7% though, better than the bank!

Take it you have no idea how to answer the questions Julie, just know how to talk up the one last thing you have to hold on to?

julieq

I'll debate, but the next person who calls me "dear" gets a 5" stiletto heel jammed through their foot. So if one or other of you cares to tone down the sarcasm and unpleasantness a notch or two, let's reset back to what I am saying.

Over the next 7 years, house prices are likely to get back at least to their levels today. Just on the basis of 3% compounded annual inflation, there's an underlying 30% or so ramp in prices, so it would be very difficult not to get basic stagnation at the very least.

There is a gain due to rental income. We can argue about what that is.

The only reason to bail from a BTL investment at this point is if income is less than costs (i.e. cashflow). Otherwise you simply crystallise a loss. Any competent BTL owner would be using current low rates to mitigate that situation.

So, sarcasm apart, which of those statements is untrue, and why?

Then it just becomes a question of beating the safe 3.5% from the bank. Which I think is possible, and you don't, so let's agree to differ shall we?

julieq

mbga9pgf wrote: »

So, your answer is no then? Prices have a way to fall from here too you know...



Tell that to your mates over at inside track that bought in 2007....

Want to tell me why so many of your BTL chums are going BR at this moment in time?

I don't have any "mates" at inside track, and I certainly wouldn't have said BTL was a good investment then. At that time a housing bubble had clearly formed and rental was way less than the amount you could earn having the money in the bank.

Neither of those facts are true now. BTL investors are in a better position, and the competent ones will be paying down debt. And just what is the proportion of BTL investors going bankrupt? Last time we were told the bankruptcies were "soaring" to small numbers of hundreds, in an environment where vastly more conventional businesses are folding. You're falling prey to press hyperbole without any absolute numbers attached.

chucky

Graham_Devon wrote: »

Load of bull, sorry

Especially the arguably the best investment claptrap! Keep convincing yourself, though you won't us!

you do come across as a someone who hasn't got a clue Graham.
it get's explained to you and you still don't get it.

the key to being a landlord is one word here - Buy to LET
if you have a good yield - you do well.
if you don't you've messed up and shouldn't be into BTL.

as for the comments on capital depreciation - why would any investor (of anything) buy an asset at the top of the market? if your entry price is to high of course you're going to have a paper loss. if your entry price is good - why would you lose money long term.

Graham_Devon

julieq wrote: »

I'll debate, but the next person who calls me "dear" gets a 5" stiletto heel jammed through their foot. So if one or other of you cares to tone down the sarcasm and unpleasantness a notch or two, let's reset back to what I am saying.

Who's called you dear? Or is that the imaginary stuff going on again

Over the next 7 years, house prices are likely to get back at least to their levels today. Just on the basis of 3% compounded annual inflation, there's an underlying 30% or so ramp in prices, so it would be very difficult not to get basic stagnation at the very least.

There is a gain due to rental income. We can argue about what that is.

The only reason to bail from a BTL investment at this point is if income is less than costs (i.e. cashflow). Otherwise you simply crystallise a loss. Any competent BTL owner would be using current low rates to mitigate that situation.

So, sarcasm apart, which of those statements is untrue, and why?

None, but you have still ignored the questions.

I rather admire that you have to buy at todays prices AND get a 7% yield (very unlikely) to carry out your maths. I rather get the feeling we were talking about people who have bought in the last few years. Not last week, but anyway....

If it is true that it's all about yield, then why the hell are the bulls going round all ramping up prices and talking about how much their houses have gone up by this month thanks to increases in the house price?

Strange one that. It's not about the asset value, UNLESS the asset value is going up, then it's all about the asset value.

Graham_Devon

julieq wrote: »

I don't have any "mates" at inside track, and I certainly wouldn't have said BTL was a good investment then. At that time a housing bubble had clearly formed and rental was way less than the amount you could earn having the money in the bank.

Neither of those facts are true now. BTL investors are in a better position, and the competent ones will be paying down debt. And just what is the proportion of BTL investors going bankrupt? Last time we were told the bankruptcies were "soaring" to small numbers of hundreds, in an environment where vastly more conventional businesses are folding. You're falling prey to press hyperbole without any absolute numbers attached.

The number of BTL reposessions are up eight fold compared to just last year.

The rate of BTL reposession is 3x that of the rate of householders reposession.

http://www.ftadviser.com/FTAdviser/Mortgages/Products/BuyToLet/News/article/20090611/bfc44596-5673-11de-8e2b-0015171400aa/BTL-borrowers-losing-homes-faster-than-rest-of-market.jsp

Yes, much better position.