Buy to let fever?

meanmachine_2

Tassotti wrote:

So, yes, in 40 years, I would expect my childrens' children to be paying well over a million for a 1 bed flat. A million will be virtually nothing then.

How many times does this have to be repeated....we're in a low inflation era now.

A million pound debt will still be a massive debt in 20 years' time.

Sheesh. I give up.

lynzpower

A quarter of a million seemed like an astronomical amount of money 15 years ago, now its the norm for FTB.

gallygirl

Dan29 wrote:

That's subjective, although if I found somewhere where I could get 15% I wouldn't be posting details on here

I'm defining "make money" as in the original comment "impossible to make money" as anything over 0%, i.e. the dividing line between making money and not making money.

OK - hows this .....

2 yrs ago bought btl, 64k with 8k deposit. Rent = 5000 per year, mortgage 3500 per year, insurance, repairs 500 per year, 1000 profit = 12.5% return. Now worth 94k. 30k increase + 2yrs @ 1k profit, 32k in 2 years, will leave you to work out increase.

nmiah786

ali007 wrote:

OK - hows this .....

2 yrs ago bought btl, 64k with 8k deposit. Rent = 5000 per year, mortgage 3500 per year, insurance, repairs 500 per year, 1000 profit = 12.5% return. Now worth 94k. 30k increase + 2yrs @ 1k profit, 32k in 2 years, will leave you to work out increase.

Not meaninng to sound difficult but how much do you think you will realistically be able to sell that £94k property in todays market. If your not selling now then the profit is irrelavent (sp?)!!

If you can sell it now and make that kind of profit, good on you, well done.

[Deleted User]

Damn, and here's me struggling to get my foot on the ladder, desperate to become a FTB (in london.. its like a different country) and people are still talking buy to let.

I've got quite angry about all this today; house prices have outstripped wages and it's all got to collapse one day.. but i can't see when.

Makes me think i should just spend my hard-saved 10K deposit money on a shiney new car.

BobProperty

ali007 wrote:

OK - hows this .....

2 yrs ago bought btl, 64k with 8k deposit. Rent = 5000 per year, mortgage 3500 per year, insurance, repairs 500 per year, 1000 profit = 12.5% return. Now worth 94k. 30k increase + 2yrs @ 1k profit, 32k in 2 years, will leave you to work out increase.

Er? I did say gross rent somewhere didn't I? 15% net and I'd be trampled in the rush.
So £5000 on a £64000 property = 7.8% on my calculator. Or if you want your return based on your estimated current value £5000 on £94000 = 5.3%
Is that mortgage IO at 6.25%?

F_T_Buyer

ali007 wrote:

OK - hows this .....

2 yrs ago bought btl, 64k with 8k deposit. Rent = 5000 per year, mortgage 3500 per year, insurance, repairs 500 per year, 1000 profit = 12.5% return. Now worth 94k. 30k increase + 2yrs @ 1k profit, 32k in 2 years, will leave you to work out increase.

This post sums up the thinking behind Buy to Let.

Yes, you have done well. You found a high yielding property two years ago - a 7.8% gross yield. After maintenance that is 7% - still good.

But look at that investment today. The gross yield would be 5.3% gross. With a net yield of 4.8%. No very good at all. They are many other investments that will easily out perform that!

Also, what about voids? Debt servicing costs? etc etc. This needs to be taken into account.

Ah... but it's going up in value... innit... (I hear some people say to themseleves)

Is it? We can argue which way prices will go from now on - but's that's been covered far enough. Either way there is a huge amount of contridictory evidence from different house price surveys. The general consensus is prices will be flat!

But to price the investment on future growth is simply bubble logic. Just like the recent tech bubble. No one cared about the earnings of the company (the yield) it was going up in value so they didn't care - it was a bubble. When it stopped going up in value it crashed.

To think BTL is a good investment because it will go up in value, proves my point that the housing market is a bubble.

I'm not saying that money cannot be made, it can if you look very hard. But to assume your capital gains will continue as it did is rather foolish. Making money out of property is not as easy as it once was, and K&P producing a program to ramp BTL is purelly irresponsible.

BobProperty

ringo_24601 wrote:

.... but i can't see when.

Makes me think i should just spend my hard-saved 10K deposit money on a shiney new car.

If you want to get on the property ladder then please don't. Give it 4 years, pay off any debt you have, save as much as you can, and get a nice deposit together. When the time comes, estate agents will be queueing up to sell you properties.

Deemy

A flat market means a fall in price in real terms !

The risk is with BTL, for there will be times when the property is empty.

meanmachine_2

lynzpower wrote:

A quarter of a million seemed like an astronomical amount of money 15 years ago, now its the norm for FTB.

250K was an astronomical number then, and it still is.

Factor in mortgage interest and that's 500K you've got to earn over the course of your life.

Now that's scary.

Just shows how HPI has totally destroyed the value of money.

It's like living in Zimbabwe. Well, ish.