is it wise to invest in buy to let now?

edgex

BTL is NOT, & NEVER HAS BEEN, a way to great or instant riches

as with any other substantial, high-risk investment, it is for the long term, ie. 10years+

when you add together any profit made on the rent, & any increase in asset value over that sort of period, you could be looking at a profit
as soon as you add in the average mortgage charges for a BTL mortgage, there is no profit.



student housing:
dont go there
ever

not only are there now some pretty tough regulations to deal with, as well as those laid down by university accommodation offices, there has been, & continues to be built, a lot more purpose-built student accommodation.
these are either built by uni's themselves, or major players in the market.
there is no way that you could ever compete with what they can offer.

Bermuda_John

get a 25% deposit 10% for improvements and then go for it

houses are at a 20% discount, in a few years time half the poeple on here will be saying "i wish i had cashed in on the credit crunch, we could have made a mint if we had bought some houses"

dont let other peoples negativity get in your way. i f you belive you can do it, go for it.

if you fail, its your fault and everyone will tell you "i told you so".

If you can take that on then chin and have the necessary finances then do it.

no profit in BTL, think you have your sums wrong edgex

toby3000

KatP wrote: »

Interesting thread.....

I am currently living mortgage free in a property owned by my husband. Part of the logic of buying a property is having a foothold in the property market and some security.

i know it's prying somewhat, but are you still with your husband? In which case you DO have one house already...

colinbloke

good point bermuda john about house prices being up to 20% cheaper now than a year or so ago ..... of course they could drop again as the rcession could go w shape ect however what about the housing shortage i keep hearing about even though alot of new houses are being/ have been built aparently it will not be enough or future demand. hence surely property prices will recover 5 years plus any comments?

nembot

colinbloke wrote: »

good point bermuda john about house prices being up to 20% cheaper now than a year or so ago ..... of course they could drop again as the rcession could go w shape ect however what about the housing shortage i keep hearing about even though alot of new houses are being/ have been built aparently it will not be enough or future demand. hence surely property prices will recover 5 years plus any comments?

There is no housing shortage, only people with a vested interest in the property market are saying this, try a search on rightmove.

They list 650,000 properties for sale, then we have property that's not on rightmove and last month there were only 38,000'ish mortgage approvals.

So the only real shortage apparently, is money, buyers and realistically priced property.

edgex

there is no property shortage
there is simply a broken market

a few years ago, the unions had some research done into homelessness, & empty properties
they found that the number of homeless could be housed 7 or 8 times over by simply using those empty properties that were known about, usually those that had been empty for a number of years.

then add in all those people that are in properties that are realistically too big for them.
does an elderly couple really need a 4bed detached house?
does a single person need a 3bed house?



property is still overpriced, & part of the ramping up of prices was due to the BTL's

if your thinking that the future will be low interest rates, that also means there will be low inflation, low wage increases etc etc
so where would any major increase in the 'value' of a property come from?
who is going to be able to afford to pay the rent, or buy it in the future, to give a BTL'r a profit?

Bermuda_John

put it this way, i wouldnt listen to any experts

in 2006 and 2007 nobody predicted a massive recession!!

Housing is a basic need, once the banks get back in shape house prices will rise.

I thihnk it will take around 5 -10 years to recover and then 5 years of boom.

colinbloke

this thread has certainly made me feel far more cautious about property as an investment however i did read some where historically including the 1930's depression house prices have incresed 7% on average per year,

anybody else have anything positive on the subject of property as an investment at present or is it really that high risk,

Thermidor

Property ALWAYS rises in the long term.

You need to look at property prices for every decade. Ten years ago properties were MUCH less than they are now - and that's even with the last property slump!

Twenty years ago they were even less.......and so on.

In 10 years from now all properties will be worth at least double (or even treble) what they're worth now.

Harry_Powell

It's an interesting notion when people say you're going to have a '100% deposit' if you take money out of your mortgage.

However, if you take the logic further, even if you had the 25% deposit saved up in a bank account instead of against your mortgage and if those savings are less than what you owe on your current mortgage, you'll still be borrowing 100%.

Example,

You have a £350k house with a £100k mortgage on it. You want to buy a small 2 up 2 down terrace to let out and it will cost you £100k. You remove £25k from your mortgage for the deposit on the terrace. The good folks on here shout "NO!" you really have a 100% mortgage on the terrace!

Alternatively...

You have a £350k house with a £125k mortgage on it and savings to the tune of £25k. You want to buy a £100k terraced house to let out. You put your £25k savings forward as a deposit. The good folks on here say "Yeah! that's the way to do it, you are not mewing! Good man".

Basic mathematics skills are often lacking on MSE. In reality you should be looking at affordability and security. You should be asking yourself the following questions:

1. If you MEW money out of your house, will you still have enough equity to get a decent mortgage rate (anything from 60% to 80% equity)?
2. If you buy the BTL with a 25% deposit and 75% mortgage, will you be able to acquire a decent mortgage rate?
3. Will you get a decent return on your £100k investment? (i.e. will the rental be sufficient, especially when you factor in expenses and void periods).
4. Will you be able to afford both mortgages if you have a void period (especially if interest rates go up)?

If you can "Yes" to all of the above, then you should go for it. The careful (and some would say fearful) folks on MSE would have you be completely mortgage free and then save up the 25% deposit before buying the BTL, and even then they would prefer you to buy the BTL outright with no mortgage. This is fine if you intend becoming a BTL landlord in 25 years time...