Was STR worth it?

StiflersMom

I was speaking to the EA that we are buying through at the moment, and he said that a lot of the increased demand in the part of London we are buying in is from STR (Selling to Rent). People who sold in late 2007 / early 2008 as the market turned down and went into rental accommodation, and are now coming back in as the market is strengthening.

My question is “Were people really stupid enough to do this? Who would go through all the costs, hassles, and stress of selling their family home in the hope that they could time the market to risk all to make a gain before buying again?”

According to the EA, a lot of STRs have timed it really badly that are now nursing huge losses, and are in a big panic to buy back into the market. This is a big part of what is driving local prices up, as these STRs see the value of their house rise above the price they sold it for.


:eek:

What have others experience been of STR. It seems like a highly reckless strategy to me.

Good luck to everyone out there buying

Graham_Devon

Was it worth saying you were speaking to an EA? As you obviously werent. You just wanted a pop

the_ash_and_the_oak

StiflersMom wrote: »

I was speaking to the EA that we are buying through at the moment, and he said that a lot of the increased demand in the part of London we are buying in is from STR (Selling to Rent). People who sold in late 2007 / early 2008 as the market turned down and went into rental accommodation, and are now coming back in as the market is strengthening.

My question is “Were people really stupid enough to do this? Who would go through all the costs, hassles, and stress of selling their family home in the hope that they could time the market to risk all to make a gain before buying again?”

According to the EA, a lot of STRs have timed it really badly that are now nursing huge losses, and are in a big panic to buy back into the market. This is a big part of what is driving local prices up, as these STRs see the value of their house rise above the price they sold it for.


:eek:

What have others experience been of STR. It seems like a highly reckless strategy to me.

Good luck to everyone out there buying

My grandparents STR. It was sort of semi-financially motivated (but they also had concerns about the roof and a few other things of their house). I think since they rented some of those concerns might have been general ones rather than about the house they owned particularly ('hypothetical worries' do seem to increase w age imo). The plan to buy another house down the line gradually seemed to disappear as renting was paid for by interest and maybe more to the point they found it worked for them.

They did have to leave one place tbf so took the opportunity to spend 6 months in Malta before coming back.For active older people renting can actually have many lifestyle advantages imo

StiflersMom

Graham_Devon wrote: »

Was it worth saying you were speaking to an EA? As you obviously werent. You just wanted a pop

That's a little defensive Graham - did you have a bad experience with STR?

Sorry to hear that

Why don't you share your story, so that others learn from it

StiflersMom

the_ash_and_the_oak wrote: »

For active older people renting can actually have many lifestyle advantages imo

Thanks Ash - I can see how it would work from a lifestyle perspective. At least the cash can nicely supplement their pension.

Hope they are enjoying the sun

:beer:

the_ash_and_the_oak

StiflersMom wrote: »

Thanks Ash - I can see how it would work from a lifestyle perspective. At least the cash can nicely supplement their pension.

Hope they are enjoying the sun

:beer:

They came back! (and before I had a chance to go stay there)

Pobby

Hands up here. Had i been younger I may well have become an str. Also i would have got it very wrong if i had done so prior to 2007. In fact even so, doing it in 2007 wouldn`t have been great as the interest at that time would have covered the rent now with low IRs that would not have been the case for me. A guy at work did this in 2007, when i last asked him he said that he was looking to come back in but there hadn`t been the drops in prices as expected.

The only advantage afaiks would be to buy at auction. There are still some very fair bargains to be had.

StiflersMom

Pobby wrote: »

...there hadn`t been the drops in prices as expected...

I hear that a lot of STRs are finding this, and that previous price drops are quickly turning around. Hope he finds something.

lostinrates

I think davesnave found it worthwhile.

Not buying in 2007 has..so far...been the righ decision. If we had been owners I don't think we would have sold to rent, even if we were certain of drops, but not buying has been...right, so far.

HAMISH_MCTAVISH

I have no doubt there were a few, and I mean a very few, who timed it right and profited accordingly.

But for most it would have been disastrous, as the windows for getting it right were so slim. Two or three months each at peak and trough. And even then the gains were far smaller than hoped for, in most cases.

The transactional costs and rental expenses are just too high for it to work most of the time. And for those who left a good mortgage product to now have to take a worse one, it's even worse.

There was a lot of debate around this on hpc some time ago, some quite detailed calculations were done, and it all seemed to boil down to 20% falls in less than 2 years was the key thing just to break even at average house prices.

If the falls were less than 20%, it was tough to make it work, if the time spent in rental was more than 2 years, it was tough to make it work.

Of course if you sell a million pound house and then go live at home with mum and dad, or rent a bedsit, it becomes much easier to get the numbers to stack up..... But we all know that just doesn't happen in the real world.:rolleyes:

The viability of STR relied on faulty assumptions..... That rates would rise, that high rates would trigger the crash, that ZIRP wouldn't happen, that prices would fall by 40% to the previous cycle lows versus income, that authorities wouldn't intevene and would allow the markets to melt down, that the crash would be fast and the recovery slow, etc etc etc....

There will have been some success stories. Most will have lost their ar5e though.

ruggedtoast

Anyone who had a house they could afford in 2007, sold it, then missed out on 2 years of the lowest interest rates ever, to buy back in 2009 at a loss at a much worse rate of mortgage, must be feeling pretty sheepish.

I dont have a lot of sympathy to be honest. I have never even met anyone who has met anyone who has done this so guess this is a troll by the OP.

Its a shame that people with fewer than 100 posts are able to make threads.