Was STR worth it?

Cannon_Fodder

The maths has been done to death on this, in numerous posts when it was a hot topic. Try the search facility, if you are genuinely not trolling.

The short version is that given the right timing, the right interest rate on savings and a decent amount of equity to earn interest to pay your rent, the eventual difference between 2007 prices and 2009 prices is pretty much 100% in the bank, and can be a substantial amount of money.

"all the costs"? - Stamp duty is only paid when you eventually buy, anyway. You pay the EA to sell, whether you rent or buy the next place. Solicitors might have some overlap in costs, but it should essentially be a two-stage process, capable of splitting. You only Survey your potential purchase, not the rental.

Duplicated costs? Removals. Mail redirection. BT phone line. ?what else?

Hardly earth-shattering, if you save £10s of thousands.

Having said which, I think it would be brave to deliberately give up a wonderful home just to save some money.

I think if you are planning a move anyway, but the right new place has not come along, and you have a buyer in place at a decent price, then going into rental to bide your time and watch the market for "the house", irrespective of the money side is sensible.

The money you save is a bonus.

purch

No offense, but I would consider anyone who STR'd, who did it for any reason other than they were about to be repo'd because they couldn't afford the mortgage, were completely BONKERS !!!!

StiflersMom

My own thoughts exactly purch.

It is reckless in the extreme. What if the market moves against you? You are stuck in rental for years

Valerius

The major flaw in the strategy of anyone who STR to cash in the market was an expectancy of many cheap (good) repos around on the market - This has not happened.

Had there been this situation, may be, it would have worked - But It did not - Most homeowners stayed put enjoying their 0.5% tracker rate.

purch

The major flaw in the strategy of anyone who STR

The major flaw was, that they had a strategy to begin with !!!

Once you start looking at the place where you live in terms of figures on a calculator you are on the slippery slope !!!

the_ash_and_the_oak

Not totally convinced STRs would have been in the market for repos imo.

Do we really think most STRs were mid-mortgage? My assumption (w no real basis tbf) was that most STRs were pretty much mortgage free

Really2

STR was selling and interest on capital covering your rent while prices fell. (I nearly did it) So mid mortgage, cant really see the point of STR if virtually mortgage free (some were hoping to be )
What many STR's did not account for was IR being cut during a recession/bust.

So now the STR fund is being dipped in to or the amount saved each month is being lowered due to the fact they have to pay for their rent.

Personal I would have been worse of to STR but others it may have suited.
I would say it suited people who did not know where they were going to move to.
If you had a specific area or street you wanted to buy back in to I would say STR as not been great. (so far:))

Valerius

the_ash_and_the_oak wrote: »

Not totally convinced STRs would have been in the market for repos imo.

Do we really think most STRs were mid-mortgage? My assumption (w no real basis tbf) was that most STRs were pretty much mortgage free

Well, sell high buy low was the name of the game right?

I am talking specific STRs who tried to time the market

Pobby

Had you StR`ed in 1991 you would have done relly well. IR`s very high so a good bit to be had from that and a deffo large price drop. Add that to the amount of repos at that time and it would hve been party on.

Davesnave

lostinrates wrote: »

I think davesnave found it worthwhile.

Yes we did, despite failing to sell at peak.

As Cannon Fodder says, if you were going to move anyway, there wasn't a better time, though as we found, selling first was the tricky part once the slide had begun!

As for interest on the money, we had over 6% on most of ours, and we still have on some of what's left over. OK that will end at Christmas, but I've just opened another at 4.25% this morning. The bottom line is that we profited on renting.

No, we didn't much care for being tenants, though living in a so-called 'posh' road round the corner from our old house confirmed we'd had a real bargain for the 21 years we were there. Being in rented was a necessity, but not principally because we felt the market was due more falls; more to do with finding the specific type of property we wanted. If we hadn't found that, and we expected it to take longer, there would have been little point in going through all the bother.

After only 5 months in rented, we found a place that ticked almost all the boxes. I don't want to go into the circumstances, but the owner had an inflexible deadline, a limited market and was desperate to sell, so the deal we did was a bit special. There would have been no property here for us though, if we hadn't had the cash sitting there, ready to go. As it was, we were almost gazumped, but the vendor had moral fortitude, so maybe we were a bit lucky there too.

So, despite an appalling start, we did OK in the end. However, we fully expected to go to West Wales where, if we were still searching now, there are plenty of deals to be done. If we were still hunting, we'd be untroubled by thoughts of a sudden mad rush come the spring, but probably very bored.

All I can say is that STR worked excellently for us, but I wouldn't advise others to do likewise because human aspirations and the characteristics of different localities differ tremendously.