Bulls and Bears don't exist

Emy1501

IveSeenTheLight wrote: »

I bought one of my properties in Jan 07, no where near the bottom.
As an investment, it's going very well though

While it is ideal to buy at the bottom and sell at the top, this is a very small window of oppertunity and prone to being very wrong.

Much better to invest in sound principles rather than hoping to get the cyclical market timing correct.

I do not believe anyone can time when to buy and when to sell correctly as its mainly luck and being in the right place at the right time. I have therefore never bought into the HPC argument. At the same time though I believe that the time to invest in property was back in the 90's when my family did it. I not sure that there will be much money to make out of property over the next 15 years or so

IveSeenTheLight

Cleaver wrote: »

Isn't it much better to do both?

We'll lets look with hindsight and at the housing market.

Let's assume I was in a position to invest in 1998.
Should I not have done so as it was not the bottom of the market?
Should I have waited until Feb this year?
How much more would it have cost me waiting for this bottom?
What would I have done in the 11 years between waiting for the new bottom?

I'd have ended up with a higher mortgage and started from a later position in life to clear it

For investing in property, I do not see there being any real significance in waiting for the cyclical market.
At best, you could have saved what 18 or 19%, not an insignificant some in hindsight, if you times it correctly.
Of course if you did not time it perfectly, the benefits would not have been the same.

I bought a property in Jan 07 and in that time I've had 16 void days.
Also in that time the tenants have significantly been paying off the mortgage.

Should I have waited for the bottom?
Well the bottom in that market was (Apr 09) on average still 4.19% higher than when I bought in Jan 07.
Again, I'd have ended up paying more and had been 2 1/2 years further down the line.

IveSeenTheLight

Emy1501 wrote: »

I do not believe anyone can time when to buy and when to sell correctly as its mainly luck and being in the right place at the right time. I have therefore never bought into the HPC argument. At the same time though I believe that the time to invest in property was back in the 90's when my family did it. I not sure that there will be much money to make out of property over the next 15 years or so

Fair enough, we all have our opinions.
Like I said, it's important to invest using sound principles.
I have seen and know property recently that meet those sound principles, so oppertunities still exist.

I am not saying the capital return will be anywhere near like the 90's, but those days have gone and you need to look to what the future will bring.

cootambear

Because the `free market` is fundamentally irrational, it is usually best to bet against sentiment.

Thrugelmir

Emy1501 wrote: »

I dont even think you will find many bears on HPC who believe prices will not go up over the normal term a property is bought for. Its all about seeing property as an investment ie buying in at the bottom of any cycle, jumping out at the top and then buying in at the bottom again etc.

I've never bought property as an investment. I've always purchased, never rented out of personal preference. I've moved house out of necessity, job relocation, personal circumstances.

Interestingly I found the best time to sell one property at the bottom of the market. Five years after purchasing it I sold it for £500 more than the original cost. However as house prices has collapsed by more higher up the ladder, I was able to vacate a 3 bed linked house in a town, to a 4 bed new detatched in the country. At that point the numbers added up. Professional couple, no children. We could bridge the gap and make an enormous leap. Our mortgage rate was around 10.5% to.

At the end of the day its all timing and ones to suit ones own circumstances.

the_ash_and_the_oak

IveSeenTheLight wrote: »

Given all the information you have in the current situation we face and knowing that situations can change, are you bullish or bearish on the housing market over the term that a property is usually purchased over?

Good question this - how long is a property usually purchased over?

the_ash_and_the_oak

IveSeenTheLight wrote: »

I do firmly believe in the long term that house prices will rise. this is why I am bullish on house prices and wonder if anyone can seriously be bearish on property on the long term.

Definitely agree with this (re:long term) tho imo you should really consider your position over the likely timeframe of owning the property before trading up/moving on etc. Eg buying a flat not really feeling living in it for 25 years so the rises of 25 years inc the ones after its sold not really applicable imo. Maybe around 5 is what I'd pencil in. Should be bullish or bearish based on the estimated timeframe of owning before selling (which is of course different depending on personal scenario)

the_ash_and_the_oak

Caveat to that: Someone buying in 1990 and living in it for the duration of a 25 year mortgage and selling in 2015 has made a pretty good profit imo (and would have been proven right if they were bullish in the long term!)...although imo buying in 1994 on a 20 year mortgage would have been a better idea

IveSeenTheLight

the_ash_and_the_oak wrote: »

Good question this - how long is a property usually purchased over?

Do you, or have you ever had a mortgage?
Generally, I believe mortgages are taken over 25 years, although there are instances of longer.

Of course even if you do take a 25 year mortgage out, my advice would be to overpay where you can as you can substantially reduce the length of time to pay it off and significantly reduce the interest you pay on the borrowed capital.

the_ash_and_the_oak

IveSeenTheLight wrote: »

Do you, or have you ever had a mortgage?
Generally, I believe mortgages are taken over 25 years, although there are instances of longer.

Of course even if you do take a 25 year mortgage out, my advice would be to overpay where you can as you can substantially reduce the length of time to pay it off and significantly reduce the interest you pay on the borrowed capital.

I haven't but surely a most first time purchases don't take place over 25 years? Don't a lot of people sell and rebuy after more like 4-8 years?