Low interest rates will support house prices until 2014

Emy1501

chucknorris wrote: »

Looks like that isn't a good place to buy investment property then, it very importantant to buy in the right place. For example where I live in Dorking I wouldn't dream of buying an investment property as the rental market here is pathetic

As I said I dont think there are many place outside of central London where BTL has been a worthwhile investment in the last few years. Just look whats happened to place like Manchester and Birmingham over the last few years.

Emy1501

chucknorris wrote: »

your figures are not right:

The yield is nowhere near 40% the headline yield (allowing for the 5k spend) is only 20.5%. Which is astonishingly high though and doesn't look right as 20% yields or anything near that is not normally achievable

The stuck down about 12.5K and after mortgage and deductions etc would have been making about £4400 a year? Thats not far off 40%. My workings out maybe wrong though

chucknorris

Emy1501 wrote: »

The stuck down about 12.5K and after mortgage and deductions etc would have been making about £4400 a year? Thats not far off 40%. My workings out maybe wrong though

No it is 40% I realised you meant the net yield and edited my post, when I realised.

There is something not right here though unless they got the property very cheap because of substantial work required, but 5k does not really equate to 'substantial' work unless they did it themselves and that was merely the material cost (ie excluding labour)?

What area is it in and what type of property was it?

IveSeenTheLight

Thrugelmir wrote: »

The material gain in average house prices was made between 1999 and early 2005. Since 2005 average house prices have in fact stood still.

So investors (as opposed) to home owners would have been best to leave the market then.

I stress average as of course there are always hotspots which perform better than the average. Though of course to balance this out somebody else has suffered a greater loss.

The art of investment is to know when to bank a profit and seek pastures new.

Investors in property do not do it for capital gain.
It's done for Rental Yield.
Capital gain is only realised when the asset is sold

Emy1501

chucknorris wrote: »

No it is 40% I realised you meant the net yield and edited my post, when I realised.

There is something not right here though unless they got the property very cheap because of substantial work required, but 5k does not really equate to 'substantial' work unless they did it themselves and that was merely the material cost (ie excluding labour)?

What area is it in and what type of property was it?

Its in South London. It was a bargin back in 96 not many people were interested in buying. It was also a 1 bed flat that was turned into a 2 bed flat. No major work was need when I think back maybe they spent 10K on it but I'm sure they said 5K. It did need a new kitchen, bath suite and central heating so it must have cost more than 5K to do up even though they had alot of people doing it cheap. In fairness it was probably even then worth about 10K more than they paid for it. I remember being really gutted as I had bought a few months earlier and whilst I got a bargin it was nothing like that!

Even If you add on the extra 5K you are still looking at 25% yield

Graham_Devon

IveSeenTheLight wrote: »

Investors in property do not do it for capital gain.
It's done for Rental Yield.
Capital gain is only realised when the asset is sold

What a ridiculous sentence.

Apply that to shares, gold, etc. All investments are done to make money, and the capital gain at the end of the investment is a major part of the investment.

chucky

Graham_Devon wrote: »

What a ridiculous sentence.

Apply that to shares, gold, etc. All investments are done to make money, and the capital gain at the end of the investment is a major part of the investment.

there is no yield on an investment in gold.
there are many shares with an extremely low yield and there are some with a very high yield - all related to risk.

sorry not a great comparison

btw you didn't come back to ISTL's post regarding you trying to bluff your way out before :rolleyes:

chucknorris

Emy1501 wrote: »

Its in South London. It was a bargin back in 96 not many people were interested in buying. It was also a 1 bed flat that was turned into a 2 bed flat. No major work was need when I think back maybe they spent 10K on it but I'm sure they said 5K. It did need a new kitchen, bath suite and central heating so it must have cost more than 5K to do up even though they had alot of people doing it cheap. In fairness it was probably even then worth about 10K more than they paid for it. I remember being really gutted as I had bought a few months earlier and whilst I got a bargin it was nothing like that!

Even If you add on the extra 5K you are still looking at 25% yield

They did very well, in 96 prices were starting to creep up so they must have just got it just in time.

25% or anywhere near it is not generally available, I think you are under the impression that this was the norm, let me assure you that it was not. Was it ex council? There's nothing wrong with good quality ex council, but can explain getting an exceptionally good buy and a correspondingly good yield.

HammerSmashedFace

StevieJ wrote: »

Good to see you bearish types have pulled yourselves off the floor and are now back with the absoloute certainties that you were spouting twelve months ago
I am still scratching my head wondering why you bought a house though

If I was to divulge how and why I bought (which I'm not, as I'm sure you would understand) you would see easily that given my personal circumstances it was a complete no brainer.

The value of that house is completely irrelevant to me as I live in it, will never owe anything and am lucky to never have to go on the mortgage merry go round again and that is where the story ends. People like me are the government's nightmare as I don't have a single penny of debt and never will have.

chucknorris

HammerSmashedFace wrote: »

If I was to divulge how and why I bought (which I'm not, as I'm sure you would understand) you would see easily that given my personal circumstances it was a complete no brainer.

The value of that house is completely irrelevant to me as I live in it, will never owe anything and am lucky to never have to go on the mortgage merry go round again and that is where the story ends. People like me are the government's nightmare as I don't have a single penny of debt and never will have.

Would you never consider downsizing? We live in Dorking which is a commuter town, when my wife retires in a few years we will probably move to somewhere near a beach which although would be a similar sized house, it would be cheaper. Some people also downsize in the size of their property too (although I don't think we would)