How much to offer on £175,000?

Peterxxxx

two years ago was actually the bottom of the slump following the 2007-08 crash and quite a few brave souls got in and got some real bargains that winter before prices started rising the following Easter. Now we are back down a bit again, but we are not back down there yet and may not get there again.

I would cast your net a bit wider in order to get a sense of a) what the house is worth and b) what the house is worth to you.

hazyjo

Peterxxxx wrote: »

two years ago was actually the bottom of the slump following the 2007-08 crash and quite a few brave souls got in and got some real bargains that winter before prices started rising the following Easter. Now we are back down a bit again, but we are not back down there yet and may not get there again.

Must be a regional thing then cos prices here are definitely under what they were in 2007 and haven't gone up since then, and still seem to be falling. I'm in East London.

Jx

john_white

hazyjo wrote: »

Must be a regional thing then cos prices here are definitely under what they were in 2007 and haven't gone up since then, and still seem to be falling. I'm in East London.

Jx

Exactly. House prices are regional.

We bought early 2007 and sold 2010, the HPi showed just 1 poin apart (277 or there abouts).

Peterxxxx

"Must be a regional thing then cos prices here are definitely under what they were in 2007"

2007 was the peak. But two years ago, when the place three doors away sold for 105K - was winter 2008-9 and that was the bottom of the last slump -when we were - on average - about 20 percent below peak and when people were having offers accepted at quite a bit even below that. It's not unreasonable to think that in most places we're not back at that point, I would think.

Thunderbird_2

Thank you all for your kind replies and apologies for the late response (work and mortgage in principle malarky!)

To clarify few things, the house is a 3 storey property divided into 4 flats achieving £1000 rent a month.It was purchased 1991. The house next door is similar size, but with a shop on the ground floor. I am not sure about the condition when sold on 2008, but now seems to have better windows than the one I am thinking of investing in.

I really want this house as a pension investment. I am not a professional landlord. I only have one another house that I let (not out of choice) but seeing this one seemed a good financial sense.

The area is not the best in terms of families because the house is on a main busy road and the school close to it doesn't perform as the we all hope for.

Any more thoughts will be appreciated.

Many thanks

Mallotum_X

So its 4 flats/bedsits and not a house like the one several doors down.

Are ther 4 flats receiving £1000 each per month or is it £250 each per month?

Are you planning to continue to rent the flats out?

Does the property actually come up to the correct standards for rental/HMO?

What return do you consider reasonable to make, have you calculated expected profits?

£150k if fully let with no voids ever at £1000 a month is a return of about 8%. Do you consider that to be ok?

Have you got the finance in place, cash buyer or with a mortgage, have you managed to get a buy to let mortgage offer?

Lots of questions really to be able to offer any advice.

sunshinetours

Mallotum_X wrote: »

So its 4 flats/bedsits and not a house like the one several doors down.

Are ther 4 flats receiving £1000 each per month or is it £250 each per month?

Are you planning to continue to rent the flats out?

Does the property actually come up to the correct standards for rental/HMO?

What return do you consider reasonable to make, have you calculated expected profits?

£150k if fully let with no voids ever at £1000 a month is a return of about 8%. Do you consider that to be ok?

Have you got the finance in place, cash buyer or with a mortgage, have you managed to get a buy to let mortgage offer?

Lots of questions really to be able to offer any advice.

If the answer is the one highlighted above please let me have the link as I will buy it for full asking price

Thunderbird_2

Mallotum_X wrote: »

So its 4 flats/bedsits and not a house like the one several doors down. I can't tell from the outside, but I expect to be flats. May be I need to go and speak to the shop owner?

Are ther 4 flats receiving £1000 each per month or is it £250 each per month? £250 each

Are you planning to continue to rent the flats out? Yes

Does the property actually come up to the correct standards for rental/HMO? HMO is to be clarified, the rest is in order.

What return do you consider reasonable to make, have you calculated expected profits? expected profit should be £300-£400/month

£150k if fully let with no voids ever at £1000 a month is a return of about 8%. Do you consider that to be ok? I think 8% is good in these times, what do you think of it?

Have you got the finance in place, cash buyer or with a mortgage, have you managed to get a buy to let mortgage offer?
Mortgage passed primary check and will be in place within 48hrs Lots of questions really to be able to offer any advice.

Many thanks

Mallotum_X

Its really an investment type decision.

What will happen to property prices in the short, medium and long term, (relative to the rest of the economy). How long do you plan to hold on, and what would your feelings be if prices say fell say 10% this year.

8% return before other costs is only part of the picture, 400 a month profit is the actual return (I assume by profit you are taking into account interest payments on the mortgage but obviously excluding capital) The return on 300-400 a month is about 3%.

Have you considered longer term repairs and maintenance and figured these into return calculations.

It all boils down to how much risk you want to take, if property prices remain static in real terms then a 3% return and the need for capital repayments plus occasional big returns doesnt seem like a great investment to me. Plus there may be void periods when there is no rent from some of the flats.

If you are hoping for (real term) property price rises then thats the current big question, will we get significant property inflation again? Its very easy to argue either way on that one.

Obviously none of us on here can say whether its a good investment for you, but the key is to consider all the options. None of us know really what will happen to property as an investment over the next few years. If prices shoot up again then in 10 years time you will probably feel like you got a great bargain, if prices stagnate or fall then would it look quite so good.

Take your time and make sure you have considered all the risks before making your decision.

Thunderbird_2

Mallotum_X wrote: »

Its really an investment type decision.

What will happen to property prices in the short, medium and long term, (relative to the rest of the economy). How long do you plan to hold on, and what would your feelings be if prices say fell say 10% this year. I plan to hold on for years to come as I am considering it a cash cow rather than an asset appreciating in value. Any appreciation in value in 25 years time is a bonus.

8% return before other costs is only part of the picture, 400 a month profit is the actual return (I assume by profit you are taking into account interest payments on the mortgage but obviously excluding capital) The return on 300-400 a month is about 3%. You are spot on there. In the current climate, I thought 8% gross return is good on the amount invested. I understand the 3% is more real term return.

Have you considered longer term repairs and maintenance and figured these into return calculations. I have not considered these long term repairs yet.

It all boils down to how much risk you want to take, if property prices remain static in real terms then a 3% return and the need for capital repayments plus occasional big returns doesnt seem like a great investment to me. Plus there may be void periods when there is no rent from some of the flats.

If you are hoping for (real term) property price rises then thats the current big question, will we get significant property inflation again? Its very easy to argue either way on that one. Very true, but, the over all trend over 20 years time was almost always upwards.

Obviously none of us on here can say whether its a good investment for you, but the key is to consider all the options. None of us know really what will happen to property as an investment over the next few years. If prices shoot up again then in 10 years time you will probably feel like you got a great bargain, if prices stagnate or fall then would it look quite so good. Agreed

Take your time and make sure you have considered all the risks before making your decision.

I am thinking of getting a private surveyor to value the house for me. I feel it will be money very well spent as it will help me make an educated offer. The trouble I am facing now that the house is not so bad value based on the rental incom. However, considering the house without the return, it seems way overpriced! Even when thinking of the value of the flats separately, they will not added to the asking price or indeed to the indicated price they might accept!