Rents Continue Rising

chucknorris

IveSeenTheLight wrote: »

I think the percentage of investors you refer to is minimal.

I have two BTL's. The rent from the cheaper property covers the mortgage interest on both properties.

Profit is such that I am considering investing the profit on a third BTL, but of course it would be self sustainable

We would invest further but we are planning to sell up when the market is at a good level (which is of course very difficult to guage right now, but we think about 10-15 years from now).

When we retire however we are toying (early days) with the idea of perhaps moving to Devon and having a few holiday cottages.

Wee_Willy_Harris

chucknorris wrote: »

In terms of being safe we are in a much superior position than the Wilsons are. You really are a pessimist aren't you? I have been through recessions before it's actually in the next year or so that is the optinum time to invest.

However at my time of life it doesn't suit as I am gearing up for retirement in 10-15 years time so it isn't realistic to invest further when I plan to bail out so soon).

And I wish you a very happy retirement. But, as has been said already, your undoubted foresight and wisdom is no indicator of the rest of the sector. Frankly, right now is pretty much as good as the BTL market will ever be. Those investing next year are in for a very expensive lesson in the facts of life. The BTL road ahead looks very rocky indeed and, for some, will come to a very expensive dead end much sooner than many would have you believe. That's not pessimism, that's realism.

chucknorris

Wee_Willy_Harris wrote: »

And I wish you a very happy retirement. But, as has been said already, your undoubted foresight and wisdom is no indicator of the rest of the sector. Frankly, right now is pretty much as good as the BTL market will ever be. Those investing next year are in for a very expensive lesson in the facts of life. The BTL road ahead looks very rocky indeed and, for some, will come to a very expensive dead end much sooner than many would have you believe. That's not pessimism, that's realism.

It's not about the year one yield it's about the growth of the yield over the years, btl NEVER looks good looking at the early years in isolation.

Wee_Willy_Harris

IveSeenTheLight wrote: »

I think the percentage of investors you refer to is minimal.

I have two BTL's. The rent from the cheaper property covers the mortgage interest on both properties.

Profit is such that I am considering investing the profit on a third BTL, but of course it would be self sustainable

A prime example of what I'm discussing. The principle of the BTL model is very similar to that of pyramid selling, as your comment above demonstrates. But it only takes a very small negative adjustment for the foundations to crumble. That "investors" like you are looking to buy at a time of inflated prices, interest rates than will only increase and a downward pressure on rents shows how effective the smoke and mirrors trick has been. Tread carefully.

Wee_Willy_Harris

chucknorris wrote: »

It's not about the year one yield it's about the growth of the yield over the years, btl NEVER looks good looking at the early years in isolation.

Well, no. Because the BTL model relies on continued expansion funded by current investment, and that assumes that everything good (rental income, capital value, low interest rates, etc) continues to get better while everything bad(reducing rents, higher interest, falling/stagnant capitol value, voids, increasing costs) never happens. How realistic IS that, really?

chucknorris

Wee_Willy_Harris wrote: »

Well, no. Because the BTL model relies on continued expansion funded by current investment, and that assumes that everything good (rental income, capital value, low interest rates, etc) continues to get better while everything bad(reducing rents, higher interest, falling/stagnant capitol value, voids, increasing costs) never happens. How realistic IS that, really?

You have a very simplistic view of business, you remind me of a story about a couple that bought a btl investment blindly which as always going to fail.

Low interest rates? they were in double figures when I started in the early 90's.

I think you are unsuited to business, you would be far better off just working for someone.

Wee_Willy_Harris

chucknorris wrote: »

You have a very simplistic view of business, you remind me of a story about a couple that bought a btl investment blindly which as always going to fail.

Low interest rates? they were in double figures when I started in the early 90's.

I think you are unsuited to business, you would be far better off just working for someone.

Remember Chuck... Bigger picture? This isn't about just you or I, so let's keep the personal comments to a minimum and have at least a passing attempt at addressing the issues raised, which I note you have avoided doing, there's a good chap.

HAMISH_MCTAVISH

Wee_Willy_Harris wrote: »

I'll try and make it simple for you, as I can see comprehension isn't your strong point.

And as always, you've jumped straight into one plus one equals eleventy mode....

We are seeing job loses,

Unemployment is currently falling, and has probably peaked. Private sector job creation continues to outstrip public sector job reductions, by a significant margin.

reduced LHA rates, benefit cuts etc etc etc.

By an average of £9 per week, and phased in over two years. Hardly earth shattering.

Remember housing is a primary need and will absorb funds from other areas of spend.

Which is why the reductions so far have had zero impact as rents keep rising.

I'll try and make this simple for you....

Population is growing faster than we build houses to keep up.

The only possible outcome is more people (and hence more income, be it from benefits or work) per household. There's nothing remotely controversial about this concept, it's a simple mathematical inevitability.

Just so we're clear, I'll give you a couple of examples. If you still fail to understand, do let me know and I'll see if we can arrange some crayons to draw you a picture:

Example 1.

Wee Willy needs to renew his lease.

Wee Willy has £100 a week to spend on housing. The rest goes on Sky, Buckfast, Cigarettes, etc.

Wee Willy's housing benefits reduce by £9 a week.

Wee Willy asks his friendly landlord, Hamish, for a discount.

Hamish says No.

Wee Willy looks around and sees that other flats have risen in price, and realises he'll just have to cut back on the fags and Buckfast.


Example 2.

There are 100 people in Willytown looking for flats.

There are 90 flats for rent in Willytown.

Wee Willy is looking for a flat. Wee Willy's flat renting budget is £100 a week, but all the flats range from £125 a week for a one bed, to £175 a week for a two bed.

Wee Willy can't afford a one bed flat anymore, because they've gone up in price. Of course, the only reason they went up in prices is because demand outstripped supply. So there are plenty of other people who need to share accommodation as well. Willy can speak to his mate, Graham, who also has £100 a week and can't afford a flat, and they can combine their resources.

Willy and Graham now have £200 a week to rent a flat. Which gets them a two bed, and even gives them spare budget for the next few years inevitable rent increases.


Once again, as long as we fail to build enough houses for the growing population, the ONLY possible outcome is more people, and hence more income, per house.

Hope that's now simple enough for you to understand.

chucknorris

Wee_Willy_Harris wrote: »

Remember Chuck... Bigger picture? This isn't about just you or I, so let's keep the personal comments to a minimum and have at least a passing attempt at addressing the issues raised, which I note you have avoided doing, there's a good chap.

We will never agree because you are far too cautious, where you see danger I see opportunities. Well of course that is your perogative, you are entitled to live your life the way that you see fit without me lecturing you, but then so am I too.

EDIT: ps sorry to hear that you had to cut down on your fags and buckfast (I had to google that to make sure I wasn't being rude) to pay the rent, hope everything works out well sharing with Graham

Wee_Willy_Harris

chucknorris wrote: »

We will never agree because you are far too cautious, where you see danger I see opportunities. Well of course that is your perogative, you are entitled to live your life the way that you see fit without me lecturing you, but then so am I too.

EDIT: ps sorry to hear that you had to cut down on your fags and buckfast to pay the rent, hope everything works out well sharing with Graham

Oh Chuck, you don't see opportunities, you are far too busy window shopping for the pipe and slippers.

chucknorris wrote: »

However at my time of life it doesn't suit as I am gearing up for retirement in 10-15 years time so it isn't realistic to invest further when I plan to bail out so soon).