Credit crunch forecaster now suggests 50% falls in house prices

andybenw

IveSeenTheLight wrote: »

You are painting quite a negatvie perspective for being a landlord.

Why then don't you sell?

I am in the process of completing a BTL.
If the mortgage was 100% (which it's not) the mortgage interest would be £758.50 per monther while the expected rental is £1200.

£441.5 per month (£5,298 per year) goes a long way to covering other expenses.
Other expenses are largely tax deductable as well.

P.S. my mortgage interest will only be £530.95 pcm, so £669.05 pcm towards other expenses / profit.

There are many areas / properties where it is cheaper to buy than rent.
Rent should be a premium as you are procuring the property for a relatively short period of time

Are you renting to students? Where I am (Portsmouth) would not be quite as favourable a return but would be reasonable and much higher to students.

Pimperne1

andybenw wrote: »

And________

The longer I live the better the deal gets.

And________

When I get old I can downsize and free up a wedge of cash. Or pass on a sizable inheritance.


There is good reason why most renters are 'saving up for a deposit'.

Impossible to argue with that.

IveSeenTheLight

andybenw wrote: »

Are you renting to students? Where I am (Portsmouth) would not be quite as favourable a return but would be reasonable and much higher to students.

This property is a 4 bedroomed property aimed at a family, not students.

I do have a 2 bed flat which is currently let out to students and attains £850 per month

The area does benefit from a strong rental market which supports the rental prices

rozeepozee

IveSeenTheLight wrote: »

You are painting quite a negatvie perspective for being a landlord.

Why then don't you sell?

I am in the process of completing a BTL.
If the mortgage was 100% (which it's not) the mortgage interest would be £758.50 per monther while the expected rental is £1200.

£441.5 per month (£5,298 per year) goes a long way to covering other expenses.
Other expenses are largely tax deductable as well.

P.S. my mortgage interest will only be £530.95 pcm, so £669.05 pcm towards other expenses / profit.

There are many areas / properties where it is cheaper to buy than rent.
Rent should be a premium as you are procuring the property for a relatively short period of time

It's complicated. I used to live in part of the property, which has been converted into flats. It's an exceptionally nice property and I don't ram as many people as I can into it so my yields are probably not as high as they could be but I'd rather have nice, happy tenants who look after the place. As I bought in the 90s, I can afford to do this. I also remortgaged when rates were exceptionally low. However, it's a big old place and requires a lot of maintenance and I put in good quality furnishings and appliances. I don't sell because who would want to be a seller in this market unless they had to be? It's a long term investment. I anticipate seeing a large appreciation on my initial capital investment.

But my point is there are a lot more expenses that don't seem to be being taken into account when people on here are talking about BTL or comparing renting costs with the costs of letting. Plus, if you are buying to let now (or buying) are you spending monay to pay off your capital too? When are you expecting to see an appreciation on your capital investment or are you in it purely for the income?

IveSeenTheLight

rozeepozee wrote: »

Plus, if you are buying to let now (or buying) are you spending monay to pay off your capital too? When are you expecting to see an appreciation on your capital investment or are you in it purely for the income?

I had a strategy of rapidly repaying the mortgages.
I'm shifting towards them being interest only so that I can invest the profits elsewhere while the rates are low.
When rates change, I aim to be in a position to pay off a larger chunk of the capital (I dont have restrictions on overpayments or ERP's)

I too believe property is a long term strategy.
I do expect property to provide a nominal bonus at the time when I chose to sell my assets, however until that time, the rental returned are what is important.

I do also agree with you on the benefits of having good tenants who look after the property.

MiserlyMartin

MrRee wrote: »

So, if property prices remain static - but inflation is 5% - in 10 years one could argue that a 50% fall has occurred?

But, at the end of that 10 years a buyer would have to pay the same as they would have to today ..... the person who rented for those years waiting for the drop would have paid around £120,000 in rent - the person who bought would be 10 years into clearing the debt ... maybe even debt free.

I have looked at it from all sides now, renting is an absolute waste of good money - buying is, by far, the best option.

How do you work this out? If wages increase in line with inflation then the house will be 50% cheaper. Add on an average 3% net return on the money saved then more again on the interest that was not paid on a mortgage for 10 years you get a different picture.

heathcote123

MiserlyMartin wrote: »

How do you work this out? If wages increase in line with inflation then the house will be 50% cheaper. Add on an average 3% net return on the money saved then more again on the interest that was not paid on a mortgage for 10 years you get a different picture.

Lets hope rents don't increase with inflation too, or your calculations may be affected.

MiserlyMartin

Rents don't effect me as a homeowner since the mid 90's, but thanks for your concern heathcoate123

heathcote123

MiserlyMartin wrote: »

Rents don't effect me as a homeowner since the mid 90's, but thanks for your concern heathcoate123

That doesnt negate your arguament being entirely stupid.