How Much Money Have You Wasted On Rent?

chucknorris

neverdespairgirl wrote: »

So you bought 2 flats @ £220k each in Jan 2009, in Ealing.

Costs:

£440k (purchase price)
+ £4.4k (stamp duty)
+ £2.5k - legals, searches, lease charges

= £446.9k

If you sold now:

£490k (average chance in prices in Ealing)
- £5k (EA charges)
- £1 (legals)

Profit - £39.1k

Inflation has been 11.7% in the period from then until now. So the house price in Ealing has actually gone up less than inflation.

Of course, had you put all your eggs in a different basket, gold has gone up from £580 / ounce in January 2009 to about £1,080 / ounce today, which means that if you'd spent your money on gold instead, it would have been worth about £830,000 today, or a profit nearly 10 x what you have actually made (and a profit rather easier to realise, at that).

Whilst what you say is true I would add however:

1. Most would have bought with mortgages so the return should be based upon the deposit + costs rather than the full value of the flats + costs. This dramatically increases the % return, you cannot of course buy gold with a mortgage.

2. I can't imagine many buying in 2009 would sell up now, property is a long term investment (I bought mine in the 90's and don't expect to sell for about another decade) and I imagine anyone buying in 2009 would not be planning to sell until the market is far better.

3. If held for a longer period the rental profits contribute more to the overall value of the investment. Based on the purchase price I paid in the 90's and the current rent the gross yield is over 28%.

wymondham

reweird wrote: »

The bears and crashaholics often argue that renting is not dead money and that it is money well spent. Meanwhile in the cold reality of day in the sane World anybody and their dog can see that each month you pay down rent to a landlord, or for the man-babies on here, to mummy it is simply one less month you are away from paying down your own mortgage and owning your own home outright. But how much over the years have you personally wasted away paying someone else's mortgage?

I always thought people paid rent as they had to live somewhere.... I can't see how this is 'wasted' - you get a place to stay without the liabilities - not a bad deal in my books!

kabayiri

>100k

chucknorris wrote: »

Whilst what you say is true I would add however:

1. Most would have bought with mortgages so the return should be based upon the deposit + costs rather than the full value of the flats + costs. This dramatically increases the % return, you cannot of course buy gold with a mortgage.
...

It's a leveraged investment in multiple aspects. That's one of the attractions of a mortgage; it delivers a high value item to people on relatively moderate incomes.

It's the leveraging aspect which can create problems. There will always be a chunk of people on the edges with cashflow problems, loss of employment, or family break up. Any big event like this could create a significant loss situation where you have to sell.

In the earlier years, or years of turbulence in your life, renting can decrease your exposure. But then, of course, you miss out on higher returns.

It's all a bit pointless as a survey though, as it is presented in a divisive manner. That's true of all Reweirds' non-surveys though.

Renters need good landlords. Landlords need good tennants. There is no reason why there should be reasonable profit in this arrangement.

chucknorris

kabayiri wrote: »

It's a leveraged investment in multiple aspects. That's one of the attractions of a mortgage


It's all a bit pointless as a survey though, as it is presented in a divisive manner. That's true of all Reweirds' non-surveys though.

I know, I have 5 of them (4 held since the 90's).

Of course it's a pointless survey, I don't think anyone is taking it seriously (even the OP).

kabayiri

>100k

chucknorris wrote: »

I know, I have 5 of them (4 held since the 90's).

And I just own the one house in the UK. Each to their own I say.

I have an interest elsewhere in Canadian property, but I don't see that in the same way as a B2L landlord here. It doesn't really cover it's costs.

daveyjp

Today's question - "How much have you wasted on food?"

You spend all that money on it and it ends up being flushed down the toilet - WHAT A WASTE.

Pimperne1

kabayiri wrote: »

And I just own the one house in the UK. Each to their own I say.

I have an interest elsewhere in Canadian property, but I don't see that in the same way as a B2L landlord here. It doesn't really cover it's costs.

Interested to know whether you are saying:

BTL is not profitable in Canada, or

The circumstances under which I have a property interest in Canada, if mirrored in a property holding in the UK, would still not make a profit (ie you only own 50% of it and the rent doesn't cover the mortgage).

doire_2

Aberdeenangarse wrote: »

I've noticed the 'porkie' detectors gone off again:rotfl:

:rotfl::T.......................

Cleaver

Probably like most people on here I didn't 'waste' any money on rent. For all the years I rented a property I did so because I wanted to, so I was buying a service I required. Therefore I wouldn't see it as a 'waste'.

IveSeenTheLight

neverdespairgirl wrote: »

Of course, had you put all your eggs in a different basket

Of course, hindsight is a wonderful thing and different investments provide different risks and rewards