Selling To Rent

Really2

marlonthemagnificent wrote: »

i
i was well advised to buy metals, which i did with 100% of my equity.

Yes all financial advisers would say the same, 100% on PM's can't fail.

Would it be silver by any chance?
Of course, the 20% loss on VAT won't be a problem either if you need to sell it quickly.

paulmapp8306

wotsthat wrote: »

I thought about STR’ing in 2006 as I thought prices couldn’t keep rising and was worried about the ease that credit was available. (I never thought in a million years we’d be in the current turmoil though)

I didn’t STR for four reasons; my wife told me I was being a retard, I had two children settled in a good local school, the mortgage was affordable and, to be honest, I couldn’t be bothered with the hassle.

I’ve tried to revisit the situation and work out the situation I’d be in if I’d STR’ed.

In Q3 2007 my house, 3-bed detached, was worth around £200,000 and according to Nationwide it’s now worth £179,400 however I’m certain that it would be sold this time next week if it was £170,000 so I’ll go with that. Let’s say I sold in 2007, rented from the purchaser, and bought back today at this ‘distressed’ price.

The basic reduction in price has been £30,000. My selling fees (1% EA + legal) would have been £2611 and my buying back fees (mortgage valuation, stamp duty and legal) would be £2759. From my profit of £30,000 therefore I need to subtract the total fees of £5370 which leaves me with £24630.

Then I need to factor in the rent I needed to pay – well today there’s a house almost identical to mine within ½ mile up for a rent of £775/ month. We know rents have risen since 2007 so let’s say I could have rented for £650/ month and because my landlord likes me the rent hasn’t changed since. 48 months of rent at this level would be £31,200.

So using figures intended to help an STR argument i.e. bargain rent, low EA fees, selling at peak, buying back at distressed levels, no moving costs etc. I’d be down a total of £6570 just on the basic buying and selling.

As it happens my mortgage has remained quite some way below the rental and I’m 4 years closer to paying off the mortgage too. Maintenance costs have been minimal; most of the expenditure such as a new bathroom were cosmetic and I’m sure wouldn’t have been considered by a landlord.

If I had STR’ed I’d need prices to fall roughly 10% (from an already distressed price) just to break even by the end of 2012. If I wanted to present the figures more realistically I’d need much more significant falls to break even and who wants to take a five year punt against a market just to break even.

The only realistic circumstances I can see this working is as short term gamble i.e. sell up, short sharp crash and buy back. Even gradual declines don’t really help as rent just means that you end up treading water.

Has anyone managed to make STR pay?

The only thing you have forgotten really is that yes you would be paying £650pm rent BUT you would not be paying your mortgage. you have to subtract the mortgage payments from the rent. that means you have "spent" a lot less . Yes yo have paid of more capital this way, and that needs adding back in.

So. made £30k from selling then buying back. From your figures your down £6570. Burt Add back whatever your paying in mortgage payments. I dont know what they are - but for arguments sake lets call is £400pm as you say its some way below your rent. That means you have paid £19200 in mortgage payments - so now your back in the black by £12630. Now you have to figure out how much capital those payments have paid off. That will depend on how many years you have been paying the mortgage, but anything less than £12630 would mean STR would have been the better move. anything more and your better off the way you played it.

this doesnt take into account maintenance. OK you say thats not much - but how much is not much? Boiler services? any repairs at all? To be accurate these need adding onto the £12630 you have saved (before taking off the equity you paid off) - even if its just £1k.

marlonthemagnificent

Really2 wrote: »

Yes all financial advisers would say the same, 100% on PM's can't fail.

Would it be silver by any chance?
Of course, the 20% loss on VAT won't be a problem either if you need to sell it quickly.

it's mainly gold and it wasn't a financial advisor....it was on this very site, back in 2004
some one i know sent me the link below in 2007
on the back of reading it, i did 2 months of research before committing

https://forums.moneysavingexpert.com/discussion/14783


perhaps if you'd have taken the same advise you might not be so bitter and twisted now

doire_2

IveSeenTheLight wrote: »

Hey geneer, what's the significance of your new avatar?
I get the feeling there's a meaning behind it.

I did like your previous mug shot.

Am i missing something here? Is having an avatar an option on this board?

geneer

wotsthat wrote: »

OK you get the prize for the first mention of bulls or bears:T

And you get the prize for being a non-bull obsessed with STRs.
Something doesn't compute in your posturing does it

Really2

marlonthemagnificent wrote: »

it's mainly gold and it wasn't a financial advisor....it was on this very site, back in 2004
some one i know sent me the link below in 2007
on the back of reading it, i did 2 months of research before committing

https://forums.moneysavingexpert.com/discussion/14783


perhaps if you'd have taken the same advise you might not be so bitter and twisted now

But yet you join in september 2011,
Not bitter at all, I admire the conveinence of your situation.
Such as being sent a 2007 link in 2004!
You would of thought you may have joined before 3 months ago if the info was so good?

Or perhaps you had joined before and have had to change user names etc.;)

chucknorris

Dan: wrote: »

What sort of person would uproot their entire family from the family home into rented accomendation on the off chance they can make a quick buck? discusting if you ask me. And, as described above it never seems to work and ends up costing far more then just staying put.

To be fair to them Dan I don't think many would have actually decided to STR purely based on a financial decision. I suspect that a significant number of those who did STR would have been considering selling anyway. Possibly trading up (or down) or moving area (for a job, family or relationship) and where under normal circumstances they might have bought, they took a decision to stay out of the market for a while.

Given that they would have incurred the buying and selling fees anyway if they had simply bought straight away, it's likely that they have (and are still) benefiting, although the drop of the base rate to 0.5% which was unforeseeable (being fair to them) severely curtailed the value of STRing (unless of course they invested their equity in something like PM).

Additionally of course if you they were moving to a different area they might not want to buy straight away anyway. When I moved to London from Newcastle in the early 90's, I had no idea of where to buy in London so I rented for 6 months to get to know the merits of the different locations.

marlonthemagnificent

Really2 wrote: »

But yet you join in september 2011,
Not bitter at all, I admire the conveinence of your situation.
Such as being sent a 2007 link in 2004!
You would of thought you may have joined before 3 months ago if the info was so good?

Or perhaps you had joined before and have had to change user names etc.;)

you actually don't read, do you?
you see what you want to see, not what is actually there, and then just jump to conclusions and then write some childish response.
read it again...slowly.......

can you now see that i said it was a 2004 link, sent in 2007....thereby not defying the laws of time and space?

can you see it......?

and as for your other assertation, yes...i have been looking at this site for some time, but i had no reason to join.
the only benefit you get from joining is that you can post comments
you can still read them without having an account, which was fine for me
i do the same thing on HPC and some other sites

i have no idea why you and some others feel so compelled to prove that i have multiple id's?

i've obviously said something that rattles your cage...so what is it.
instead of just making incorrectly founded and stupid accusations, why don't you say what your issue is?
the way you approach conversations has a very playground feel about it

Dan:_4

chucknorris wrote: »

To be fair to them Dan I don't think many would have actually decided to STR purely based on a financial decision. I suspect that a significant number of those who did STR would have been considering selling anyway. Possibly trading up (or down) or moving area (for a job, family or relationship) and where under normal circumstances they might have bought, they took a decision to stay out of the market for a while.

Given that they would have incurred the buying and selling fees anyway if they had simply bought straight away, it's likely that they have (and are still) benefiting, although the drop of the base rate to 0.5% which was unforeseeable (being fair to them) severely curtailed the value of STRing (unless of course they invested their equity in something like PM).

Additionally of course if you they were moving to a different area they might not want to buy straight away anyway. When I moved to London from Newcastle in the early 90's, I had no idea of where to buy in London so I rented for 6 months to get to know the merits of the different locations.

Totally agree. I myself have sold to rent recently due to relocation.

I was talking about the very small minority, normally found on HPC who have sold the family home to rent, simply because they reckon their property vaule is going to fall - that is madness.

Davesnave

chucknorris wrote: »

To be fair to them Dan I don't think many would have actually decided to STR purely based on a financial decision. I suspect that a significant number of those who did STR would have been considering selling anyway. Possibly trading up (or down) or moving area (for a job, family or relationship) and where under normal circumstances they might have bought, they took a decision to stay out of the market for a while.

Exactly.

We STR'd for a short time (8 months) and did well out of it, but we'd have done even better had we sold both houses before the Crash, instead of the cheaper one first! Significantly, it was a big lifestyle move and we had no mortgage to complicate things either.

We were intending to move to Wales and take advantage of the lower prices there, but we'd have rented first to see how the land lay.....different culture and all that.

However, our daughter had signed herself up for a year at a local college, so we hung around waiting for that to finish. Suddenly, a couple of places in the Westcountry came up, both with motivated sellers, and here we are in one of them.

Looking at the way prices went, I can't help thinking that daughter did us a favour!