Rents to soar again in 2012...

chucknorris

IveSeenTheLight wrote: »

Maybe not soaring, but if you consider what rents are doing with regards to outstanding mortgage debts.

Many LL's have seen their mortgage interest reduce whilst also seeing their rent received increased.
This means a better return than the 2.95%pa suggests

I just had a look at my tax returns for 2009 and 2011:

Rental income increased by only 6.1% (however the figures include a bit of a drop for some of my properties in this period but excludes last year's recovery).

Taxable income (specific to investment property) increased by 24.3% this is due to much lower mortgage interest rates (I adjusted the difference in other expenses, otherwise it would have been around 29%). Not forgetting of course that my return in 2009 already included some fall in the base rate which started to be cut in Oct 2008.

I'm certainly not expecting rents to soar this year, in fact we probably will not raise the rents to our existing tenants.

IveSeenTheLight

Graham_Devon wrote: »

Many landlords are on interest only mortgages too, and something you appeared to have overlooked is that many will have seen the asset reduce in value too.

Not at all.

Asset price is only realised at the point of sale thus any changes in valuation is only papertalk and does not affect the financial figures around profitable and taxable income.

Of course it can affect the rate you can get from a lender depending on the LTV.

I've yet to see this affect me negatively though.

Until it's sold, it's not made a profit / loss.
I would argue that a high majority of landlord who have sold will have benefitted from both rental income and asset appreciation at the point of sale.

geneer

Graham_Devon wrote: »

Many landlords are on interest only mortgages too, and something you appeared to have overlooked is that many will have seen the asset reduce in value too.

As I understand it Lite bought his 2007 properties using IO mortgages.

Its a shame. If it wasn't for the millions of "reluctant landlords" poor lite might be getting better rents.

geneer

IveSeenTheLight wrote: »

Asset price is only realised at the point of sale

Therefore stock prices don't increase or decrease in the interim right?

Right?

:rotfl:

nembot

Let's hope they soar as much as 2011-2012 (which in actual fact was a drop).

All the best though Hamish

Graham_Devon

IveSeenTheLight wrote: »

Not at all.

Asset price is only realised at the point of sale thus any changes in valuation is only papertalk and does not affect the financial figures around profitable and taxable income.

Of course it can affect the rate you can get from a lender depending on the LTV.

So it doesn't affect anything, but it does?

IveSeenTheLight

geneer wrote: »

Therefore stock prices don't increase or decrease in the interim right?

Right?

:rotfl:

If you hold stocks, do you make profits or losses on your assets before you sell them?

You don't make your profit or loss when you sell.

Of course you may get a dividend depending on the conpany performance, but then again so does the LL get rent.

If you want, let's compare your stock investments, profit losses, with my property portfolio profits and losses.

IveSeenTheLight

Graham_Devon wrote: »

So it doesn't affect anything, but it does?

It doesn't affect annual profits / losses or taxes unless you have sold.

It can affect a mortgage product you may be able to get.

Do you need it any clearer than that?

Graham_Devon

IveSeenTheLight wrote: »

It doesn't affect annual profits / losses or taxes unless you have sold.

Exactly the same as shares.

You don't need to make it any clearer. At the moment the rent is good. But many landlords could well be stuck with lower asset values and stuck with the investment.

Just as I am with a couple of shares, unless I want to take the loss.

To say asset values don't matter is somewhat disingenuous. You see it all over the share boards from investors too, pretending they don't care about the share value, they are in it for the long term. Same day they are cheering on a 0.5% rise like it's the second coming.

IveSeenTheLight

Graham_Devon wrote: »

Exactly the same as shares.

You don't need to make it any clearer. At the moment the rent is good. But many landlords could well be stuck with lower asset values and stuck with the investment.

Just as I am with a couple of shares, unless I want to take the loss.

To say asset values don't matter is somewhat disingenuous. You see it all over the share boards from investors too, pretending they don't care about the share value, they are in it for the long term. Same day they are cheering on a 0.5% rise like it's the second coming.

To try and keep you on track, the discussion was surrounding rents and how they have inflated in the last few years.
I added that as well as rent inflation you should consider the additional income received as a result of lower costs (lower mortgage rates) to reflect the true increase in profitability of rents.

This has nothing to do with asset value of property and even further removed from shares.

Nice attempt at deflection though.