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Do BTL investors trade-up? If not, will the pain flow up the ladder?
mr_fishbulb
Posts: 5,224 Forumite
There is often an argument that the lack of FTBs will not have too much of a negative effect on the housing market as BTL investors are also buying the same type of properties. This prevents demand from being cut off at the bottom of the market, as second-time-buyers looking to trade-up have someone to sell their current property to.
However unless BTL investors are trading-up to larger houses, doesn't this just mean that the lack of demand in the market is just pushed up to the second rung of the housing ladder?
BTL landlords, by their very nature are "investors" and as such would seek to spread their portfolio across more properties rather than buying one larger one. This spreads the risk of non-paying tenants, repair costs, etc.
This is how the traditional model worked before BTL was so popular:
FTBs and few BTLs
|
V
Flat/1 Bedroom House (BTLs stay at this level)
|
|---Second-Time-Buyers (were FTBs)
V
2/3 Bedroom House
|
|---Third Times-Buyers (were 2ndTBs)
V
3/4 Bedroom House
Now if BTLs are replacing the lack of FTBs, it would look like:
BTLs and a few FTBs
|
V
Flat/1 Bedroom House (BTLs stay at this level)
|
|---Few Second-Time-Buyers (because fewer FTBs above)
V
2/3 Bedroom House
|
|---Few Third Time-Buyers (because fewer 2ndTBs above)
V
3/4 Bedroom House
So the pain is just being moved along the ladder and second-time-buyers will have less buyers for their property. What have I missed?
However unless BTL investors are trading-up to larger houses, doesn't this just mean that the lack of demand in the market is just pushed up to the second rung of the housing ladder?
BTL landlords, by their very nature are "investors" and as such would seek to spread their portfolio across more properties rather than buying one larger one. This spreads the risk of non-paying tenants, repair costs, etc.
This is how the traditional model worked before BTL was so popular:
FTBs and few BTLs
|
V
Flat/1 Bedroom House (BTLs stay at this level)
|
|---Second-Time-Buyers (were FTBs)
V
2/3 Bedroom House
|
|---Third Times-Buyers (were 2ndTBs)
V
3/4 Bedroom House
Now if BTLs are replacing the lack of FTBs, it would look like:
BTLs and a few FTBs
|
V
Flat/1 Bedroom House (BTLs stay at this level)
|
|---Few Second-Time-Buyers (because fewer FTBs above)
V
2/3 Bedroom House
|
|---Few Third Time-Buyers (because fewer 2ndTBs above)
V
3/4 Bedroom House
So the pain is just being moved along the ladder and second-time-buyers will have less buyers for their property. What have I missed?
0
Comments
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mr_fishbulb wrote: »However unless BTL investors are trading-up to larger houses, doesn't this just mean that the lack of demand in the market is just pushed up to the second rung of the housing ladder?
To be honest, from a personal perspective, as a BTL LL, I don't buy to then trade up.
I buy and keep.
This is because I buy properties that work in a strong rental market.
I have a 2 bed flat and two 4 bed houses.
there is no need to trade up or down as a BTL LL.
If the property ir right for BTL, it will make a profit and you can utilise those profits for furhter BTL aquisitions or investment elsewhere.
You don't have to start at the bottom and BTL properties expand accross the range of properties.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
yes. people trying to sell 4 bed detached houses are having problems. but some btl landlords are happier with a lower yield on a bigger property for a better class of tenant.0
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yes. people trying to sell 4 bed detached houses are having problems. but some btl landlords are happier with a lower yield on a bigger property for a better class of tenant.
Larger property does not have to provide a lower yield.
I recently bought a 4 bed property as an investment which is giving me a RY of 7.02% and after expenses, a return of 13.1% on my investment.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
I've tended to stay in the 2 bed end of things. Yield is about 8% currently - but I hope to nudge that up to 9% in the next few months once the rent reviews kick in.
Capital growth on my portfolio has also averaged 5% per annum over the last 3 years.
So a return of about 13% is about right - made all the sweeter by the tax write offs and borrowing costs at < 3%!!
0 -
nollag2006 wrote: »I've tended to stay in the 2 bed end of things. Yield is about 8% currently - but I hope to nudge that up to 9% in the next few months once the rent reviews kick in.
Capital growth on my portfolio has also averaged 5% per annum over the last 3 years.
So a return of about 13% is about right - made all the sweeter by the tax write offs and borrowing costs at < 3%!!
Percentages can go down as well as up.0 -
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nollag2006 wrote: »No flies on you Jimbo
Do BTL investors trade up ?
Some do.
Some dont.
Some lose the lot.0 -
Do BTL investors trade up ?
Some do.
Some dont.
Some lose the lot.
Why trade up? It would incur more expenses (solicitors x2, stamp duty, estate agents fees, etc.) it would be better to just simply buy another investment property without selling one.Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
Have you ever traded up your caravan Jimbo?0
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chucknorris wrote: »Why trade up? It would incur more expenses (solicitors x2, stamp duty, estate agents fees, etc.) it would be better to just simply buy another investment property without selling one.
Like i said, some lose the lot.0
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