Rents rising again....

IveSeenTheLight

Percy1983 wrote: »

CM? sorry I don't understand.

Contribution Margin, usually as a percentage or nominal value and before fixed costs.

http://en.wikipedia.org/wiki/Contribution_margin

Sales$ 462,452
Less Variable Costs:
Cost of Goods Sold $ 230,934
Sales Commissions $ 58,852
Delivery Charges $ 13,984

Total Variable Costs $ 303,770

Contribution Margin (34%)$ 158,682

Less Fixed Costs:
Advertising $ 1,850
Depreciation $ 13,250
Insurance $ 5,400
Payroll Taxes $ 8,200
Rent $ 9,600
Utilities $ 17,801
Wages $ 40,000

Total Fixed Costs $ 96,101

Net Operating Income $ 62,581

Percy1983

JonnyBravo wrote: »

You're not making a loss.
It is you comparing apples and oranges.
You're comparing the sum you receive when you sell your house against the value of something else you want to buy, not the cost of the item you bought.
Yet you are expecting me to compare the rental I receive vs the cost of what I bought. Well I want to buy an aircraft carrier with my rental and that costs £1bn.
How can I afford to make such a large loss?

Get it yet?

I think I see the difference in out thinking here, I am going with the idea of I need to have a home, hence if I sell I need to buy, I don't want another house I NEED another house. So to do anything which makes me getting the house I NEED harder would be rather silly.

Meanwhile you see houses as an investment, you don't need them, you just want them.

To put the comparison like for like, in asking me to sell below market rate I would ask you would you rent out at a figure which means you make a loss. I am guessing the answer would be the same.

As I say the sooner tough regulation come in on the rental market the better.

Percy1983

IveSeenTheLight wrote: »

Contribution Margin, usually as a percentage or nominal value and before fixed costs.

http://en.wikipedia.org/wiki/Contribution_margin

Sales$ 462,452
Less Variable Costs:
Cost of Goods Sold $ 230,934
Sales Commissions $ 58,852
Delivery Charges $ 13,984

Total Variable Costs $ 303,770

Contribution Margin (34%)$ 158,682

Less Fixed Costs:
Advertising $ 1,850
Depreciation $ 13,250
Insurance $ 5,400
Payroll Taxes $ 8,200
Rent $ 9,600
Utilities $ 17,801
Wages $ 40,000

Total Fixed Costs $ 96,101

Net Operating Income $ 62,581

Didn't need the example the 2 words you meant would have been enough. I don't have enough data to give an absolute figure but I would estimate 78%.

IveSeenTheLight

Percy1983 wrote: »

So what is the reason to increase rent it costs have dropped?

Greed...

I have three BTL's, therefore I guess you could describe me as greedy.

On the other hand, I've looked at the data and decided to secure my families future. Therefore I've secured property now as opposed to the price it may cost my children in the future.

I'm not preventing people from buying, I've just secured propertiesfor them now as opposed to them adding to the demand in the future.

Is this greed or is it now good planning?

JonnyBravo

Percy1983 wrote: »

I think I see the difference in out thinking here, I am going with the idea of I need to have a home, hence if I sell I need to buy, I don't want another house I NEED another house. So to do anything which makes me getting the house I NEED harder would be rather silly.

Meanwhile you see houses as an investment, you don't need them, you just want them.

To put the comparison like for like, in asking me to sell below market rate I would ask you would you rent out at a figure which means you make a loss. I am guessing the answer would be the same.

As I say the sooner tough regulation come in on the rental market the better.

Hallelujah!

Sort of got there in the end.

IveSeenTheLight

Percy1983 wrote: »

Didn't need the example the 2 words you meant would have been enough. I don't have enough data to give an absolute figure but I would estimate 78%.

That's a pretty good return.

You could of course have an opportunity to reduce that margin, making it cheaper for the majority of your customers, whilst also enabling it to be more affordable to those with lower incomes.

Percy1983

JonnyBravo wrote: »

Hallelujah!

Sort of got there in the end.

Well I suppose we agree to disagree, at least you will stand your corner and not throw to many toys/personal insults, always nice to have a well mannered debate. Thank you.

IveSeenTheLight wrote: »

That's a pretty good return.

You could of course have an opportunity to reduce that margin, making it cheaper for the majority of your customers, whilst also enabling it to be more affordable to those with lower incomes.

To be honest that is what I have already that figure could be closer to 130% and I wouldn't lose business, with that its more time than material intensive which will always lead to higher percentages.

JonnyBravo

Percy1983 wrote: »

Well I suppose we agree to disagree, at least you will stand your corner and not throw to many toys/personal insults, always nice to have a well mannered debate. Thank you.

Absolutely.
The rest are "relative" wants/needs.
Just as you think I "want" a rental house rather than "need" one, I too think that term will be able to be applied to you when you want to buy a larger and more expensive house.

To follow your reasoning I too will want to move (once more probably). If I took below market rent in a situation which isn't appropriate I'd be making the purchase of my future house (which I need/want?) harder. Which would be silly.

Percy1983

JonnyBravo wrote: »

Absolutely.
The rest are "relative" wants/needs.
Just as you think I "want" a rental house rather than "need" one, I too think that term will be able to be applied to you when you want to buy a larger and more expensive house.

To follow your reasoning I too will want to move (once more probably). If I took below market rent in a situation which isn't appropriate I'd be making the purchase of my future house (which I need/want?) harder. Which would be silly.

I don't question if I business should make profits, I question the ethics/morals of the BTL business, that is where we will never agree.

Out of interest I really don't think I will ever want a bigger house, we have bought for life all being well.

JonnyBravo

Percy1983 wrote: »

Out of interest I really don't think I will ever want a bigger house, we have bought for life all being well.

I'll bet a shiny sixpence you will.
I used to think that. Experience has now taught me otherwise.