BTL, could we do it?

ds1980

Nice post. Yields are all well and good but as you say the returns can only be based on your money. If im making £3k a year after all deductions and ive put down £10k on £100k house im making 30%.

You show me where there is anything that can return £3k on a £10k investment in 1 year.

Stocks and shares and all other investments are risk related apart from say shares yours always told to invest for a mininimum of 5-10 years thats the way you have to treat property.

In those 10 years my mortgage is decreasing ok not by huge amounts but ive probaby paid off 20k in 10 years (although its not me paying it its the people whom rent it). If the house prices didnt do anything ive made £50k in 10 years on a £10k investment. However thats only if i sold which i won't need to. The idea is to get the mrotgages paid off as quickly as possible so that you are decreasing your risks of investments all the time. On average my 25 year mortgages will be paid off in 10 years maximum. As time goes on this will decrease as i will have more money to put down and more money coming in from rentals and if I sell any properties that have made capital gains. At the same time i will have a decent amount of money in my bank accounts and other investments that if disasters happen i can cover them.

PS al lot of the disaters discussed are all covered by insurance i claim at leats 5-6 times a year on various differentthings so wear and tear isn't really an issue......an aggravation yes but this is part and parcel of taking the gamble in the first place.

If these places couldn't achieve the rents they do tehn of course i wouldn't buy them. Do the maths and see where you come out.

As long as your in it for the long term then i don't see what you have to lose.

sortofok

My earlier post (#6) wasn't aimed at you in particular ds.

It was aimed at aspring BTLers who in general having been seduced by the mantra of ever-increasing prices and easy gains are thinking of entering a market without due regard for the implications of their actions.

You may have prospered, as I have, from owning property but people imagining that it is an easy road to riches are sadly deluded.

It's easy making money in a rising market. Keeping it in a falling market is far harder. Which is why people need to think about what is happening at the moment. With sky-high prices and the threat of rising interst rates now is not the time to be gambling with your future in the hope of one day being rich.

Don't forget people when you "release equity" or "unlock the capital" from your
home you are borrowing money . It is not your money and needs to paid back.

Beware of debt masquerading as wealth.

ds1980

as ive said ive never released equity from any of my properties. the only times when i have is when ive sold.

It may be a rising market but its only paper money if you don't sell as far as im concerned so it makes no difference if prices continue to go up (all very nice) or plummet by 50% because ive still got a house which i will "never" (i know you should never say "never") get rid of. The way i see it that in 25 years i will have made thousands and thousands of pounds by investing just a few. If my house is worth 100k and falls 50% in 5 years but in 25 years it has trebled in price, which i doubt anyone will say it won't have in 25 years then to me its a sound investment. at the same time how much will rents be on a 100k house £1500-£2000k a month??? Who knows. Thats what i likeno one knows the answers.

sortofok

ds, you have obviously done well and bought at the right time.

However now is not the right time to embarking on such an excercise.

Anyone hoping to emulate your success by buying now, at the top of the market, with money MEWed at low (but rising) interst rates, with an IO mortgage which they think someone will always pay and which would stretch them to breaking point if they had to pay it themselves is just plain stupid.

Romani_Ite_Domum

ds1980 wrote: »

It may be a rising market but its only paper money if you don't sell as far as im concerned so it makes no difference if prices continue to go up (all very nice) or plummet by 50% because ive still got a house which i will "never" (i know you should never say "never") get rid of.

DS your long term plan is fine in theory as house prices over time do increase in the long term. However:

If house prices were to plummet by 50% there will be a recession. They will be a rise in unemployment and people will lose their homes.

There is a common misconception by amateur BTLers that this will drive up demand in the rental market and increase yields.

What will actually happen is that thousands of migrants who came to the UK for work will go home.

As well as people defaulting on their mortgages,there will be people defaulting on their rents. They will have to either trade down to cheaper places or pay less. The BTLers who are subsidising their mortgages now will also get repossessed.

Demand may increase but rents will decrease. Do not think that because you are a LL that you will be bullet proof from a recession and high IRs.

Longer term more houses are being built and the baby boomer generation will start to die off.

Houses will be cheap as chips in 20 years IMHO :money:

mr.broderick

inmypocketnottheirs wrote: »

sortofok wrote: »

Out of interest, where is the property?

Yes sortofok..where is this property? or are you telling lies.?

btloptingout

ds1980 wrote: »

As long as your in it for the long term then i don't see what you have to lose.

Might be worth reading up a bit about Japan.....is 15 years long term enough?

If your strategy is "never sell", you are cash-flow positive and getting a decent return on capital outlay which can be liquidised then you might have a worthwhile business........but all good businessmen have an exit strategy, where's yours?

mr.broderick

btloptingout wrote: »

Might be worth reading up a bit about Japan.....is 15 years long term enough?

If your strategy is "never sell", you are cash-flow positive and getting a decent return on capital outlay which can be liquidised then you might have a worthwhile business........but all good businessmen have an exit strategy, where's yours?

You either have an exit strategy or bottle, judging by your id you had an exit strategy.

sortofok

mr.broderick wrote: »

inmypocketnottheirs wrote: »

Yes sortofok..where is this property? or are you telling lies.?

Sorry I forgot to reply to that one. It's in South Wales (Cardiff area)

btloptingout

mr.broderick wrote: »

You either have an exit strategy or bottle, judging by your id you had an exit strategy.

I don't think "exit strategy" and "bottle" are mutualy exclusive.

You could have "bottle" or be a "fool" regardless of whether you "exit" or "stay".

You're right I "exited".......whether I had "bottle" or was a "fool" only time will tell.

Regardless i'm okay with my choice (for now), and that's all that really matters.