Buying is £124 a month cheaper than renting

System

J_i_m wrote: »

Maintenance isn't free for all tenants either, people seem to be forgetting that the vast majority of land lords will be factoring maintenance into the rent rate. They are after-all running a business so will at the very least need to break even over all, and then there's the factor of profit.

Strictly speaking that isn't true.

ukcarper

Walcott wrote: »

Strictly speaking that isn't true.

Have you anything constructive to say or do you just make statements without backing them up.

System

ukcarper wrote: »

Have you anything constructive to say or do you just make statements without backing them up.

I would have thought it is quite obvious.

A landlord does not get to chose what rent s/he charges. The landlord can only chose what rent to charge within a given range for that property, or less if they wish to do so. The rental market is more or less a free market so it is the market that choses the rental bands per property type.

Property investment has two elements:
1) Capital income
2) Rental income

Not all investors invest in property to obtain profits via rental income. They may also take losses in rental income in order to gain capital profits. This is evident in areas where mortgages cost more than rental. When the mortgage cost > rental this means there is a strong demand in that area for property for purchase. This in turn leads to rising prices. However because of the movements in property between buyers being high, the rental demand is low and hence low rentals and low yields to investors - which they recoup in capital on sale. So it logically follows that maintenance is not included in the cost of rental because rentals are lower than the cost of the mortgage.

Constructive enough for you? Or are you just going to ignore this as it doesn't fit in with your views...............

ukcarper

Walcott wrote: »

I would have thought it is quite obvious.

A landlord does not get to chose what rent s/he charges. The landlord can only chose what rent to charge within a given range for that property, or less if they wish to do so. The rental market is more or less a free market so it is the market that choses the rental bands per property type.

Property investment has two elements:
1) Capital income
2) Rental income

Not all investors invest in property to obtain profits via rental income. They may also take losses in rental income in order to gain capital profits. This is evident in areas where mortgages cost more than rental. When the mortgage cost > rental this means there is a strong demand in that area for property for purchase. This in turn leads to rising prices. However because of the movements in property between buyers being high, the rental demand is low and hence low rentals and low yields to investors - which they recoup in capital on sale. So it logically follows that maintenance is not included in the cost of rental because rentals are lower than the cost of the mortgage.

Constructive enough for you? Or are you just going to ignore this as it doesn't fit in with your views...............

Much Better the thing you missed is that rents increase over time and in the latter years the yield will be much higher.

Johnandabby

Walcott wrote: »

So it logically follows that maintenance is not included in the cost of rental because rentals are lower than the cost of the mortgage.

But monthly rental income would have to be 125% of the BTL mortgage to get the mortgage... You would only be able to buy properties with cash to do what you suggested, and then there may be better options for investing the cash than property.

To be honest, the article and the whole of this thread is pointless as it can never look at all of the individual issues involved.

Some people rent, some people buy....

BillJones

MrRee wrote: »

You're quite right - words HAVE failed you ... as they don't make sense.

The choice is really painfully simple ...

1. Buy and be your own master for all time.

2. Rent and be a slave for all time.

That makes no sense at all. There've been times in my life (when work kept moving me between NYC and LDN, for example) when renting was a far better choice for me. I own now, and prefer it, now, but renting in the past was a far better choice.

I even rented for a few years in the building where I've now bought. That was a good few thousand pounds a month in rent that I was paying, but it was not money wasted, it was money well spent being sure that I'd found a place where I'd be happy spending seven figures on a flat.

There is no conceivable way in which I could view the period when renting as meaning that I was a "slave".

ukcarper

Johnandabby wrote: »

But monthly rental income would have to be 125% of the BTL mortgage to get the mortgage... You would only be able to buy properties with cash to do what you suggested, and then there may be better options for investing the cash than property.

To be honest, the article and the whole of this thread is pointless as it can never look at all of the individual issues involved.

Some people rent, some people buy....

I wouldn't say the whole thread is pointless but it would be sensible not to pay to much attention to the more biased posters. But as you say some people rent some people buy and some people that rent have no option but to rent.

System

ukcarper wrote: »

Much Better the thing you missed is that rents increase over time and in the latter years the yield will be much higher.

You have completely missed the point. The rental increases over time does not mean that the cost of maintenance falls on the head of the tenant. The post that you quoted was in relation to tenants paying maintenance as landlords must make a profit.

My point still stands. If you are saying that the rental increases will cover this in the scenario I put forward then the investor is not very bright as s/he is sat on a property that has its returns tied up in capital yet it is being used as a long term revenue stream.

System

Johnandabby wrote: »

But monthly rental income would have to be 125% of the BTL mortgage to get the mortgage... You would only be able to buy properties with cash to do what you suggested, and then there may be better options for investing the cash than property.

To be honest, the article and the whole of this thread is pointless as it can never look at all of the individual issues involved.

Some people rent, some people buy....

To make a monthly rental 125% of BTL mortgage in an area with low rentals you do not need to be a cash buyer. You need to have a deposit that increases LTV and hence covers the rental shortfall.

The investor will do this as s/he believes that the up front deposit paid will be recouped via a capital gain as opposed to a constant revenue stream.

MrRee_2

Let me clear something up.

I did not say that, sometimes, renting is the right choice for an individual - for a multitude of reasons.

I have myself said that I rented for 4 years when I couldn't afford to buy, that was my reason - for others it may be work committments or some such other life event.

What I am saying, however, is that buying opens up a whole world of choices in the latter years of ones life .... I can speak from that position as I am there myself.

Had I continued renting, as I was for 4 years, I would still be renting now. Would I have the savings I do now? No, I doubt it, as the savings I have built are mainly due to the fact that the mortgage was cleared ages ago.

So, lets say, I am sat in my home - paying £2,000 a month in rent (I like my home and want to be here so I have no choice, as that rent is the going rate) ..... now, we all know that can be paid while one is working - no problems there.

BUT, and this is the crux of it all ...... what happens when one retires? Pension = £3,000 a month - that £2,000 becomes a real problem then doesn't it?

Luckily, as I bought, rather than continued renting, I can sit in my home and retire here - rent free - that's £2,000 in my pocket each month!

The council would only house me in a bedsit somewhere - I would have paid all that rent, for all that time, to sit in a damp bedsit on the corner of chav street ................ what kind of maths makes that a preferred choice FOR ANYONE? And how can anyone argue that is better than buying?

Nah, doesn't stack up on any level ...