We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Who won in the end?
Comments
-
chucknorris wrote: »
I bought my first investment property 24 years ago, would I do it all again if I was 24 years younger? No,
I don't think I would have ever ben brave enough to buy a BTL with a mortgage.
I just "lucked" into it, when I had disposable cash from bonuses, and went to an auction where I knew a distressed developer was selling and ended up buying a few. After that for the next couple of years I went about spending my bonus money by buying new builds off developers for knock down prices.
BTL has worked for a large number of people entireley by luck and absolutley no judgement. The idea of leveraging 70% (or more) of an asset for an Investment is on the face of it quite crazy, but due to circumstances very few would have predicted it has paid off handsomely for those who did so.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
I don't think I would have ever ben brave enough to buy a BTL with a mortgage.
I just "lucked" into it, when I had disposable cash from bonuses, and went to an auction where I knew a distressed developer was selling and ended up buying a few. After that for the next couple of years I went about spending my bonus money by buying new builds off developers for knock down prices.
BTL has worked for a large number of people entireley by luck and absolutley no judgement. The idea of leveraging 70% (or more) of an asset for an Investment is on the face of it quite crazy, but due to circumstances very few would have predicted it has paid off handsomely for those who did so.
I have to say on my part that judgement was a big part (I'm not saying it was without risk, of course it was), although I agree that it paid off even more than I ever dreamed it would. But I now think (at least in London) the value for new entrants into the market has gone at current prices/forthcoming tax changes.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 -
chucknorris wrote: »I have to say on my part that judgement was a big part (I'm not saying it was without risk, of course it was), although I agree that it paid off even more than I ever dreamed it would. But I now think (at least in London) the value for new entrants into the market has gone at current prices/forthcoming tax changes.
Did you see the new news about half a London tower block selling out in 5 hours today and news about the Chinee looking to move hundreds of millions into London property ?
There are so many new upsides I think anything could happen
( stability, growing global capital status, accepted home of billionaires, growing economy, growing wages, even greater tax advantages for normal home owners through lodger allowance, short term letting allowed together with birth of airbnb to support it, massive new investment etc).
The BTL tax changes is a big wind against London HPI but I think there are stronger winds behind London property and will be for a while yet.Proudly voted remain. A global union of countries is the only way to commit global capital to the rule of law.0 -
The renter who made an informed decision will have the funds to cover that, or to simply buy a house mortgage free out of saved equity at 60 years of age.
I don't think they would.
I've run through your spreadsheet and now have a better idea of how it works.
The buyer pays..
- £600,000 for the house
- £308,000 interest
- £50,000 maintenance
- £22,000 stamp duty and other
i.e. a cost of £980,000 and a paid for house.
The renter pays
- £480,000 rent
- £200,000 in the bank (£60k + interest)
= happy renter!
So with 25 years of no inflation, a low rental yield, no HPI and an atypical return on cash our happy renter is up on the deal.
I know you really don't like looking at the past for guidance but your sums only work if the future bears absolutely no resemblance to the past.0 -
The spreadsheet is very poor. For a start, I'd like to know where you can rent a £600k property for £1600 a month.
With 7% return on cash, and 2% inflation and RPI it is completely unrealistic.
With more realistic figures, the truer, more likely picture becomes clear.
A £275k property, rented at £1250pm, will cost a total of £512k over 25 years, assuming that the rent rises with inflation of 2.5%pa. The repayments remain higher than the rental cost for the first 12 years, and are then overtaken.
If we assume purchase costs of £25k, added to the mortgage, then a £300k repayment mortgage over 25 years at 4.25% costs a total of £503k.
Even on the basic costs, buying is slightly less than renting. However, the buyer then owns an asset worth £275k in today's money terms, or £497k assuming HPI of 2.5%. A more realistic HPI of 5% gives a value of £886k.
E&OE0 -
I couldn't find the article but wouldn't be surprised if this analysis was true. Maybe it's my bias but in terms of investing priority I wouldn't touch BTL until I had my own home, had exhausted maximum pension contributions, had a couple of years spending in cash and have sufficient wealth that a BTL was a reasonably small part of it.
The media do over-egg BTL - there's a success bias - decent data on BTL is hard to find and you don't get many people bragging about how crap they've done!
!!!!. :mad:
I hope I'm doing the right thing. Jumping in the deep end having measure the water temperature and depth.
I'm investing in a property, which after interest might give about 8% return on MY investment, plus or minus 2%. The break even on the 2 years fixed rate is 4 months of letting per year. If we get the lower of the lowest estimated rent, but get it for 10 months, and the interest rate goes to 12% we just about break even.
If house prices, and/or rents go up, if we pay down some of the loan, and if we are right about our research and the area and the demand in that area, we'll make more than 8%.
If we are completely wrong, we'll loose some money in the short term.
Either way, I'm "hoping" that we can provide a nice home for someone, at a reasonable price0 -
Prothet_of_Doom wrote: »!!!!. :mad:
I hope I'm doing the right thing. Jumping in the deep end having measure the water temperature and depth.
I'm investing in a property, which after interest might give about 8% return on MY investment, plus or minus 2%. The break even on the 2 years fixed rate is 4 months of letting per year. If we get the lower of the lowest estimated rent, but get it for 10 months, and the interest rate goes to 12% we just about break even.
If house prices, and/or rents go up, if we pay down some of the loan, and if we are right about our research and the area and the demand in that area, we'll make more than 8%.
If we are completely wrong, we'll loose some money in the short term.
Either way, I'm "hoping" that we can provide a nice home for someone, at a reasonable price
Sounds good. I'm going to make sure I stick £24k post tax income into a pension first because I'll get a £16k return on day one.0 -
Cornucopia wrote: »The spreadsheet is very poor. For a start, I'd like to know where you can rent a £600k property for £1600 a month.
You're obviously completely out of touch and not even bothering to try and check your stuff. Just go look at the apostles roads, Raynes Park, SW London:
http://www.rightmove.co.uk/property-for-sale/property-33418020.html
http://www.rightmove.co.uk/property-for-sale/property-52471658.html
http://www.rightmove.co.uk/property-for-sale/property-49132367.html
Rentals:
http://www.rightmove.co.uk/property-to-rent/property-53249912.html
http://www.rightmove.co.uk/property-to-rent/property-52969187.html
http://www.rightmove.co.uk/property-to-rent/property-50853620.html
Plenty of other areas around London where yields just don't make much sense.
I already mentioned I rented in Wimbledon for ~£16000. I found out over the weekend that place has just sold for £1.8m. It's a different market though, people buy for the location, status and "investment" rather than underlying yield.With 7% return on cash, and 2% inflation and RPI it is completely unrealistic.
Ok. So, 5% dividends and some capital growth. I thought 7% returns were previously (before low yield world) fairly average. I must admit, I've only started investing in the last 7 or so years, I don't have experience from before.0 -
You're obviously completely out of touch and not even bothering to try and check your stuff.
As you say yourself:... yields just don't make much sense.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351.3K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.8K Spending & Discounts
- 244.3K Work, Benefits & Business
- 599.5K Mortgages, Homes & Bills
- 177.1K Life & Family
- 257.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards