HPC thread of the week

chucknorris

Crashy_Time wrote: »

My main metric of wealth, as mentioned many times , is how many years could someone live at their current lifestyle without working, that requires access to liquidity which property doesn`t give IMO. Sure you can flog a house or two, maybe, but if the market turns you might find that difficult, again, as I said many times, if you want to cash out you better get going.

We don't need to flog a house (to obtain cash), our rental profits are almost £100k per annum. Although it probably won't be long before I do sell something, but it isn't an easy decision to make though, because there isn't anywhere better to invest the equity. But as property is illiquid, and they have to be sold at some point, and the fact that I need to spend it all, the time to sell has arrived. Actually I am retiring (early) next September, for that very reason (i.e. living same lifestyle without working), but it isn't because of cash (although it could be), it is because of other asset values, and because of rental and dividend income (and further down the line, pension to come when I'm older).

Mistermeaner

chucknorris wrote: »

We don't need to flog a house (to obtain cash), our rental profits are almost £100k per annum. Although it probably won't be long before I sell something, but it isn't an easy decision to make though, because there isn't anywhere better to invest the equity. But as property is illiquid, they have to be sold at some point.

To be fair Chuck you ain't the best example to use as advocacy for buying property - you've done exceptionally well for yourself and fair play but for most 'normal' people it's a question of buy a home or rent a home - even without hpi buying is generally the best thing for the vast vast vast majority of people but that doesn't mean they'll end up like you.

chucknorris

Mistermeaner wrote: »

To be fair Chuck you ain't the best example to use as advocacy for buying property - you've done exceptionally well for yourself and fair play but for most 'normal' people it's a question of buy a home or rent a home - even without hpi buying is generally the best thing for the vast vast vast majority of people but that doesn't mean they'll end up like you.

I agree, but I don't champion other landlords or promote HPI, I merely respond to crashy and others like him.

Crashy_Time

Mistermeaner wrote: »

I've had no hpi since buying in 2004

What I do have is a modest pile of equity and mortgage freedom 3years away, having paid perhaps 10% premium over rents on similar properties in my area.

It's my home and I'm not selling it for cash, don't care about its value.

In what circumstances would I have been better renting?

A circumstance where you move a lot or want the flexibility to move, or wanted to invest the 10% elsewhere, or wanted to rent very cheaply and not have all your wealth tied up in one illiquid asset...BTW where is your equity coming from if the amount you borrowed plus interest is the value of the house now (you are including your debt interest in this?)

Crashy_Time

Joeskeppi wrote: »

So the bloke I gave a quid to on the street who smelt of wee is wealthier than I am. Con merchant.

Yes, smarter than you too, who would have thunk it.......:rotfl:

Mistermeaner

Crashy_Time wrote: »

BTW where is your equity coming from if the amount you borrowed plus interest is the value of the house now (you are including your debt interest in this?)

Sorry I'm confused by the question?

My house is give or take worth what paid for it 10ish years ago (it's actually worth a bit more because of stuff I've done but that cost me so netts to zero)

Each month I pay my mortgage which is roughly 10% more than rent on similar properties near me.

Each month some of that mortgage payment is swallowed by interest, some goes against the principle.

Each month it means I own a little bit more of my house and the amount of interest payable is lower. If times got tough I could go interest only at approx 1/3 of caparable rents.

In 3 years time I will own my house and not have pay anything in mortgage to anyone.

How would I have been better renting?

Crashy_Time

Mistermeaner wrote: »

Sorry I'm confused by the question?

My house is give or take worth what paid for it 10ish years ago (it's actually worth a bit more because of stuff I've done but that cost me so netts to zero)

Each month I pay my mortgage which is roughly 10% more than rent on similar properties near me.

Each month some of that mortgage payment is swallowed by interest, some goes against the principle.

Each month it means I own a little bit more of my house and the amount of interest payable is lower. If times got tough I could go interest only at approx 1/3 of caparable rents.

In 3 years time I will own my house and not have pay anything in mortgage to anyone.

How would I have been better renting?

You could have invested the 10% you saved in the next Microsoft maybe? (plus the other ways which I already told you about) You say that stuff you have done to the house that cost you nothing is your "equity", not sure what you mean but well done anyway. How does the full re-payment on your loan (principal and interest) compare to the present value of the house?

wotsthat

Crashy_Time wrote: »

You could have invested the 10% you saved in the next Microsoft maybe? (plus the other ways which I already told you about) You say that stuff you have done to the house that cost you nothing is your "equity", not sure what you mean but well done anyway. How does the full re-payment on your loan (principal and interest) compare to the present value of the house?

How does 20 years of rent compare to the present value of your house?

Crashy_Time

wotsthat wrote: »

How does 20 years of rent compare to the present value of your house?

Even calculating that my rent now has been the same over 20 years (it hasn`t, it has often been less) the amount is negligible, about as much as some posters on here will get for their new-builds after the bust proper. What point were you trying to reach for?

Mistermeaner

Crashy_Time wrote: »

You could have invested the 10% you saved in the next Microsoft maybe? (plus the other ways which I already told you about) You say that stuff you have done to the house that cost you nothing is your "equity", not sure what you mean but well done anyway. How does the full re-payment on your loan (principal and interest) compare to the present value of the house?

Re the 10% premium that was my choice to get the mortgage paid off quicker (and save interest in the long term). Anyone can of course play tunes with such sums.... interest only with an endowment is the extreme of one end. I took a middle of the road option and have saved and invested as well as 'overpaying' my mortgage. Main point is in 3 years my rent will be 100% less than anyone renting a similar property near me, I can invest all of that if I wish. I will also have some equity , albeit in my home and illiquid but it's still there - doesn't have to be realised to be useful - for example if I needed to move I could rent out my property to cover my rent elsewhere so give or take I can rent anywhere for free, and still invest my 'saved rent'.

Re the stuff I've done to the house apologies if I wasn't clear - I meant I have paid for improvements that have increased the value of the house, give or take the cost is roughly equal to the increase in value so I've ignored in my day packet calcs - not talking major stuff; just things like New Windows and boiler - roughly roughly prices round here flex according to how that sort of desirable stuff has been done (on basis any buyer wants a discount for having to do them themselves)

In terms of full repayment (principle + interest) fag packet calc is I will have paid 150% ish of est value of the house by the time I'm mortgage free. If rent cost was a fraction of mortgage cost I would have more sympathy with renting to enable alternative investment but in the same period I would have paid approx 135% of the value of the house and had nothing to show for it, so the premium I've paid for ownership is well worth it.

Also don't forget this is a home for me and my son; in some circumstances a cheap bedsit May suit to enable investment in other things but me and boy want a degree of comfort, a garden to play in etc

I do have some sympathy with your view but bottom line is buying is the best thing to do for the vast majority of people.