buy to let -Out!

economic

exactly. people tend to look at recent history and extrapolate.

and people assume averaging in over the long term is a pretty sure bet of long term inflation beating returns. its not as simple as that I'm afraid.

as for property people assume it can only go up especially in London. there is a time to buy and sell Anything.

Ifts

HappyMJ wrote: »

Property is a long term investment over at least 10 years. 3% stamp duty upfront is only 0.3% per year which really in the big scheme of things isn't really that much at all.

Also pay the extra stamp duty today on a BTL and when/if you decide to sell in the future it gets deducted from any taxes you have to pay.

JohnRo

ChiefGrasscutter wrote: »

Look at the Dow Jones between 1929 to 1949

Let's look at every 20 year period since 1901

_CC_

ChiefGrasscutter wrote: »

Look at the Dow Jones between 1929 to 1949

I have, and it wouldn't have produced negative returns if following the tried and tested method of dollar-cost-averaging and reinvesting dividends.

The often erratic nature of the markets do nothing but reinforce the argument that passive, accumulative investing is the best method, whereas timing the markets is nothing but pure speculation.

Malthusian

HappyMJ wrote:

3% stamp duty upfront is only 0.3% per year which really in the big scheme of things isn't really that much at all.

That will come as news to the people who wring their hands about every last basis point involved in holding a diversified share portfolio, and have declared that the 0.15% a year fund managers spend (e.g.) acquiring shares and paying an auditor to do the books is a HIDDEN CHARGE SCANDAL. Often these people are heavily involved in buy to let.

economic wrote:

that's because over the last 50 years it has. but you don't know the same outperformance will continue over the next 50years.....

A portfolio of equities will always beat cash, assuming that you don't a) put all your eggs in one basket b) panic c) gear up. For the next 50 years and the next 500 years. We know this because otherwise there would be no point in holding equities. Equities are volatile / risky and this risk is compensated for by higher long-term returns. Past performance merely provides the evidence to support this hypothesis.

Your statement is akin to saying "just because the last 50 times you dropped an object it fell to the ground, you can't be certain that the next time you drop an object it won't float up into the air". We know it will fall to the ground, because we know the universe has a physical force called gravity, which we understand reasonably well. We have a logical reason for knowing that long-term equities will beat cash - the equivalent of gravity is the risk/reward equation - and the evidence of the last 100 years merely confirms that our logic is correct.

MEM62

There are other reasons people rent property and not all small time landlords are just in it to exploit others for a quick buck. I am just about to put my property in West London on the rental market as I am moving in with my girlfriend in Hampshire. I do not want to sell as we have a lot of friends and family in the area. One day we may want to move back and if I sell it I could never afford to buy in the area again.

Also, from my investigations thus far, renting is not as lucrative as some would have you believe. Of the £1,100 - £1,200 per month that is the going rate for properties in the area I will end up with around £500 after agency fees, insurances and the chancellor sticking is hand in the pot for his 40%.

HappyMJ

MEM62 wrote: »

Not all small time landlords are just in it to exploit others for a quick buck. I am just about to put my property in West London on the rental market as I am moving in with my girlfriend in Hampshire. I do not want to sell as we have a lot of friends and family in the area. One day we may want to move back and if I sell it I could never afford to buy in the area again.

Also, from my investigations thus far, renting is not as lucrative as some would have you believe. Of the £1,100 - £1,200 per month that is the going rate for properties in the area I will end up with around £500 after agency fees, insurances and the chancellor sticking is hand in the pot for his 40%.

£500 after expenses is very good on rent of £1,100 per month.

I let my property out for £600 a month and end up with nothing each month. The £600 that I get in rent goes towards interest payments, maintenance, annual gas safety certificates, agency fees and budgeting for void periods along with many other expenses.

I make money only on the capital gain of the property which recently have been quite poor. I need to pay tax of 18% on a small proportion of the gain only when I sell.

Glen_Clark

Nimbys will continue to strangle the supply of housing to keep up prices. But in many places housing costs have overtaken wages, so they can only be kept up by Government borrowing to subsidise house prices - Housing Benefit, 'Help to Buy' etc. The current level of borrowing, at least, is not sustainable. House price rises are being portrayed as 'Growth' and evidence of 'Recovery', but you can't fool all of the people all of the time.
On that basis I don't see a collapse in property prices. But neither can I see a repeat of the price rises over the last few years.
Bear in mind that Buy to Let of one property is still risky depending mainly on your tenant, or nasty surprises in the property itself. Evictions for rent arrears are at a record high, with often no chance of recovering back rent, legal and baliff costs, and property damage. Women with children are immediately re housed by the council, and since they have started paying rent to the tenant instead of the landlord, some have never held so much cash in their lives can't resist the temptation to blow it all on shopping instead of paying the rent, knowing the council will have to rehouse them. Wealthier landlords balance the risk over several properties.

MEM62

HappyMJ wrote: »

£500 after expenses is very good on rent of £1,100 per month.

I let my property out for £600 a month and end up with nothing each month. The £600 that I get in rent goes towards interest payments, maintenance, annual gas safety certificates, agency fees and budgeting for void periods along with many other expenses.

I make money only on the capital gain of the property which recently have been quite poor. I need to pay tax of 18% on a small proportion of the gain only when I sell.

My initial post was to demonstrate that renting is not necessarily as lucrative as some may think and your experience seems to back that up. Also, that we do not all rent because we are aspiring property barons!

The 'in pocket' return for me is actually negative as I have as I have a mortgage on it. I will be having the throw a couple of hundred quid at it each month but I want to hang onto the property so I'm happy with that. Renting for me is a bigger life decision - not particularly a financial one.