Buy to let is for amateurs

jimjames

mike88 wrote: »

I wonder if those who advocate stock markets as the best form of investment have lived through many crashes.

I'd ask the same question about those advocating property. Property crashes might happen less frequently and with less obvious valuations than stock markets but having experienced them I can certainly say a BTL would not be great to own when it happens. In fact we've not had a proper crash since BTL became popular so many BTL investors will have no experience of property prices falling.

Pincher

jimjames wrote: »

Property crashes might happen less frequently and with less obvious valuations than stock markets but having experienced them I can certainly say a BTL would not be great to own when it happens.

Provided you are not selling, price is irrelevant.
If rent is covering outgoings, that is all you need to ride it out.

2009 was a 30% drop: I didn't even have to drop the rent.

What did make a huge difference was Mervyn King dropping BOE from ~5% down to 0.5%. It's almost like he knew I was on a BOE Tracker. As it was an Interest Only, it was a gift that kept on giving.

Assume a £200k mortgage, at BOE+1.75%, the 4.5% difference is £9,000 interest a year. Cheers, Mervyn :beer:

Hmm, that means I paid more income tax, because I had £9,000 less in deductibles. Still a good thing overall, so that's alright.

slowpoke_rodriguez

jimjames wrote: »

In fact we've not had a proper crash since BTL became popular so many BTL investors will have no experience of property prices falling.

And many of them won't yet have payed the tax due on the withdrawals they made from their pension to buy property...

https://www.youtube.com/watch?v=LINsEVvXL0c

mike88

jimjames wrote: »

I'd ask the same question about those advocating property. Property crashes might happen less frequently and with less obvious valuations than stock markets but having experienced them I can certainly say a BTL would not be great to own when it happens. In fact we've not had a proper crash since BTL became popular so many BTL investors will have no experience of property prices falling.

With a huge housing shortage where demand exceeds supply for any decent property for rent I do not see any risk in the foreseeable future whereas there is much uncertainty for the future of equities following BREXIT all of course dependent on how issues unfold.

jimjames

Pincher wrote: »

Provided you are not selling, price is irrelevant.

But that's exactly the same for equities!

mike88 wrote: »

With a huge housing shortage where demand exceeds supply for any decent property for rent I do not see any risk in the foreseeable future whereas there is much uncertainty for the future of equities following BREXIT all of course dependent on how issues unfold.

I agree that I also can't see a short term drop in prices. However it's the things we can't see coming that tend to have a habit of upsetting the markets. Longer term the terms for Brexit could make a massive difference.

slowpoke_rodriguez

mike88 wrote: »

With a huge housing shortage where demand exceeds supply for any decent property for rent .

Is it really that great a shortage though?

I don't see favelas springing up willy nilly...

bigadaj

mike88 wrote: »

With a huge housing shortage where demand exceeds supply for any decent property for rent I do not see any risk in the foreseeable future whereas there is much uncertainty for the future of equities following BREXIT all of course dependent on how issues unfold.

There a risks for assets at many levels.

Brexit effects on property could be large, we have had hundreds of thousands of immigrants per year over the last decade or more, it could well be the case this becomes an equivalent net exodus in the future.

Rents are high in many areas, in terms of ratios to income, interest rates will have to rise at some point.

The housing benefit bill has become excessive and the government is currently aiming to cut it, this may well have an effect in rental yield going forward.

Many of these risks also apply to equities, bonds and other assets, there's little out there that looks cheap at the moment.

Glen_Clark

veryintrigued wrote: »

Why would those heavily invested in stockmarkets suggest anything but?

The more people hankering after stocks the greater their perceived value.

They would have to be incredibly vain to think their comments on an internet forum is going to move stock markets.

Glen_Clark

atush wrote: »

That would assume (Jeremy Corbyn) is electable, which I feel he isnt

Thats what they said about Brexit. For someone who is unelectable he seems to have won a lot of elections. Enough to get the Establishment worried judging by the press campaigns against him, which like their support for remain, voters may take no notice of?

Glen_Clark

bigadaj wrote: »

The housing benefit bill has become excessive

Indeed, and the statistics don't fit the stereotypes.
We are presented with this picture of idle benefit claimers, but most housing benefit is paid to workers whose wages don't cover the rent.
With the 300 year old National Debt having doubled in the last 6 years, how much longer can the Government keep borrowing to pay the ever rising housing benefit bill?