Buy to let is for amateurs

lush_walrus

Pincher wrote: »

There were plenty of articles over the years where the parents play guarantor, so the student buys a 3/4 bedroom house in the university town they study in, and play landlord to fellow students. Lots of parents nosing around during summer, even 30 years ago.

A lecturer around 1984 was reminiscing his Halcyon days in the 1960s. Turned up from Australia, studied at university, and bought a string of houses to rent to fellow students. Don't ask how he managed to borrow to begin with, apparently he lied, but once rent started rolling in, it has its own momentum. And then he sold it all, to start a company: big mistake. Lost it all in the seventies, and had to get a day job. If he had stayed in property, he would have some prime properties in Bayswater and Earls Court.

Some people should stick to what they are good at.
Let us assume you are with property.

It's not really the point, or relivent, but the business I established as a student was not funded by my parents nor was it BTL, it did however find that in later years and that forms a separate interest.

London has been a great and moving place of investment. Its sad to hear someone loose their way.

xnoxxnox

Pincher wrote: »

Free vasectomy with every housing benefit application.

To illegal immigrants: we take your balls if you come to Britain.

In fact, for some crimes, like rape, why don't we take their balls instead of prison? Helps a lot with prison overcrowding. First offense, one ball, second offense, second ball. Same for ovaries, sexual equality and that.

.... this is so wrong on so many levels. Think about it logically: if people in prison are criminals, they do not abide the law. If the people who write the law, make it illegal for criminals to vote - all that is left to do is proclaim inconvenient people as criminals. The top criminals are in fact not those to violate the laws, but those that write the laws, to begin with. This is essentially how the dictatorship / nationalist governments get established and remain in power forever (* n.b. forever means until the territory gets bombed and a convenient dictator is appointed instead).

UK used to chemically castrate criminals that were convicted. It results in depression, change of hormones, suicidal tendencies and IMHO effectively limits one's human right to live. And it's very easy to be judgemental. One can be smart intellectual and defeat foreign spies and nations, yet be subjected to such treatment by his own nation. For example, Alan Turing. HIs breakthrough mathematic skills broke Nazi encryption which was a turning point in ending that conflict. Gay, convicted of gross indecency, chemically castrated by the british government, died of cyanide poisoning two years later, presumed suicide, received state pardon last year.... a little too late. That's not the world I would like to live in.

Yet, my taxes sponsor bombings in syria, and therefore refugee crisis in Calais. Zero-hour contracts and other forced labour schemes (apprenticeships) are below living wage employments. Mortgages are all leveraged - all banks get freshly printed money from bank of england to fund the property prices in the UK. E.g. all the help to buy schemes - be that isa bonus, equity loan, shared ownership are all quantitative easing methods to avoid recession. Because recession means repossession and literally Corbyn voters left on the street. A vicious, self-perpetual, self-harm / self-created cycle.

The real crisis is the lack of new housing built (supply - -) , yet bottomless money minted for mortgages (demand++). I live in an "affordable" housing, thanks to the schemes, which has a capped price which means they are smaller in size with each year built and are at the top of the limit of maximum allowed price tag. Newly finished affordable housing in greenwich has 25% share and requires 40% deposit towards that share. All i have on my mind is Missy Elliot song Where They From. How can household with income between 24894 and 49789 "save" a 50k deposit?!

BananaRepublic

I read an analysis by some online magazine comparing BTL and stock market investments, and over 20+ years the BTL came out significantly better. They seemed to do a decent job of factoring in maintenance costs, periods with no tenant, mortgage costs etc. Of course this was in the south, somewhere like Bradford might be quite different. Whether or not this changes significantly due to reduction in mortgage interest tax relief, I know not, though I suspect it does. What this thread lacks (or at least the pages I could be bothered to read) is an analytical analysis of BTL versus stock market investments.

Here is one analysis:

http://www.thisismoney.co.uk/money/investing/article-3341827/Are-shares-better-bet-buy-let-Osborne-s-latest-attack-landlords-property-FAR-lucrative.html

chucknorris

BananaRepublic wrote: »

I read an analysis by some online magazine comparing BTL and stock market investments, and over 20+ years the BTL came out significantly better. They seemed to do a decent job of factoring in maintenance costs, periods with no tenant, mortgage costs etc. Of course this was in the south, somewhere like Bradford might be quite different. Whether or not this changes significantly due to reduction in mortgage interest tax relief, I know not, though I suspect it does. What this thread lacks (or at least the pages I could be bothered to read) is an analytical analysis of BTL versus stock market investments.

Here is one analysis:

http://www.thisismoney.co.uk/money/investing/article-3341827/Are-shares-better-bet-buy-let-Osborne-s-latest-attack-landlords-property-FAR-lucrative.html

Certainly for London property IMO the following makes holding shares more preferable to me:

- The higher income tax on rental income
- The lesser income tax on dividend income
- The additional 3% stamp duty (I already own so I didn't have to pay this)
- The difficulty in avoiding CGT with property
- The ease of avoiding CGT with shares
- The higher CGT on property
- The current high value of London property, from which I can't really see much, if any, real term gain.
- The current high value of London property, which means that yields are quite low
- The fact that property isn't as easy (hassle free) as shares to hold

We are actually starting to sell London property now, although that also has an awful lot to do with lifestyle as I am approaching retirement and will want to be free to spend the winter in warmer climate, and the fact that it will take years to spend the equity, so it needs to be released in time to spend it. But when the base rate reaches 2.25%, property and shares provide me with equal income (ignoring capital growth), so I have decided to sell property as my tenants vacate.

System

Banana - I don't provide analysis here as 1- the numbers are out there and 2 - most people don't do shares like I do, these examples are always heavily weighted towards "safer" large cap FTSE companies

I'm 50-50% small and medium cap in my sipp pension, growing 15% a year, which would double every 5 years and outperform both the examples in that article. I also have cheaper fund fees than in the example, as I merely track an index

Also for me pension is a way to pass on an inheritance, I don't bother with life insurance (yet) because of it

Pincher

xnoxxnox wrote: »

UK used to chemically castrate criminals that were convicted. It results in depression, change of hormones, suicidal tendencies and IMHO effectively limits one's human right to live. And it's very easy to be judgemental. One can be smart intelectual and defeat foreign spies and nations, yet be subjected to such treatment by his own nation. For example, Alan Turing.

I still remember standing in W H Smith, about forty years ago, picking up a copy of Spare Rib, and reading the women's letters, asking for castration of ALL MEN. I think the idea is that all men are potential rapists. One ball is relatively tame, and no hormonal problems.

Punishment is a deterrent, not cure and not therapy.
You are supposed to suffer. I am still fixing the damage the burglar made six months ago. Leaking pipe, walnut unit. Even disposing a worktop (legally) is costing me hassle and money. A stern telling off if he is caught? I DON'T THINK SO! In fact, I would put in death traps for the next burglar, except I know they would PUNISH ME for it.

Alan Turing vs. the system is well known, after all the movies, and now a museum in Bletchley. This we should nurture everyone just in case they are Einstein idea is just wasting resources. You can be abusing a lot of vulnerable people who are nothing special, but one of them is a genius is irrelevant. Fair justice should be practiced because they are people, not because they are geniuses. Don't punish anybody just in case one of them is a genius is equally absurd.

There are 6 billion people too many in the world, according to David Attenborough.

Oh look, there's a green and pleasant land where we can breed more children. Hitler needed more Lebensraum, Living Space, for his people. They probably started settling in neighbouring lands by asking nicely, initially, until the neighbours said no.
You can want to provide food and shelter for the human being in front of you, but their ultimate goal is to bring the whole family over, and produce more offspring.
The American Indians said the pilgrims can stay, and see what happened to them.
No thanks, there are too many already.

If you say you can have food and shelter, but no future off springs, their true purpose emerges.

BananaRepublic

MatthewAinsworth wrote: »

Banana - I don't provide analysis here as 1- the numbers are out there and 2 - most people don't do shares like I do, these examples are always heavily weighted towards "safer" large cap FTSE companies

I'm 50-50% small and medium cap in my sipp pension, growing 15% a year, which would double every 5 years and outperform both the examples in that article. I also have cheaper fund fees than in the example, as I merely track an index

Also for me pension is a way to pass on an inheritance, I don't bother with life insurance (yet) because of it

If you want to convince someone, you need to post evidence or a link to evidence. Could you do so?

Interestingly the link I posted does assume modest stock market gains, however in the past it was possible to get a mortgage with a small deposit, which made it a lot more lucrative than today. The need for a ~25% deposit reduces the gearing, and the reduced mortgage interest relief is also not good for BTL.

qwert_yuiop

Possibly. Very radical for us, though, and that's what matters to us.

System

Banana -

I would've gone with:
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0GBR06FNN

(But my sipp platform doesn't provide it)

So I'm with:
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F000005OPT

Under the portfolio/holdings section it gives you the breakdown

Both roughly double every 5 years, as does the msci global small cap index it tracks. Small companies have more room to grow than big ones and they have the advantage that many pensions and funds are too big/ too ruley to invest in them (if the fund is significantly bigger than the companies its buying it would completely take over companies which I think breaks some rules. Also pensions don't like volatility)

Although these funds have less volatility than a FTSE tracker

bigadaj

MatthewAinsworth wrote: »

Banana -

I would've gone with:
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0GBR06FNN

(But my sipp platform doesn't provide it)

So I'm with:
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F000005OPT

Under the portfolio/holdings section it gives you the breakdown

Both roughly double every 5 years, as does the msci global small cap index it tracks. Small companies have more room to grow than big ones and they have the advantage that many pensions and funds are too big/ too ruley to invest in them (if the fund is significantly bigger than the companies its buying it would completely take over companies which I think breaks some rules. Also pensions don't like volatility)

Although these funds have less volatility than a FTSE tracker

Don't think you've fully appreciated the funds and level of risk you have adopted.

Your basing this all on the last five and up to ten years, which have been incredibly benign for equities.

You're not studying the graphs properly if you claim they are doubling every five years, volatility of smaller stocks is generally far higher than larger companies and will probably suffer far larger falls in any market downturn.