Is buy to let still worth it?

Conrad

chucknorris wrote: »

That's your choice, and I can understand it (they are hassle), but we manage our own properties, and at today's prices we have saved approx £350k in management fees. By the time I sell up over the next few years, and my wife much later, that will not be far short of £500k.

I manage my own fully. The only time I see an Agent is to advertise a new let for £150 - I do everything else, as you say saves a fortune.


When I say I never visit, I mean once let I do not inspect, in fact I personally feel it's a moral obligation on my part to leave grown adults to enjoy the property as they see fit.


I'm very choosey about who I let to, so fingers crossed I get properties back in good order (apart from the drug flat but that was let to a Charity anyway so they had to cover the costs of cleaning)


I do have one place with scuzzy tenants as I found out when I replaced a cooker but hey ho, I'll worry about them cleaning it when they move out, I'm not going to let such things eat away at me, life is short.

chucknorris

Conrad wrote: »

I manage my own fully. The only time I see an Agent is to advertise a new let for £150 - I do everything else, as you say saves a fortune.


When I say I never visit, I mean once let I do not inspect, in fact I personally feel it's a moral obligation on my part to leave grown adults to enjoy the property as they see fit.


I'm very choosey about who I let to, so fingers crossed I get properties back in good order (apart from the drug flat but that was let to a Charity anyway so they had to cover the costs of cleaning)


I do have one place with scuzzy tenants as I found out when I replaced a cooker but hey ho, I'll worry about them cleaning it when they move out, I'm not going to let such things eat away at me, life is short.

I used to use a maintenance contractor who dealt with everything, but he got too sloppy after the first few years, so I ditched him. We now use British Gas Homecare who cover quite a lot of maintenance items, and the tenants contact them directly. I use them for plumbing/drainage and Gas (but not for electrics and kitchen appliances, as I don't think that they are value for those).

lisyloo

10-12% gross annual return

Gross generalisation.
The gross return on the flat I live in is 3.9%.
I would expect it to be much better outside central London, so those figures are a massive generalisation.

always_sunny

lisyloo wrote: »

Gross generalisation.
The gross return on the flat I live in is 3.9%.
I would expect it to be much better outside central London, so those figures are a massive generalisation.

In London most hope for capital appreciation to compensate meagre yields!
(which makes you think how higher house prices could go before they reach plateau)

always_sunny

Conrad wrote: »

Well I'm still buying with no intention of stopping.
..
My long term plan is to build a portfolio until such time as I can sell say halve of them in order to repay the entire debt on the remaining halve.

No wonder you don't really care much about Brexit and impact on the economy for the average Joe!

chucknorris

always_sunny wrote: »

In London most hope for capital appreciation to compensate meagre yields!
(which makes you think how higher house prices could go before they reach plateau)

The reason that London yields are so small, is because London has already had very significant capital appreciation. I honestly can't see much capital growth in London, but I would love to be proved wrong.

mystic_trev

chucknorris wrote: »

The reason that London yields are so small, is because London has already had very significant capital appreciation. I honestly can't see much capital growth in London, but I would love to be proved wrong.

Same here in the SE

I was playing around with some figures, the other day, to see how much my first Investment property had gone up in the last 20 years. We're talking about a one bed flat bought in August 1996 for £37,000. this is now worth around £200,000 so works out using compound interest as increasing 8.5% a year. Take that forward 20 years that one bed flat will be worth excess of a million.Short of inflation going back to what it was in the 70's and early 80's I really can't see that happening.

From a personal point of view Properties have been a great investment. I retired at 42 the same year I bought my first Investment Property.Now, at 62 there's no way I'l be able to spend my accumulated wealth before I snuff it. I am, however, going to give it a damn good try!

If others starting out now can make money out of BTL - good luck to them.

westernpromise

MyOnlyPost wrote: »

Really?

10-12% gross annual return coupled with long term capital growth and far less volatility. Show me an investment fund that outperforms house price growth over 30 years and pays a 10% annual dividend



The House price index and the FTSE have both increased by very similar amounts over the period but the house prices are a far smoother upward curve with few drops and no steep cliffs. You could have got in at any time and be in profit today, whereas the FTSE took 15 years to recover from the dotcom bubble.

The blue line is above the red line at almost every point along that graph.

Conrad

westernpromise wrote: »

The blue line is above the red line at almost every point along that graph.

Maybe so but few ordinary folk would leverage up £200k cash in order to buy exposure to £800k worth of equities

MyOnlyPost

chucknorris wrote: »

Speaking from a London landlord's and someone who is approaching their 60's perspective, it is time for me to move into other investments.

I think this is the other significant factor, location. BTL in London I would imagine is going to be much harder for new entrants (and maybe existing landlords) due to property prices and the rental ceiling. In areas of the country where property is still relatively affordable it can still be a lucrative proposition.

As for the graphs, what I take from them is that if you can time the market then you can make significant gains in the FTSE but time it wrong (1999/2000) and you can take a considerable hit on your investment for a long time. I was lucky enough to take my first monthly investment in the markets the week before 9/11 so I was buying into an already falling market that then fell further. Had I bought in 2 years eralier it would be a very different story

House prices have lagged behind the market most of the time it's true, but at very few points would you have taken a loss if you had to sell and ultimately a house will never be worth nothing, unlike some what were once premium shares. And then you have the annual yield of course.