Is buy to let still worth it?

chucknorris

Crashy_Time wrote: »

It is going to be quite funny if you can`t shift your properties after posting all this guff.....:rotfl:

What is quite funny Crashy, is that you panicked and sold your house the minute it recovered from the 80's/90's crash, whereas if you had held it, you would probably have £100k's of equity now When I first invested prices continued to dip a little, but I bought more properties, you need to grow a pair. Whereas I actually started investing in that same crash, and we now have very significant equity, and you are trying to advise me how to time the market?

chucknorris

Crashy_Time wrote: »

Would have been more liquid if you had sold when I originally said you should.

Yes, but our properties were worth about £1m less back then, and also the rental income income has exceeded the dividend income since then too (and still does). Selling back then would only have been wise if I was terminally ill and much more keen to start spending the equity.

The point that I think that you are missing crashy is that on only financial criteria, I wouldn't sell now, it is only when other criteria are introduced, like my longevity (you can't take it with you) and lifestyle (I don't want the hassle when I'm older) that tips the balance from holding to selling.

Crashy_Time

chucknorris wrote: »

Yes, but our properties were worth about £1m less back then, and also the rental income income has exceeded the dividend income since then too (and still does). Selling back then would only have been wise if I was terminally ill and much more keen to start spending the equity.

The point that I think that you are missing crashy is that on only financial criteria, I wouldn't sell now, it is only when other criteria are introduced, like my longevity (you can't take it with you) and lifestyle (I don't want the hassle when I'm older) that tips the balance from holding to selling.

So landlord taxes, low yields, benefit cuts etc. are of no concern to you?

westernpromise

What low yields?

My BTL has a £288k mortgage and is worth about £975k. To sell it would cost me about £20k and would crystallise a CGT bill of about £100k. What would be left after a sale, about £590k, is my realisable equity, on which I am earning a return. That return is currently about £30k gross. That's a yield of more than 5% and there have been inflationary gains of over £500k since I left it and let it out.

So it's a toss up between FTSE and staying put. But that's not the whole picture because my daughters may / will need a salubrious place to live in at some point. To sell and re-buy that property later under the current transaction tax penalties would cost me the thick end of another £100k. So the true equity position is not £590k but more like £500k because of the cost of selling and buying back in - possibly at a higher price and certainly with a higher finance cost.

So that is in fact a yield of 6%. Now if you know a better way of obtaining a 6% return, why do you live in a bedsit?

Crashy_Time

westernpromise wrote: »

What low yields?

My BTL has a £288k mortgage and is worth about £975k. To sell it would cost me about £20k and would crystallise a CGT bill of about £100k. What would be left after a sale, about £590k, is my realisable equity, on which I am earning a return. That return is currently about £30k gross. That's a yield of more than 5% and there have been inflationary gains of over £500k since I left it and let it out.

So it's a toss up between FTSE and staying put. But that's not the whole picture because my daughters may / will need a salubrious place to live in at some point. To sell and re-buy that property later under the current transaction tax penalties would cost me the thick end of another £100k. So the true equity position is not £590k but more like £500k because of the cost of selling and buying back in - possibly at a higher price and certainly with a higher finance cost.

So that is in fact a yield of 6%. Now if you know a better way of obtaining a 6% return, why do you live in a bedsit?

You missed out landlord taxes and finding someone to buy it, never mind rising interest rates, but who really cares anyway......:rotfl:

westernpromise

There would also be taxes on £500k in cash since it would take 30 years to get it all into ISAs. The income from it would also be taxed with no deductible mortgage interest. The tax position is better, not worse.

Why would it be hard to find someone to buy it? You don't even know where it is. But there have been 245 sales in the postcode in the last 12 months at an average price of £836,000.

They aren't making 1840s white stucco with 14' ceilings any more, you see.

chucknorris

Crashy_Time wrote: »

So landlord taxes, low yields, benefit cuts etc. are of no concern to you?

My yields are not ‘low’ compared to alternative investments, yes, they are lower, but that is a result of rapid capital value increases, as I am starting to slowly sell, that’s great, bring it on (yes please to even lower yields). I am not highly geared and my low margin tracker mortgages combined with such a low BOE base rate means that the reduction of mortgage interest relief is virtually insignificant. Why didn't you mention loss of the wear and tear allowance? Are you so pathetic that I have to provide you with ammo? That was much more significant to me than the latter (my guess is you didn’t mention it because you don't know as much as you think you do).

My wife asked me what I was laughing at when I was typing this reply, when I explained it to her, she said, you shouldn't criticise him, it's fools like that that have made us wealthy.

The-Joker

Tax and fees are going to get worse and worse for BTLers, there will be a lot of sales flooding the market over the next few years...

Conrad

The-Joker wrote: »

Tax and fees are going to get worse and worse for BTLers, there will be a lot of sales flooding the market over the next few years...

I have read that Landlords are going to be offloading stock dozens of times over the last 15 years and for all manner of reasons.


Doesn't happen.
What the concrete brained never understand is that Landlords don't sell due to;



+ Selling crystallises a CGT bill

+ Not wishing to invest in bits of paper (shares)


+ Wishing to maintain leveraged exposure thanks to mortgages


+ That all these bends in the road such as tax increases, come out in the wash - for example rents will rise to offset the tax


+ In the round with rent and capital growth, property remains a fantastic asset


+ Pride - Landlords enjoy a sense of pride by owning property in a way simply not present with holding shares. They go to bed and nearly always wake up richer the next day. Shares are up and down like a wh!!!s draws.
Property investing is entrepreneurial and other people admire it


+ Property will remain in short supply


+ In the event of a mega depression, people still retain that most essential of needs - shelter. Bits of paper do not compare.


+ Control - largely a Landlord is in the decision making seat, whereas with shares he is merely a bystander. A Philip Green can nick / crush your investment at the stroke of a pen

economic

Conrad wrote: »

I have read that Landlords are going to be offloading stock dozens of times over the last 15 years and for all manner of reasons.


Doesn't happen.
What the concrete brained never understand is that Landlords don't sell due to;



+ Selling crystallises a CGT bill

+ Not wishing to invest in bits of paper (shares)


+ Wishing to maintain leveraged exposure thanks to mortgages


+ That all these bends in the road such as tax increases, come out in the wash - for example rents will rise to offset the tax


+ In the round with rent and capital growth, property remains a fantastic asset


+ Pride - Landlords enjoy a sense of pride by owning property in a way simply not present with holding shares. They go to bed and nearly always wake up richer the next day. Shares are up and down like a wh!!!s draws.
Property investing is entrepreneurial and other people admire it


+ Property will remain in short supply


+ In the event of a mega depression, people still retain that most essential of needs - shelter. Bits of paper do not compare.


+ Control - largely a Landlord is in the decision making seat, whereas with shares he is merely a bystander. A Philip Green can nick / crush your investment at the stroke of a pen

governments can much more easily tax the hell out of your property then they can shares.