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Pobby
Posts: 5,438 Forumite
Saw an ad today.We buy your home for 205 of the market value and rent it back.Ok,150k house around these parts.So the owner gets 120k.The purchase can only charge the market rent which is about £550 per month.
Now a btl mortgage average deal is around 5.5% maybe with a 2.5% fee.So these sharks are not going to make any money to speak of by having the seller rent.My only guess is that they hope prices don`t fall,evict after 6 months and sell the property.Any ideas?
Now a btl mortgage average deal is around 5.5% maybe with a 2.5% fee.So these sharks are not going to make any money to speak of by having the seller rent.My only guess is that they hope prices don`t fall,evict after 6 months and sell the property.Any ideas?
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Some of your assumptions are dodgy. Bet they won't pay 80% if they are charging market rent, more like 70% (or 80% with a higher rent). They also will have access to mortgages without 2.5% fees.
Buy at below market value, remortgage to market value. If the mortgage just covers their costs they have done their deal, they own the property with a reliable tenant who wants to stay, no money down, no problems.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Saw an ad today.We buy your home for 205 of the market value and rent it back.Ok,150k house around these parts.So the owner gets 120k.The purchase can only charge the market rent which is about £550 per month.
Now a btl mortgage average deal is around 5.5% maybe with a 2.5% fee.So these sharks are not going to make any money to speak of by having the seller rent.My only guess is that they hope prices don`t fall,evict after 6 months and sell the property.Any ideas?
Run a mile from these schemes. They are never in your interest and are designed to prey on the desperate or the financially ignorant.
If you must sell your house fast, do so at 5-10% 'below market value' and bank whatever equity you have. Then try renting a place - you might find that it compares very favourably cost-wise and you are no longer a hostage to a volatile house market that looks extremely shaky.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
No I am thankfully in a posistion of mortgage paid,I was just tring to do the math on how these deals work.Silvercar,still strikes me as risky to the purchasers if the markets go down a considerable amount.0
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No I am thankfully in a posistion of mortgage paid,I was just tring to do the math on how these deals work.Silvercar,still strikes me as risky to the purchasers if the markets go down a considerable amount.
I guess these companies are relativily new and we're setup during HPI. I guess at the moment their portfolio will be showing a huge profit if the market takes a down turn they'll be more resistant to buying.
They will prey on people in desperate situation who want to avoid reposession, at the moment reposession are up and houses haven't palyed catch up in turns of prices coming down weather they will is any body's guess :rolleyes:
I bet their business model hasn't been tested if prices drop more then 20%. Just like NR didn't stress test what would happen if they could no longer get funds on the open market
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I guess they only pick the deals they want.
In this market they may not be looking to sell quickly but to hold for the long term. A seller who wants to remain a long term tenant is an advantage.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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