A demonstration of ludicrous house prices...

dolce_vita

IveSeenTheLight wrote: »

With the property prices in the last decade always rising, then the rental yields would be reducing every month unless the rent received increased.

Oh my god, i think you've got it.

Now you really have "seen the light"

what you have previously been discussing is cashflow, not yield.

it's an easy mistake to make.

wolvoman

meanmachine wrote: »

Take this as a basic example of how utterly ludicrous prices are:

Nice area of SW London.

Rental income on 1bedder £805pcm.

Average price of 1 bedder £240K

IO mortgage £1150

Tenant subsidy per month: £345

I guess someone's going to say that, "ah well, look at it as a type of pension investment".

I look at it as insanity.

You'd be very lucky to find a 1bed flat in SW London (in a good area) for £800pcm.

Plus on a 90% LTV the IO mortgage would be more like £950 than the £1150 you quote.

moneysavinmonkey

wolvoman wrote: »

You'd be very lucky to find a 1bed flat in SW London (in a good area) for £800pcm.

Plus on a 90% LTV the IO mortgage would be more like £950 than the £1150 you quote.

and at 80% LTV the IO mortgage would be even less - so what? you have to add in the interest lost on sticking your deposit money in a savings account otherwise it's a false economy.