Falling prices and BTL opportunities

Gorgeous_George

Undoubtedly, house prices are on the way down. This could be good news for potential BTL investors.

Firstly, negative equity and financial stress leads to more reposessions. This means cheaper houses for wannabe BTL investors.

Secondly, in a falling market, people are less likely to buy a home. Renting, therefore, becomes more popular and this increases demand for good quality BTL properties. Rents should rise accordingly.

Anyone who missed the boat last time should be preparing to buy a ticket for the next ride. Just be sure to set sail at low tide.

GG

Rover

And when will low tide be GG?
My guess is some years down the line?

silvercar

The problem being predicting when we have hit the bottom. No point buying in 6 months time if prices will be cheaper a year later.

I agree with your sentiment. There should also be some opportunity to buy and rent back.

m00m00

good opportunities will be there for sure

for cash buyers.

the 90%+LTV negatively geared muppets who've piled in in the past couple of years however, will be disappointed.

Gorgeous_George

Rover wrote: »

And when will low tide be GG?
My guess is some years down the line?

Obviously, calling the bottom of the market will be as difficult as calling the top and we all know how long that has been going on for!

I think that when the yield (minus void(s), insurance etc) = what you can earn in a savings account, is a good enough time. Not necessarily the best time but good enough to make the numbers stack up as part of a portfolio of investments. Rising rent will turn break even into profit in subsequent years.

The greater the left hand side of the equation, the lower the risk.

GG

Generali

If you can buy positive cashflow after all costs, BTL's a good investment. The thing is, if house prices are falling, it's going to be tougher to persuade a bank manager that.

If you're a cash buyer or have a very good deposit then you'll be fine.

epz_2

assuming you buy a 100k house and can rent it out for say £600 (generous rent in my area) and get the 10% voids & maintance then you are looking at making £6480.

now assuming 5.5% interest on 100k capital would make cost £5500 meaning a potential profit of £980 risking £100,000.

say house prices are 5% lower in 5 years, again very generous imho you will have risked £100k to lose £80 and that assumes some nutter doesnt set the place on fire, refues to leave etc.

house prices would need to fall a lot before its worthwhile

WTF?_2

Gorgeous_George wrote: »

I think that when the yield (minus void(s), insurance etc) = what you can earn in a savings account, is a good enough time. Not necessarily the best time but good enough to make the numbers stack up as part of a portfolio of investments. Rising rent will turn break even into profit in subsequent years.

The greater the left hand side of the equation, the lower the risk.

GG

Given how stupidly prices are out of whack in most of the country, that time is likely to be a long ways off. Though it is sound advice for BTLers.

Myself, I'll buy when it becomes financially attractive vs renting and not before.

Running_Horse

From memory it begins in London then ripples out.

Kind of like sitting on your surfboard in Doncaster waiting for a wave.

But London has a lot of falling to do first.

nelly_2

Running_Horse wrote: »

From memory it begins in London then ripples out.

Kind of like sitting on your surfboard in Doncaster waiting for a wave.

But London has a lot of falling to do first.

Do you think that might be because (like Americans) the media are only aware of London... with the rest of the country being some sort of dessert inhabited by weirdos who dont live in London?

JonnyBravo

nelly wrote: »

... with the rest of the country being some sort of dessert inhabited by weirdos who dont live in London?

That seems a trifle unlikely!!!!

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Well I amused myself at least.......