Buy to Let - has the time passed?

Sarah1Mitty2

Mstty said:

Hence why demand for available rental property is through the roof and rents are just going one way fast.

https://www.msn.com/en-gb/money/other/more-homes-hit-lettings-market-as-sales-stall-will-rent-rises-slow-down/ar-AA1fHzXf

Mstty

From that article linked above

There are still 43 per cent fewer rental homes on the market than there were in 2019, with every region of the country recording a fall of at least 25 per cent, and Scotland leading the way with a 65 per cent drop.

That only means one thing. Demand grossly outstripping supply and higher rents.

housebuyer143

But, I read that for the first time in 15 years or more the cost of mortgages are more than rent in many areas. 
I did BTL 2016-2021 and honestly it was an excellent investment. Mortgage £130, rent £500 and then I made £50k profit when I sold. I would never do it now. The numbers don't stack up and property growth seems less likely and as an investor, that's what you go in relying on to make money.

Mstty

housebuyer143 said:

But, I read that for the first time in 15 years or more the cost of mortgages are more than rent in many areas. 
I did BTL 2016-2021 and honestly it was an excellent investment. Mortgage £130, rent £500 and then I made £50k profit when I sold. I would never do it now. The numbers don't stack up and property growth seems less likely and as an investor, that's what you go in relying on to make money.

Of course going in now (new) you have to look at property in at least 5-10 year chunks as an investment nit a quick in and out 1-4 years toe dip.

Are you saying property won't increase in value in the next 5-10 years?

Sg28

Mstty said:

housebuyer143 said:

But, I read that for the first time in 15 years or more the cost of mortgages are more than rent in many areas. 
I did BTL 2016-2021 and honestly it was an excellent investment. Mortgage £130, rent £500 and then I made £50k profit when I sold. I would never do it now. The numbers don't stack up and property growth seems less likely and as an investor, that's what you go in relying on to make money.

Of course going in now (new) you have to look at property in at least 5-10 year chunks as an investment nit a quick in and out 1-4 years toe dip.

Are you saying property won't increase in value in the next 5-10 years?

Id say 5 years probably not, 10 years who knows.

Sg28

Mstty said:

From that article linked above

There are still 43 per cent fewer rental homes on the market than there were in 2019, with every region of the country recording a fall of at least 25 per cent, and Scotland leading the way with a 65 per cent drop.

That only means one thing. Demand grossly outstripping supply and higher rents.

The thing is though rents have a ceiling. People can only pay what their wages allow. They'll come a point where the rents asked simply cant be paid. 

Property is not really something Ive wanted to do previously as I don't want to be playing an active roll in my investments.

But now I would like to diversify into more income streams, so Ive been looking closely at various options over the last 9 months. However with prices as they are and rents as they are yields are just far to low. Around me in the South East they are as low as 2% in places. And the places ive found with apparent yields of 8%+ seem to be deprived areas where prices are so much lower. But this means less jobs, more voids, less reliable tenants. 

It just doesnt add up unless you are betting on capital growth. Which imo is unlikey in the medium term. 

Grumpy_chap

Solarstart001 said:

90k house

6.6k rent p.a

What is so unique / special about this property to rent that you expect to achieve such a high gross yield?

Sg28

Grumpy_chap said:

Solarstart001 said:

90k house

6.6k rent p.a

What is so unique / special about this property to rent that you expect to achieve such a high gross yield?

Having had a good look a few locations around the country I found gross yields as high or higher than that. With similar or lower property prices. The problem was these were all poor/ deprived areas so that gross yield is going to take a huge hit when you take voids/damage/high tenant turnover into account.

ProDave

Sg28 said:

Doesnt make any sense to me, you can get £5400 a year gross on a 1 year fix saver completely passive with no work involved. 

Basically you need house price growth to make it worthwhile. 

Yes you can, now that interest rates are somewhere close to the long term average, but little over a year ago savers were getting almost nothing.  And when interest rates go back to the new normal of almost nothing, you will again get very little as a saver.

That does not make it imho worth getting back into BTL.  But my view is skewed by the fact I am retiring and don't want "work" and ties.

Mstty

Grumpy_chap said:

Solarstart001 said:

90k house

6.6k rent p.a

What is so unique / special about this property to rent that you expect to achieve such a high gross yield?

As an example two properties we have would have a resale value of £150k but the rent in the are is £1000-1200 pcm

It really is ridiculous in the rental market right now.