There will not be a crash

The_Dangerman

PayDay wrote: »

If a tenant doesn't pay you, a LL will need more than 3 months worth of rent in a contingency fund. A missed mortgage payment will cost you dear when you try to remortgage.

On the subject of mortgages, if houses prices fall, how will you get another BTL mortgage on a good rate? Or will you just have to go onto SVR?

You have come into this BTL at a very late stage in the game.

Possibly the later but I doubt it, I don't envisage the market crashing to such an extent that I can no longer get a competitive deal. If it does, then I'll cross that bridge when I come to it.

But I'm not living my life on the basis of the worst possible outcome.

Yes, I agree, ideally one would want more than a 3 month contingency fund. But don't forget I am earning and can if the worst come to the worst fund it from my earnings. Obviously I do not wish to do this on anything more than an emergency basis but sometimes, needs must.

The_Dangerman

GavP wrote: »

Okay, a bit more nosiness: what are your typical rental yields like?

Also, which part of the country do you buy in?

The North West and a decent 7%.

The_Dangerman

PayDay wrote: »

You have come into this BTL at a very late stage in the game.

Sorry, forgot about this bit.

Maybe so, but so far it has worked. I'm not asking for anyone's approval, I'm telling you what I have done.

Maybe it will all go the way of the pear as some people are hoping. Or maybe it will pay off since I've build on err, decent foundations. One thing is for certain I'm happy, and so far, content.

There is a big difference between caution and complete negativity. I like here though, it reminds of what I used to be like. My friends got fed up with me saying "ahh but what if". It took the death of a friend of a friend at the tender age of 30 for me to realise, you know, life is for living and I'm going to make a damn good go of it!

Pez2

The_Dangerman wrote: »

The North West and a decent 7%.

Is that gross or net?

The_Dangerman

Gross yield

Generali

Leverage levels?

Pez2

The_Dangerman wrote: »

Gross yield

In which case how do you make much money out of it? After mortgage repayments you make, what, 2-3% net? Once you take into account voids, maintenance, agents fees and the tax man it must be more like 1%. Even taking into account the fact that you're leveraging your initial deposit, you'd surely make as much in a high-yeilding savings account, wouldn't you? And presumably if interest rates go up more than 2% or you're forced onto a high SVR then it's game over?

The_Dangerman

Isn't that just a variation on the question of how much equity I have in a property taking the deposit out of the equation?

If so then I feel I have answered that many times over.

I don't feel I am especially vulnrenable to slowing or reducing prices. Note for anyone going to jump on that, I do acknowledge that nothing can be taken for granted. One thing I am not is a "flipper". Only just heard that phrase coming on here!

The_Dangerman

GavP wrote: »

In which case how do you make much money out of it? After mortgage repayments you make, what, 2-3% net? Once you take into account voids, maintenance, agents fees and the tax man it must be more like 1%. Even taking into account the fact that you're leveraging your initial deposit, you'd surely make as much in a high-yeilding savings account, wouldn't you? And presumably if interest rates go up more than 2% or you're forced onto a high SVR then it's game over?

Erm, by "leveraging" my intial deposit I assume you mean borrowing it? If so then that's not how I am funding my deposit so not sure where that came from.

I have been very lucky so far in the void periods have been exceptionlly short, albeit "finders fees" from the agent factor in.

Now certainly isn't a boom time, and its' quite possible it would be as sensible to put money into a savings account but I haven't just bought. Although I feel now is an interesting time to buy, if the right place came along at the right place, but there is no rush to go head first into any more ventures.

Significant rises in interest rates are not game over, but may require me funding the properties from my own salary, which is very generous. My job is also recession proof and just about the most stable and guareenteed you can get. The down sides to having a recession proof job are that I don't earn any more during boom times as I do during recessions. Obviously funding from my own salary will impact on my standard of living but I am well aware of that.

Besides, it's exciting, and makes me feel alive. I'm afraid I can't get interested (pun very much intended ) in savings account other than them being a sensible place to put contingency funding.

Gorgeous_George

How BTL works.

1. Buy property with a 6% yield in year 1

2. In year 2, increase rent by 2.5%

3. By year 10, the yield (against initial cost) is 7.6% and rising

Its a l....o....n....g term investment. There will be voids and occasional scumbag tenants but, in the long term, it can and does work.

There will be better times to buy. I don't think there'll be worse times than right now. But it can still work.

GG