A perfect 'buy or rent' comparison

m00m00

kennyboy66 wrote: »

You have really no idea what situation previous occupants are in. They could have gone bankrupt.
I would have no problems buying a respossed property - but I would not kid myself that as a consequence I was "helping" the previous owner

the last property purchase I was involved in, was about 12 months ago. It was a repossessed property which the owner had been letting out on a residential mortgage rather than a BTL, and then couldn't make the payments and was repossessed.

my attitude to the previous owner, who was guilty of fraud as well as fiscal stupidity (bungalows do not rent at premium prices, although they sell at them), is from the great philosopher Nelson Muntz.

HAR HAR.

izzybusy23

PasturesNew wrote: »

Here is an auction from today
http://www.eigroup.co.uk/onlineauctions/orderofsale.asp?AuctionID=10597&c=brn

On the intial list you can see the guide price. If you click on each number, you will see what it sold for.

About half of these were repossessions.

A phenomenal number today didn't sell at all.

If you look at this one:
http://www.eigroup.co.uk/onlineauctions/lotpub.asp?a=10597&l=494273
You can see the last bid was £102k and it is available for £105k. You can buy property after the auction if you want to try stepping back and seeing what happens.

That one is on with rightmove still, doesn't show the price it was originally though: http://www.rightmove.co.uk/viewdetails-20420051.rsp?pa_n=1&tr_t=buy

I just saw a very reasonable house on that auction in Glos that sold for 108k... until I looked at the arial photo and realised it was built on what was the old dog track and therefore suscetible to flooding.

I think a lot of us will be looking at these auctions over the coming months.

baby_boomer

A new block of flats I've been watching in Leicester has minimum prices for 2 bed flats as:

£155K to buy
£575 pm = £6,900 pa = significantly less than 4.45% pa to rent.

Not worth withdrawing your money from an ISA to invest in buy-to-let property at that rate.

JonnyBravo

LittleMissAspie wrote: »

I have a real-life example, the house I am living in now. The current landlord bought it in 2006 for 137,500.

We pay 650 to rent it.
An interest-only mortgage would be 687 plus maintenance.
A repayment mortgage would be 896 plus maintenance.

We have one drawback and one drawback only - I hope the landlord has a big enough LTV that he is making a profit and doesn't get repossessed! I am less worried about that now than I was. Having gone through with the unsettledness of moving from a lovely big 2-bed flat to this smaller and not-very-nice house, I am more confident about moving again.

You should have no worries.

His rent is probably (from your figures... not sure how you know what interest rate he's paying but I agree they're probably about right) just about the same as the interest he's paying so that's not too bad. Sure he may have a tougher time when he comes to remortgage and the criteria have moved but he may be on a deal for years yet.
In short, unless he's stretched elsewhere, it's very very unlikely that this would break him.

So put your feet up and enjoy life and don't stress!

happywarmgun

I posted on another thread earlier so forgive the cut and paste - but I can also offer a 'real' example where renting became a no brainer....

I had to move due to expanding family. Looked at four bed detached houses in the circa 450k-500k bracket last summer. We found one place of interest but it was actually 575k. To afford such a place, with the equity we have - we were looking at INTEREST ONLY payments of around 1800 a month. Or a repayment at around £2600. Now the sellers of the house wanted rid, but wouldn't drop the price. However, we found they also had it on to rent with another agent (obviously hedging their bets).... we negotiated on rent and got it for 1400 a month.

Now - on the principal that rent to a landlord is as dead money as interest repaid to a bank we are over 400 quid a month up on if we had an interest only mortgage deal and 1200 better off a month(!) than if we had a repayment mortgage. Those savings are being invested elsewhere. These assets are appreciating. Had I have bought the house the value of it would currently be depreciating. We will probably buy again in two years (somewhere bigger again) and will have a stonking deposit as a result of this, no negative equity, and in the meantime we've lived in a brilliant, beautiful house where the landlord pays for any work that needs doing. If the landlord put it back on the market I would probably make an offer - but it would be a good 100k below last summers asking price - I'd still be super up on the decision to rent!

Like comedy all these things come down to timing

merlinthehappypig

happywarmgun wrote: »

I posted on another thread earlier so forgive the cut and paste - but I can also offer a 'real' example where renting became a no brainer....

I had to move due to expanding family. Looked at four bed detached houses in the circa 450k-500k bracket last summer. We found one place of interest but it was actually 575k. To afford such a place, with the equity we have - we were looking at INTEREST ONLY payments of around 1800 a month. Or a repayment at around £2600. Now the sellers of the house wanted rid, but wouldn't drop the price. However, we found they also had it on to rent with another agent (obviously hedging their bets).... we negotiated on rent and got it for 1400 a month.

Now - on the principal that rent to a landlord is as dead money as interest repaid to a bank we are over 400 quid a month up on if we had an interest only mortgage deal and 1200 better off a month(!) than if we had a repayment mortgage. Those savings are being invested elsewhere. These assets are appreciating. Had I have bought the house the value of it would currently be depreciating. We will probably buy again in two years (somewhere bigger again) and will have a stonking deposit as a result of this, no negative equity, and in the meantime we've lived in a brilliant, beautiful house where the landlord pays for any work that needs doing. If the landlord put it back on the market I would probably make an offer - but it would be a good 100k below last summers asking price - I'd still be super up on the decision to rent!

Like comedy all these things come down to timing

That more or less sums up how we feel, though there is something about owning your own place that renting never captures. It's a great short-term choice, but I wouldn't want to do it for ever.

One of the houses we have been watching since August has just fallen through for the third time. Bet they wish they had taken our offer back in November. It's too big for us now without my father in law so we won't be going back to them.

Another house we like has just reduced £50000 to £400000. One last push and we might not need a mortgage at all.