'BTL Landlords go long'

pickles110564

dolcevita wrote: »

Now an expert would know that things work in cycles.

I learned more overnight in the last crash when on paper I lost £30k overnight on one deal.
However, it taught me that through better research, keeping to the right area, you can weather the storm much better.
All my last property's that I have developed have been in the same catchment area within at most one mile of each other.
Yes I am still making basic errors but each time I move on trying to find that perfect development where all the builders are wonderful, turn up on time, complete on time and under budget.Whoops sorry started dreaming then.

Vincenzo

auk wrote: »

If this waiting/selling strategy results in a better outcome, then, although NPV positive, your decision to buy/hold is a VERY BAD DECISION.

This is the situation that BTLers are in now. Even if their rent coming in is higher than their interest payments, not selling is a very bad decision. When prices drop by 30%, then they will have lost 30% of the house price. The fact that they will still be making excess yield is utterly irrelevant. They could have sold and bought back into the market later. The only reason you would not do this is if you believed that transaction costs would be higher than the capital loss (very unlikely), or if your excess yield was so high that it outweighs the capital loss (very unlikely).

I expect a great deal of resi investments would be NPV negative, even when the rent exceeds the interest payments once you take into account management and maintenance costs.

I would caution though that your transaction costs could easily outweight the benefits of selling high and buying low when you factor in a potential CGT liability and/or early redemption penalties.

If you calulated that to benefit from selling now and buying again later, prices would have to drop say 20%. Would you do so? I expect most would not for a variety of reasons. Not least because property is not a particularly liquid investment - you may have tenants on ASTs which have months to run, or not want to risk voids, or Mortgage penalties to pay to name a few. Then there is the risk that prices will not drop that far, a risk which needs to be factored in.

EdInvestor

Gorgeous_George wrote: »

True, but there are plenty more monkeys that didn't.



GG

And a startlingly large number of them seem to post on this board :rolleyes::rotfl:

WTF?_2

pickles110564 wrote: »

I think you are wrong, I know of several BTL's who are waiting to buy several properties once they get to a decent level.

Several? That should underpin the market then :rotfl:

Out of interest, what sort of percentage fall in current prices would represent a decent level at which point the market will be rescued by the cavalry. 7th Pickle's Colleagues Division?

Gorgeous_George

I'm waiting for a 30% fall in the area that my BTL is.

GG

WTF?_2

Gorgeous_George wrote: »

I'm waiting for a 30% fall in the area that my BTL is.

GG

I'm waiting for about that, though expect it could go to 40% also.

30% over 2-3 years then with stagnant prices and rising inflation for a few years after that is most likely IMO.

BTLNEWbie_3

!!!!!!? wrote: »

Several? That should underpin the market then :rotfl:

Out of interest, what sort of percentage fall in current prices would represent a decent level at which point the market will be rescued by the cavalry. 7th Pickle's Colleagues Division?

I would want a drop of about 25% to make me want to buy more stock, what level are you going to buy your 1st BTL at?

BTLNEWbie_3

pickles110564 wrote: »

You lost me on this one Bud.
How much have you made over the HPI then?

I have only made paper profits because I dont intend to sell.

WTF?_2

BTLNEWbie wrote: »

I would want a drop of about 25% to make me want to buy more stock, what level are you going to buy your 1st BTL at?

I'll consider buying when the cash it generates from rental cover the costs of servicing a mortgage, maintenance and bills associated with the house and a margin for voids.

PROFESSIONAL_LANDLORD

Originally Posted by pickles110564
I think you are wrong, I know of several BTL's who are waiting to buy several properties once they get to a decent level.

!!!!!!? wrote: »

Several? That should underpin the market then :rotfl:

Out of interest, what sort of percentage fall in current prices would represent a decent level at which point the market will be rescued by the cavalry. 7th Pickle's Colleagues Division?

!!!!!! you would be surprised by the amount of property some people own,

A couple I know, who stay in a modest house own 46 properties
Landlord I was speaking to the other day, owns 22 properties
My plumber owns 14 properties
Friend of mine (big hitter) purchased 15 properties in one week last December

They all operate within 5 miles of me, BTLers cannot underpin the market but there are serious investors in the UK, who will definately take up a 'bit of slack' as re-possessions increase this year, a lot of this property will end up in auctions, most FTBers cannot purchase at auction, these properties will be sold to investors not FTBers.

If prices drop 'say 40% there will be a glut of property in auction rooms, the banks will be forced to make borrowing more attractive for BTLers/investors or they can board them up, like the USA.

IMHO once the dust settles BTL will increase in this country, fewer LLs, probably bigger players.