'BTL Landlords go long'

brit1234

I'm sure old landlords will will fine as long as they haven't used their equity to purchase new properties. Investors who bought in the last couple of years are toast.

Gorgeous_George

With any business there are risks and any business plan should accommodate those risks. Increasing interest rates are easily offset by using fixed rate deals.

I have a tracker at 0.89% above BofE base rate for the term of the mortgage. It suits me perfectly but it would not do so if I had a lot of BTLs with the same deal.

With more BTLs I'd want 5 or 10 year fixes (longer if possible) and I wouldn't want them all to end in the same year. A little careful planning would see the renewal dates staggered. With more BTLs I'd also want to keep the LTVs favourable.

I accept that it is likely that many recent BTLers will not understand risk. Others will be lucky.

GG

subjecttocontract

With interest rates due to be down to 4.5% by August. 4.25% by year end and 4.0% by early 2009 AND the potential to raise rents by 5%+ it looks like my income stream will be very healthy over the next year or so.

(I've got lots of base rate tracker mortgages.....lucky me!)

m00m00

and next weeks lottery numbers are ?

Gorgeous_George

I'm not as confident as I was last month, that base rates will fall.

By swapping mortgage debt for bonds, the Government has loosened the shackles from the Bank of England and rates could rise (slightly) to curb inflation.

GG

dopester

!!!!!!? wrote: »

I would hope that it wouldn't be that bad in 3-5 years time. However if it was, then I certainly wouldn't be getting a BTL.

I making the assumptions that:

* I don't fall ill, lose my job etc.

* Prices will fall significantly, enough for me to get my own place mortgage free or near-as in 3 years or so.

* Prices will stay low enough that rents can cover the repayment when I get the BTL a few years later.

* There will be sufficient rental demand to keep rents high enough/ voids low enough to make the above sum work.


The way I look at it is that if done right, a second property will fund itself over the next 20 years and provide me a decent income stream well into retirement, with the option to sell it and cash in once I feel it's too much hassle to manage any more.

Owning a single property never leaves you in a situation to really profit from the property market, despite what those who MEWed were thinking of at the time.

I really wish you well with your main house outright purchase for your "home" - but is there no other investment opportunity for you other than illiquid property BTL?

Or are you determined to make profits from the slump in property?

Lots of people like property for an "investment" as it's bricks and mortar they can actually see in the real world with their own eyes... not a paper certificate of value.

Yet from a report I read (20 years ago) the top 10% of wealthiest people in the USA.. only have 15% of their total worth in property. I suspect that is for a good reason - that property isn't really some great investment over the long term compared to other investment classes.

I'm guessing those ratios might be similar today. Of course property has done well in this utter frenzied bubble of recent years and maybe some of those rich people might have missed out from going hard in to property (or maybe sold before the heights of the bubble)... and I'm not saying the stock-markets today are the magic ticket... just hope you don't buy in way before the UK's biggest house price crash fully plays out on your future BTLs.

brit1234

subjecttocontract wrote: »

With interest rates due to be down to 4.5% by August. 4.25% by year end and 4.0% by early 2009 AND the potential to raise rents by 5%+ it looks like my income stream will be very healthy over the next year or so.

(I've got lots of base rate tracker mortgages.....lucky me!)

I guess the above is a wind up as the BOE mandate is to control inflation which is currently rissing fast and likely to rise for some time.

WTF?_2

dopester wrote: »

I really wish you well with your main house outright purchase for your "home" - but is there no other investment opportunity for you other than illiquid property BTL?

Or are you determined to make profits from the slump in property?

Lots of people like property for an "investment" as it's bricks and mortar they can actually see in the real world with their own eyes... not a paper certificate of value.

Yet from a report I read (20 years ago) the top 10% of wealthiest people in the USA.. only have 15% of their total worth in property. I suspect that is for a good reason - that property isn't really some great investment over the long term compared to other investment classes.

I'm guessing those ratios might be similar today. Of course property has done well in this utter frenzied bubble of recent years and maybe some of those rich people might have missed out from going hard in to property (or maybe sold before the heights of the bubble)... and I'm not saying the stock-markets today are the magic ticket... just hope you don't buy in way before the UK's biggest house price crash fully plays out on your future BTLs.

I'm not looking to make a huge profit from capital appreciation. The idea is to generate a predictable cashflow with relatively minimal effort from myself.. Eventually at some point far in the future the BTL property will be sold and at that point it should generate a pretty substantial sum.

Of course, it all depends on buying at the right time. Now is absolutely just about the worst time to buy. In another 3 years I'd say the prices will start to make sense.

Also, it depends on longer term trends for housing demand. I'm guessing that there should be an ongoing reasonable demand for rental housing that will minimise voids and keep rents up. A declining population/emigration or massive housebuilding programme could change that.

Yeah, you can make higher returns with clever investments but I don't think I'm sufficiently skilled to make decent cash on general investments on anything close to the probability of success that I'd want. Housing is pretty easy to understand and plan. Unless I can make more money in the bank from interest rates (actually possible in recent times if you got into the BTL game late ) then a second property for BTL looks like the way to go.

dopester

!!!!!!? wrote: »

I'm not looking to make a huge profit from capital appreciation. The idea is to generate a predictable cashflow with relatively minimal effort from myself.. Eventually at some point far in the future the BTL property will be sold and at that point it should generate a pretty substantial sum.

Of course, it all depends on buying at the right time. Now is absolutely just about the worst time to buy. In another 3 years I'd say the prices will start to make sense.

Also, it depends on longer term trends for housing demand. I'm guessing that there should be an ongoing reasonable demand for rental housing that will minimise voids and keep rents up. A declining population/emigration or massive housebuilding programme could change that.

Yeah, you can make higher returns with clever investments but I don't think I'm sufficiently skilled to make decent cash on general investments on anything close to the probability of success that I'd want. Housing is pretty easy to understand and plan. Unless I can make more money in the bank from interest rates (actually possible in recent times if you got into the BTL game late ) then a second property for BTL looks like the way to go.

Ok I'm reassured by the way you remain open to things possibly changing in the future, and your willingness to adapt to changes in circumstance.

If things do work out the way you envisage though, I trust you won't endanger your healthy position by using the main home you've acquired as security for any BTL purchases.

Anyway some pure honey bear food for you in yesterday's Evening Standard. The cold real world of price reality is slowly puncturing through the fantasy land some sellers are living in where they still half-believe their houses have risen 50% to 100% in value in the space of just a few years.

IveSeenTheLight

!!!!!!? wrote: »

Round my way, would be BTL magnates were snapping up all kinds of housing, not just the city centre 'luxury apartments' that appeal to the exceptionally greedy/gullible sort. Not only BTL 'investors' but out and out speculators who were trying to flip properties.

I guess this would benefit everyone who is renting and waiting for prices to drop.
If there are more rental properties then this would help to keep the rental rate the same or maybe even lower.
I guess this might explain one reason why it is cheaper to rent than to buy in your area.