'BTL Landlords go long'

EdInvestor

m00m00 wrote: »

the reason the 18% rate didn't bring many sellers out, is you actually need to have made a gain to pay capital gains. Not likely for most people who bought off plan/investment city centre flats at any point in the last 2-3 years in most areas.

This is soooo obvious.And yet many doomster speculators got it wrong. They will get more things wrong in this area, mark my words.

IveSeenTheLight

dannyboycey wrote: »

I didn't say that. I said those with little or no equity, of which there are literally thousands. These include many 'amateur speculators', who may at the moment be able to offset their losses with the equity tied up in their own home. But this is a limited resource upon which they can tap, and losses will have to be paid eventually.

Someone mentioned pushing up rents - but tenants can only take this if there is an upward trend in rent prices. Otherwise they will simply stick two fingers up at the LL and move on. As yet, an significant increase in rental prices is not something I've seen.

"Those with little or no equity, of which there are thousands" - Is this your personal belief or do you have facts to back this up?

"These include many 'amateur speculators', who may at the moment be able to offset their losses with the equity tied up in their own home." - So you are saying that BTL are subsidising rent, again do you have some facts or just your personal belief

"Someone mentioned pushing up rents - but tenants can only take this if there is an upward trend in rent prices. Otherwise they will simply stick two fingers up at the LL and move on. As yet, an significant increase in rental prices is not something I've seen." - 16months ago, I increased my rent on a 4 bed house by 22%. Last month I increased the rent on a 2 bed flat by 14%. I only increased the rent between tenants as I like to keep good tenants. I made the increases but am still marketing the properties slightly below the average rate to ensure high viewings. Both properties were snapped up immediately. I only had a void on 1 property and that was by 2 weeks, mainly because the previous tenants started mid month.

If I can increase the rent and still be slightly below the average rental price, then this shows a trend where rent prices have increased

IveSeenTheLight

!!!!!!? wrote: »

Once the market has dropped to a level where a BTL can generate positive cashflow for me (taking into account voids and the various costs), I'll certainly consider getting into the game. However, currently there is next to nothing out there in my area that it makes sense to buy for BTL and there hasn't been for a couple of years at least.

I agree with you that you have to do the calculations and maybe in your area it's not the right time or place, however this is not the same everywhere.

One of my BTL properties I bought 16 months ago, it makes a profit taking into account associated costs and voids.
You could argue that the paper caluation will go down and I would be better cashing in now. But I am in this for the long term.
Say I bought for 150,000 and it went up to 185,000 in the last 16 months. But now there is a 40% crash and the valuation drops to 111,000 in the next few years. What do you think the valuation would be in 30 years time (assuming I wanted to sell) or when the mortgage is fully paid off?
What rental income pension would this generate for my retirement (okay you dont know the valuation, type of house/flat, area etc but I hope you get my drift). Incidently, the projected self sustained mortgage pay off for this property is approx another 15 years, when I will be just reaching 50?

People generalise too much on this board. A lot of people make good points, but it has to be taken with a little pinch of scepticism and checked against their own personal circumstances.

IveSeenTheLight

Gorgeous_George wrote: »

And there are the majority who bought simply to let the property and to provide a little something for their futures.

Very good post GG.
The main point I agree with is why the majority of BTL LL's have invested.
It also backs up the OP post about why only 2% of BTL are selling.

These are the facts, not speculation that there will be a massive surge in BTL's offloading property and therefore dueling house price drops.

IveSeenTheLight

!!!!!!? wrote: »

Good for you. I'm a cash rich buyer looking to get myself a home and I'll be pretty happy too.

As long as yields stay favourable I'll be looking to get a BTL sometime afterward.

Surely you concede then that as you will be looking for two properties then demand is going to soar.

Either that or you wont get the drops you percieve and you can only afford one property.

IveSeenTheLight

Paul_N wrote: »

IMO

Taking the previous example where someone bought in the 70s and is now worth £140,000. What have they made? Just over £100,000? If with tighter lending criteria BTL loans require min 25% deposits, you're looking at being able to afford two/three more properties in the event of a crash.

It's true this is an option, IF prices drop as much as some are hoping for.

IF BTL LL's took up this option in 2005, do you think they are better off?

IveSeenTheLight

Gorgeous_George wrote: »

I don't do remortgages. My residential and BTL mortgages are small LTVs and life of mortgage deals.

Any surplus from the BTL is used as income. Surplus income is used to reduce my residential mortgage (well, added to my offset account just in case I need it later ).

When I can buy another property that will bring in surplus income commensurate with the risk, I'll buy. I look for 10%+ yields on proper family homes. A drop of 25% in my target area will result in 10%+.

GG

Gorgeous_George wrote:

You may be missing out on valuable tax allowances.

GG

IveSeenTheLight

!!!!!!? wrote:

Good for you. I'm a cash rich buyer looking to get myself a home and I'll be pretty happy too.

As long as yields stay favourable I'll be looking to get a BTL sometime afterward.

So if non current BTL LL's like yourself are looking at buying sometime in the future when prices look favourable, surely you can see that current BTL LL's will also do the same.

!!!!!!? wrote: »

By the time this is over there are going to be a good few less BTL properties out there.

So by the time this is over, there may be more BTL properties out there

IveSeenTheLight

Undersized_Rascal wrote: »

I hope that in the unfortunate event that property prices drop 30%+ all the greedy ones who screw tenants for deposits/don't fix stuff/ lie go out and never come back AND THAT ALL THE NICE ONES STAY AND CONTINUE TO TREAT TENANTS FAIRLY ......yes I know tenants can be bad too

Hear hear.
If there was a way to improve both tenants and Landlords then this would be a good thing.
There are systems started for this. You have the TDS scheme (which I don't personally like as the interest is paid out to A N Other, but I can understand due to previous disputes) and in Scotland all Landlords need to be registered with the government. The reason for this is to ensure that your are a suitable landlord.

Anything to make renting more secure for tenants and Landlords

WTF?_2

IveSeenTheLight wrote: »

So if non current BTL LL's like yourself are looking at buying sometime in the future when prices look favourable, surely you can see that current BTL LL's will also do the same.


So by the time this is over, there may be more BTL properties out there

I'm sure current BTL LLs may also do the same, if they have the spare cash and the will to take on more property. It's the ease of remortgaging existing property to get the deposit for a cheap mortgage on another property that has fuelled BTL in recent times.

The result is that there are a hell of a lot of clueless BTL LLs out there right now with 'property portfolios' who are leveraged to the hilt and/or subsidising their tenants.

I anticipate a huge wipeout in this sector with the masses deciding not to get their fingers burnt in BTL as a result.

Hence overall, less BTL.

There has been a massive rise in BTL in the last decade - coinciding not entirely coincidentally with the credit/housing boom. Return things to the long term norm and BTL suddenly becomes less of an 'easy prospect'. I'm thinking of getting into it because I'm lucky enough to have a lot of savings. This will mean a low/no mortgage when I buy a residential property and thus I'll be in a decent position to obtain a mortgage for a BTL later, should I decide to do so.