Panic selling by landlords could turn slump into rout

inmypocketnottheirs

wisbech_lad wrote: »

Yes. It's called "dollar cost averaging", "asset allocation" and "asset rebalancing"

http://www.efficientfrontier.com/

has some good articles on investment

It is very difficult to do, because rebalancing sometimes involves selling assets that are performing well, and buying poorly performing assets, which requires massive discipline. But this basically forces you to "sell high and buy low", and take a long term view.

Actually you have reminded me to dust off my doorstopper 'Into the Downwave' by Dr Robert Beckman.

scorpio_princess

inmypocketnottheirs wrote: »

You are quite right. For now. But in three to five years? Eight to ten years? I'm no economist either but I understand the economic cycle. No one can predict the future, and we can only use history as an indicator I agree. The economy is in a dire state, thanks to TB/GB (bearing in mind GB has been running the economy since 'Things can only get better') and there will be a stagnation in economic growth. But these things are cyclical.

But are they really? I mean, things go up, things go down - I get this. But is the cost of oil EVER going to go down? I don't believe for one second that the oil is on the brink of running dry, but for some reason or another quite a few industries have a vested interest in oil staying this pricey :rolleyes: Until the corruption surrounding oil is diminished (or what I perceive as corruption), it will stay at extortionate levels. How is this going to fuel (excuse the bad pun here) another economic boom?

Sorry for sounding a bit doom and gloom, but everywhere you look, people are losing their jobs, getting worried about losing their jobs and generally not having a lot to smile about (including me, although for a different reason - i've just torn my cruciate ligament in my knee - 3 weeks before my house move :mad: )

IveSeenTheLight

!!!!!!? wrote: »

And that's a pretty fantastic situation to be in. However, can you honestly say that if you were at the stage of your life where you were first buying, in the environment of the last three or four years would you have been able to do what you did?

It depends on the area you are in.
I'm fortunate in that the area I am from it was still possible in the last 4 years.
I do have sympathy for those in areas that this is not the case and a correction is obviously required for them.
It's not necessary throughout the whole of the UK though

IveSeenTheLight

Generali wrote: »

I hope you make money. I suspect you'd make more by selling and buying back but you've made your choice and I hope it's the right one.

Maybe I would make more money selling and then buying later, however statistically according to Nationwide, my area still increased annually by 13% for the first quarter for 2008.
This means one of my properties increased (on paper) by approx 6000 pounds, the other by approx 8000 pounds. Given that they both rent out regularly (only had two weeks void due to a strong rental market and my marketing strategy) and the extra profit I make I have used for reducing the outstanding capitol (I know not ideal BTL strategy, but a safer one for my requirements).

With the paper rises and extra equity gained through rental profit, I would approxiamately be about 20,000 less now than if I sold at the UK peak of Oct 2007

Now these paper rises may drop, I'm prepared to take this given recent years rises. My strategy is to own the properties outright for future income through rent and one which I am ahead of schedule in achieving that outcome.
If I sold now, then I would be much further away from that goal and would be entering into a speculation period

I hope that everyone analyses their own specific situation and manages that situation for their best interests.

dopester

IveSeenTheLight wrote: »

Maybe I would make more money selling and then buying later, however statistically according to Nationwide, my area still increased annually by 13% for the first quarter for 2008.

Are your properties in Aberdeen? I'm not sure you've ever said, or perhaps you don't want to - if so no problem.

Also forgotten how many BTLs you have.. two I think. If you sold one you'd be giving yourself a bit more insurance wouldn't you? Taking the profits from the HPI and banking it in to liquid savings, or redirecting it to over investments.

Yes the downside is you could lose out on more capital profits if HPI continues in your "region", but your exposure would be less if things turn. Please consider the big change that has come rapidly (in space of a few months) in many regions of England, where sellers are having to cut big money off to attract buyers.

IveSeenTheLight

scorpio_princess wrote: »

i've just torn my cruciate ligament in my knee - 3 weeks before my house move :mad: )

Oooohh!!!!! I remember doing that. Not a good thing.
Thought I'd give you a group hug
:grouphug:

Take it easy, grab a cuppa :coffee:get your other half to do a load of running around for you.
No more jumping jacks for a while:j or dancing for a while :dance:

Seriously though, get some good adice from your doctor (knee specialist) and follow religously.
I did my cruciate about 15 years ago and did not get good advice and was too young and foolhardy to give the proper rest and exercises. My knee will never be 100% again, I hope you make a full recovery

Good Luck

IveSeenTheLight

dopester wrote: »

Are your properties in Aberdeen? I'm not sure you've ever said, or perhaps you don't want to - if so no problem.

Also forgotten how many BTLs you have.. two I think. If you sold one you'd be giving yourself a bit more insurance wouldn't you? Taking the profits from the HPI and banking it in to liquid savings, or redirecting it to over investments.

Yes the downside is you could lose out on more capital profits if HPI continues in your "region", but your exposure would be less if things turn. Please consider the big change that has come rapidly (in space of a few months) in many regions of England, where sellers are having to cut big money off to attract buyers.

Yes, my properties are in Aberdeen and I am renting out two of them.
A four bed house and a 2 bed flat.
I do already have quite a bit of savings put away, for either paying off more capital or to use as a deposit for a third property, but need to wait till I am happy that I have reduced the risk enough on my current properties.

Actually my exposure is already quite low.
One property has more than 40% equity, the other more than 60%

I could sell the 2 bed flat (at today's prices) and pay off the mortgage on the 4 bed, but then in the future I would only receive an income from 1 property and like I've said, I don't want to move this ahead of schedule goal into speculation

Rabiddog_2

re panic selling.. isn't it the case that, say, an extra 5% of property's coming onto the market will not push prices down by 5%, but could push prices down by much more. Eg the people who come onto the market feel they HAVE to sell so are wiling to take a lower price, thus reducing average selling prices, thus panicking further "twitchy" BTL's. In a falling market those who sell first, get the best prices, encouraging a "sooner rather than later" attitude.

Africa's the new Asia

dopester

IveSeenTheLight wrote: »

I could sell the 2 bed flat (at today's prices) and pay off the mortgage on the 4 bed, but then in the future I would only receive an income from 1 property and like I've said, I don't want to move this ahead of schedule goal into speculation

You don't put a value on having that absolute certainty the 4 bedroom house is fully yours outright - without any mortgage debt? Sleeping easy, and you'd have less regional stat checking to do.

You won't sell both BTLs, that much I gather. Still you aren't open to forgoing the one of the rental income streams for that absolute ownership certainty given what is happening in other regions of England?

I appreciate you have equity cushions and savings liquidity, and therefore you seem open to the possibility of risk, but why risk it anyway? Is your yield worth it for those risks. Just a 10% fall in your region would hit you on both your properties.

Night-owl_6

http://www.guardian.co.uk/business/2008/jun/03/housingmarket.mortgages