Puff The Magic Wagon!

iTrader: (2)

Who knows about it? Done it?

fast bloke

What do you want to know?

scoobynutta555

At least 10 years too late!

Petem95

Someone has just watched a property programme "you cant go wrong with BTL [say mortgage lenders and estate agents]"

As scoobynutta555 says, you are far too late in this housing cycle!

If you want to see some decent returns try tracker funds investing in emerging markets like China and India, and strengthening markets like Germany and Japan.

paul-s

ok so maybe a bit late for large returns and profits but as an investment opportunity in a good area - what do you think ??

scoobynutta555

They say you cant go wrong with bricks and mortar! However, there really are many pitfalls associated with the whole BTL thing. Starting 10-15 years ago, like when I did, you had plentiful housing stock to choose from and everyhting was very cheap relative to todays prices. The beauty with cheap housing is that prices can only rise, so after a few years in the game you can move out of it with a tidy sum.

Nowadays with the much higher capital outlay, youll see a greatly reduced return on your investment. With the fairly stagnant nature of pricing these days, it seems theres not much profit in it for a short term investment (or even if you decide its not for you and want to get out). Also, its widely acknowledged that house prices are near their ceiling, perhaps through their ceiling! So theres potential for house prices to shift downwards, quite possibly seeing a high % borrower in negative equity.

These points are just general ones associated with the economy and housing prices. It gets even hairier dealing with things that should be in your control, ie tenants. Who will you let to, will you be able to find somebody reliable willing to pay the rent you want? The permutations are endless, even after 15 years of doing this (and a fair few number of tenants) Ive still to see a fraction of all possible scenarios.

To succinctly sum it up, BTL years ago was much less of a gamble then as it is now, and I don't think i'd get started in it now due to increased competition and the increased risk/capital costs these days.

paul-s

interesting, thanks

Deep Singh

If you are going to do it make sure

1)you are looking at a 10-15 year plan. Not short term

2) You can fund it even if empty for 6 months/if IR go up a little etc

3) Don't buy new build 2bed luxury/urban/stylish(insert bull**** here) flats. They are overpriced

Its not the best time, but depending on ones circumstances you can argue there is never a bad time to buy

jjones

if the countrys population is increasing more rapidly then the housing stock then demand/prices will continue to rise.

Total number of homes built in 2005 = 159,700.
(http://www.cpre.org.uk/campaigns/pla...-key-facts.htm)


http://www.optimumpopulation.org/opt...kpoptable.html
population is incrementing at over double the speed it was 10 years ago (see link)

just stated on radio that Halifax are claiming 4.4% rise in prices this year so far, and we are just about to enter a traditionally prosperous selling/buying time.

bad news for anyone other than those downsizing and those who like to remortgage to get a new m3.

scoobynutta555

The population rise is from people abroad moving here and not the indigenous population growing. All it would take is a downturn in the economy and, due to the relaxing of border controls and the ease of relocation abroad, you'd see a fall in the population, ergo , a fall in demand of property and a fall prices. The majotiry of my tenants over the past 2 years have been Europeans, not *English* people.

And :

I'd take with a pinch of salt what any major lender says about housing prices, especailly ones bigging up a very unpredictible and volatile market, even more so with quotes such as "we are just about to enter a traditionally prosperous selling/buying time".

The simple truth is you'd be hard pushed to get a forecast for housing prices correct for 1 years hence.

the_boy

I know this is slightly different but I too am looking to purchase property on a buy to let basis.

Basically I moved into my Gf's house just over a year ago and I help to pay the bills etc but am not on the mortgage.

Now as a failsafe / investment / foot on the ladder opportunity I'm thinking of getting a mortgage on a house which I am purely going to use for rental and use it to pay off most of the mortgage. Even if this is just for 10 years I can't see how it can be a bad idea? The mortgage will be being paid off and the house will increase in value over that time. If we decide to move further down the line to a bigger house I could cash in the property and still make a return on it. Or keep it for the full mortgage timeline and use it to fund my pension.

In addition I'm looking to purchase property abroad rather than the UK. House prices are more reasonable and there is a better chance of rental yield as far as I can see.

Has anyone gone along this track at all and if so which countries have you been looking at?

Petem95

Overseas is probably a better bet than the UK - I have friends who bought a place in Bulgaria and the value of the property has risen quite a bit (certainly well ahead of the UK) - but renting it out doesnt bring in that much money out of the holiday season apparently.

Assets such as housing are generally agreed to be way above sustainable levels however, not just in the UK, so it might not end up being the "safe bet" its made out to be.

Ritch96

Only had a quick glance but is your first link England only but second link whole of UK?

Ritchie.

MikeCardiff

iTrader: (2)

Before doing anything in the UK - check how much the mortgage payments will be - find out exactly what you can realistically rent it out for.

With house prices over inflated, and loads of people who bought to let, you may well find in a lot of places now the rent wont cover the mortgage ( even more so if you are giving away a percentage to a letting agent ) - if you are buying in an area where there are lots of houses to rent, be prepared to get less, and/or have the place standing empty for a few months at a time.

TBH I think you've missed the boat in the UK by about 4-5 years - I dont know about overseas, but from what I have seen most of the places that were a good investment a couple of years ago have been flooded by people buying, and the prices have been pushed up accordingly.

Jonathan Davies

Agree with this entirely, except that I would say: make sure you can fund the debt even if interest rates go up a good bit.

It's true that on a medium-long horizon, property has always done ok to very well. The problems start if you can't afford to ride out bad spells - eg, if rates spring up - you don't want to be a forced seller in that market.

Deep Singh

Depending on where you live and the quality of the property the rent will not cover the mortgage. For example in London a nice flat will be £250k, payments over 20 years will be approx £1800/month assuming £30k deposit. Rent will be £1k a month. Thats not taking into account voids/maintenance/tax etc

The only places it still works (imho) is in multilet type accoms in less desirable areas. Places where you can shove 10 immigrants/students etc into one house. Unfortunatley I can't be bothered with that kind of hassle, but friends of mine who do continue to make decent returns. But these guys rule/enforce with an 'iron rod' to deal with the pisstakers, my job doesn't allow that sort of behaviour!

As for abroad, even though the headline yield may seem good, that soon falls because of extra mainteance costs due to the fact that you can't just pop in and fix the lightbulb/washing machine. Just think if you had to fly out there twice a year to deal with the unforseen your yield will drop from 8% to 5%

All imho of course!!