simon - we're at cross purposes on...the purpose of the yield. It isnt for stress testing. A yield is an initial steady state comparison with the cost of funds.
By all means stress test cashflows and look at worst cases for interst rates or voids etc, but that's not the calculation I was showing.
My observation from this thread:
It's quite telling how posters who rabidly support Labour and Gordon Brown, are the same ones who bought their house/flat in the late 90s/early 00s plus a load of BTL and have done very nicely indeed thankyou out of the ensuing ridiculous housing bubble nurtured by Brown.
Coincidence?
How about a bit of hedging. If I've understood you correctly, you already own a small flat on the same floor.
Sell the smaller, and buy the bigger.
Although, knowing the location, I'd be tempted to max out and go for it. There is only you and mrs TJ to think about if it goes horribly wrong, and the risk is minimal IMHO.
It's quite telling how posters who rabidly support Labour and Gordon Brown, are the same ones who bought their house/flat in the late 90s/early 00s ...
you new here? 😉
It's quite telling how posters who rabidly support Labour and Gordon Brown, are the same ones who bought their house/flat in the late 90s/early 00s ...
I've been following this thread from the beginnign and the only person who has stated that they bought their BTL's in the late 90's early 00's was me? And I don't rabidly support Gordon Brown or Labour? Where is your evidence that I do?
Nope, had more or less this discussion before on here, in fact.
As someone else has alluded to - rabid socialists/anti-capitalists who turn out to be up to their necks in BTL... Oh, the ironing! 🙄 😆
Come on Biscuit Powered answer?
TBF I think you've mistakenly conflated toys & me & gt1972 etc with rabid anticapitalists. Not sure youd find three less likely Gordon Brown fans in here* 🙂
* without wishing to presume too much of their politico-economic tendencies...
toys19, where did I specifically refer to you exactly?
toys19, where did I specifically refer to you exactly?
By quoting me exactly.
Nobody else has said on here when they bought their BTL's other than me.
Stoner-
we're at cross purposes on...the purpose of the yield.
Absolutely. Serves me right for responding to multiple posts in one mail..
Ta for the thoughts chaps.
there would be no agency fees - we don't need an agent having the expertise between us to do without. I was counting on 2 month with no rent each year to allow some slack but I hadn't allowed anything for refurbishment - but it needs nothing now.
Another aspect is that the bathroomand kitchen are dated - it could be rented as it is but would it be worth updating the kitchen and bathroom and going for a luxury / high spec market? Its very near the scottish government buildings
Very helpful anyway chaps - gives me sumnmat to think on
Biscuit Powered - MemberMy observation from this thread:
It's quite telling how posters who rabidly support Labour and Gordon Brown, are the same ones who bought their house/flat in the late 90s/early 00s plus a load of BTL and have done very nicely indeed thankyou out of the ensuing ridiculous housing bubble nurtured by Brown.
dunno if that is aimed at me but I am no labour supporter - or certainly not a blind one and I bought and made my paper profit under the tories. Twice 🙂
Here's a radical idea - why don't you do something socially useful with your money instead of preventing yet another young family from affording basic stable accommodation? I thought you were a socialist? BTL "investors" are far worse spivs than bankers and ought to be taxed accordingly - eg a nice juicy wealth tax on your 2nd/3rd/Nth properties.
Draftcapitals
its not basic family accommodation, there is a shortage of good rental property locally, I am a ecomentalist not socialist altho the two have features in common, I need to do something to gain some pension as the tories are hell bent on removing the pension I have worked for
draftcapitlas, for you to call us spivs is the greatest compliment a man of your stature and reputation could afford, I thank you.
BTL Investors are just like any other business and are taxed accordingly. All the things you buy are marked up by someone else and the market drives the price, simples. Unless you are an anti market socialist or communist you should probably reflect on your own actions in the market place and see what effect [b]you[/b] have on others.
If you really have dropped out of the system and really don't partake in any wealth transactions then I truly and honestly applaud you, its a very brave and upstanding character who can do that. Singe minded and dedicated.
> ... a man of your stature and reputation could afford, I thank you.
I assume by that you mean the entire younger generation who have been priced out of property by BTL "entrepreneurs"? I think you have little idea how much resentment and anger my generation has for those that have pulled the property "ladder" up after them so we can fund your pensions instead of being able to afford to have families ourselves. What is the average age of a first time buyer now? 37? How is that sustainable?
Don't be too smug, congratulating your financial aptitude for buying early into the biggest housing bubble in history. And don't kid yourselves you're doing us a favour by allowing us to rent your properties when we'd far rather have a fair chance to buy our own.
Thanks for the advice re: smugness I'll listen to all the advice I can. 😆
I hardly think you can blame the participants in the market, we just took the opportunities as they came to us, and the truth is you would have done the same. You wouldn't have been able to afford to buy in 20 years ago either, it's only because of the increased relative wealth at the time, which has now evened itself out.
But it appears that you haven't actually dropped out of the capitalist system as you seem to have some desire to buy a slice for yourself and don't seem to be able to get over your resentment to be able to do something positive. Tough. If you want to be part of the market you have to expect the ups and the downs. If you don't like it either do something about it or leave the system don't bleat about it. There are opportunities a plenty out there. MTFU
As others have said, investing all of your money in one property is risky, especially on the top floor. What would happen if the roof needed repairing?
Pieface - all repairs are shared, entire building has just had a very expensive ( over a million) Scottish heritage spec restoration including a complete new roof.
If you buy the flat now, will you then be responsible for the common repairs bill for all three flats and how will you pay that?
Pawl - no - the common repairs share for flat 1 would not be my responsibility. Paid by the seller
Thanks toys19 for your nonsense about housing being no more affordable 20 years ago than it is now. Unfortunately the stats don't agree with you (if you divide through by inflation and by average UK earnings, housing is 60% more expensive now than 20 years ago, despite 20 years ago being towards the top of the previous bubble, which deflated by approx 1995).
But you go on believing you are some sort of Warren Buffet for having some cash at the right time, and go on feeling good about being part of the generation that loaded itself up with suffocating debt and now wishes to pass it on to my generation, all the while trying to absolve yourself of guilt despite voting in successive governments that facilitate credit binges, keep interest rates at virtually zero, remove mortgage regulation (self certified income for PAYE? wtf?), punt debt down the line (PFI), etc etc.
Apologies to TandemJeremy as this is somewhat off topic, but I strongly believe there are more ethical and moral investments out there than property.
TJ's got something to sell
to the capital's homeless
at the Crossroads Hotel
for the no-fixed-aboders
Where you can live life in style
you can sleep in a closet
and if you flash him a smile
he'll take your teeth as deposit
There's bats in the belfry
the windows are jammed
the toilets ain't healthy
and he don't give a damn.
😉
draftcapitals - I understand totally where you're coming from. The younger generation have been effectively priced out of the housing market for now, but to blame the entire BTL/professional landlord community for this is misguided.
I'll not go into essay mode, but would say that the housing bubble is largely a result of the credit bubble that has it's roots in the banking and political sectors. Easy access to cheap credit drove speculation, the 'you can never go wrong with bricks and mortar' mantra drove sentiment, and so house prices went up each year by more than a lot of people can earn. Add in the massive raid on pensions in the late 90s and the tax breaks made available to BTL and the natural market reaction is to dive in.
Again, I understand your anger and frustration but IMO you need to direct it towards the policy makers and their puppet masters.
And by the way, I'm late 30s, don't currently own a home, earn a lot more than the national average wage and have a large deposit, yet I still can't afford to buy a (what I'd consider) suitable home for my family where we live (Hants) without borrowing 5+ times my salary.
It's a mess.
Apologies to TandemJeremy as this is somewhat off topic, but I strongly believe there are more ethical and moral investments out there than property
Please wont someone think of the tofu factories?
property prices - more a result of overpopulation/under supply than BTLers? Most rent in many European countries.
TJ, firstly listen to Stoner and Toys, they've run the numbers, this looks like a very skinny investment. Am reading your comments, you are not being impartial and you need to be.
Secondly, speaking as a banker, you know the guys who caused the credit crunch. Well back in 2005/2006 I worked with some guys from the US who could see the housing market bubble building and were trying to position themselves and our clients for the fallout. Read about it here
http://en.wikipedia.org/wiki/The_Big_Short
I am looking at this for a medium term investment - something towards the pension pot. However basically we would only get the capital growth no monthly income.
When I saw that I had a little chill go down my back. That is the credit crunch in two sentences.
> property prices - more a result of overpopulation/under supply than BTLers?
Sure... nothing to do with 125% mortgages, 8x salary (or 8x whatever salary you pretend you have, we won't bother to check), mortgage equity withdrawal or preferential tax regimes for BTL. Nothing to do with the media perpetuating that high house prices are good or endless property porn TV.
tonyd - you're right of course. People operate within the legal/tax framework they find themselves and take advantage in ways that maximise their own personal wealth, with zero thought for the effects on society as a whole. Humans are selfish by nature.
But to be told we should MTFU by people who should be applauding us working ourselves into an early grave with nothing to show for it to pay for their overvalued slums does grate somewhat.
draftcapitals has a point and nicely put sir. Babyboomers better enjoy their autumn years 'cause the rest of us are going to be paying for it for the next 50yrs.
Babyboomers better enjoy their autumn years 'cause the rest of us are going to be paying for it for the next 50yrs
+ 1 for this sentiment allthough inflation will redress the balance somewhat.
Sure... nothing to do with 125% mortgages, 8x salary...
Well the thing is here that the demand was very high compared to supply so what do you think would happen if those high mortgages weren't given? Prices wouldn't have gone up so much but many people would haven't been able to buy and would want to rent. Thank goodness for all those BTLers increasing rental supply to give them a nice affordable place to live 😉 BTW, BTL doesn't interest me.
Well OK, BTLers obviously increased demand on buying property but I am unaware of how much influence they had. People have been investing in property to let out for a long time, maybe the problem is it was made more available to more than just the rich?
mcboo - I am listening hence the thread. It has both answered some questions and asked some questions of me.
clearly I need to be sure its a decision of the head not the heart. It has been very helpful the comments folk have made.
Its just such a shame to miss out on this flat. It really is a fantastic property and I am convinced over ten years will make substantial capital gains - location is fantastic and there are few flats like it in the area.
My feeling now is that I cannot do this at the asking price. However its very hard to value the flat and I think the owner is being optimistic. So I might be in the position of making a low offer and see if anyone out there wants to pay more.
Thanks again
Well draftcapitals I don't think you have your facts right.
My point about affordabilty wasnt about the ave wage vs average hosue price, it was about what a lender was prepared to give you. In 1990 not many people could get a mortgage to afford a house, we went through a boom when everyone could get one, and guess what we are back to the position where not many people can get a mortgage to afford a house. That shows you the relative values of things.
According to the CML in 2006 BTL was 11% of the mortgage market, it went up to 21% in 2007 and now its down to 5% so I don't see how this is driving or ever was driving prices. So somewhere between 79% and 95% of people driving prices are residential owners. Blame them. Every man and his dog has remortgaged on the back of the property boom to release equity, and every one was trading up to make money one way or another. I think you need to blame everybody.
In truth all that money that was released into the market place has driven inflation but also provided us with a massive amount of material wealth and comfort. 2 cars per family, flat screen TV's we have got loads of kit. I'll bet your house mr Draftcaptils is spartan and you have never taken advantage of what was the state of affluence we were in.
BTW I'm not overconfident about my status as an investor. When I bought it was a no brainer and I stopped buying a long time ago. I was convinced we were at the top of the market in 2001, 2,3,4,5,6,7 by 2008 I was sure the world had gone mad but if I had continued to invest as others did I would be considerably richer than I am now. I am no seer or predictor of things.
In summary the blame for your perceived woes are really with the govt and bankers, and about 79% of the remainder goes on the residential investors, and I'll take the 22% if it makes you feel better but I don't think you should direct it all at us. If you don't want to be told to MTFU don't start it by calling us spivs or anything else. Do some thinking before you bash the keyboard in future.
Teej yep.....bottom line though, even though you love this flat, you arent actually going to live in it yourself. It's just an asset. By all means lever up a little more than you should to get that house you always wanted, at least the upside is tax free. Not BTL though.
Oh and welcome to the shoddy world of capitalism. Your halo has slipped a little but dont worry fella I will catch it!
this isnt just capitalism you know. He's now standing tall in the world of [i]parasitic[/i] capitalism.
We're all [i]rentiers[/i] now George...
draftcapitals, what I want to know is what did you expect us to do?
I know: you expected that we all would say oh no I'm not going to do this because it will drive up prices for everyone else, I'm going to sit back and let the rest of the UK make hay and I'll get left behind and be financially bereft compared to my peers in 2010 just in case there is a risk of some social injustice?
You don't understand, we had no choice, and we had no idea what the effects would be. Blaming us in hindsite is an easy thing for you to do.
I know quite a few people who live in council houses who have been offered the chance to buy them at a knock down rate.
They haven't, because you know, they have principles.
With respect GG, principles don't put food on the table before or during retirement. I'm no fan of BTL but you cannot blame people for trying to protect their investments, which (IMO) is why a lot of folks got into it in the first place.
Of course there are bad and greedy folk at the margins speculating and taking risks (banks included), and the government has introduced huge moral hazard by protecting them with the current fiscal policy.
As for blaming the boomers, how can you blame someone for being born at the right time? I'm sure draftcapitals would be extremely offended if he was called stupid and financially incompetent just for being unlucky enough to be born into his generation. I know plenty of boomers who have not benefitted in any way from this bubble or the one before that (my dad for one).
It is what it is, creating animosity between generations isn't the way to solve it - that's just getting sucked into the shell game put on as a distraction by the powers that be.
By the way, I like the tag on the thread: TJ=SLUM LORD!
You don't understand, we had no choice
yes you did. Keeping up with the Jones is not compulsory.
Interesting figures in your previous post Toys. Is there a type of housing break down? I'd say 1 in 5 houses being BTL at it's peak is a pretty high share. Look at this by type of housing and you may well see that this share is higher for those properties first time buyers generally wish to buy (it might not that's why I ask).
> we had no choice
What utter guff. Plenty didn't get into BTL in the late 90s, some because they weren't especially financially savvy, some because they didn't have the money but a good deal because they knew damn well the consequences of the bottom rung of the housing "ladder" (ie first time buyers) being replaced by property speculators. And that is what has happened. You may say that BTL accounts for only 20 odd % of the housing market at its peak but that 20% was almost entirely in the sort of properties that first time buyers typically purchase - small starter homes, flats etc. And you could out gun the FTB crowd with your tax advantages and equity from your existing houses. Add the huge influx of cheap credit and deregulation and you have the mess we're in today, where the prudent are being punished with high taxation and low interest rates (4+% below inflation) on their savings, while the profligate are bailed out again and again.
And you think a cheap flat screen TV made in China will make me feel better when I'm childless in my 40s paying someone else's mortgage? Think again.
Keeping up with the Jones is not compulsory
That's really not what it's about at all.
You don't buy a house because other people have one, you buy a house because it's a sound investment and your ability to invest is rapidly diminishing.
I know quite a few people who live in council houses who have been offered the chance to buy them at a knock down rate.They haven't, because you know, they have principles.
Yeah anecdotes don't make science. Most people did actually, you know, ditch their principles and bought their council houses.
yes you did. Keeping up with the Jones is not compulsory.
Thats like saying, don't get a better job just because everyone else is doing it, I didn't do it to keep up witht the joneses, I did it to make sure I was going to have as much buying power as my peers as my life moved on otherwise all I would be impoverished right now, this argument is bunkum.
All the properties I bought were 3-4 bed houses. Not yer typical FTB.
In fact I think most FTB house prices went up because people were cashing in on the rises and trading up.
You haterz actaully see yourselves as some kind of Warren Buffet types, as if you would have been able to predict the market and how it was going to effect the next generation. What a load of crap.
As for blaming the boomers, how can you blame someone for being born at the right time? I'm sure draftcapitals would be extremely offended if he was called stupid and financially incompetent just for being unlucky enough to be born into his generation. I know plenty of boomers who have not benefitted in any way from this bubble or the one before that (my dad for one).
It is what it is, creating animosity between generations isn't the way to solve it - that's just getting sucked into the shell game put on as a distraction by the powers that be.
Exactly. ^
was almost entirely in the sort of properties that first time buyers typically purchase - small starter homes, flats etc.
This bollocks, prove it, because it isnt true, flats and 1 bed houses don't make sense as BTL's. Anyone who bought them was just being sucked in by greed hoping for price rises. If you think its the case show us the figures, you've been reading the daily mail too much.
Typical new build 1 bad flats were selling in the boom for 180k with an optimistic rental yield of 700 a month, (4.6% yield but going down to more like 4) whereas a typical BTL is a student house for 250k with a realistic rental yield of 1500 a month (7.2%yield increasing now at 8 or more) the yields are much stronger on these, nearly double. FTB and 1 bed flats are the last place lenders wanted to loan, it was and still is much harder to get credit on these types of properties for BTL. Get your facts straight.
"Yeah anecdotes don't make science. Most people did actually, you know, ditch their principles and bought their council houses."
So what? It gives me a bit of hope that some people didn't, that their principles stand for more than making a bit of money for doing nothing.
There are a few things in life that I would never even consider.
Becoming a landlord is one of them.