I think simulcra's point is that with a house you can't guarentee a sale value, whilst if a share is priced at £x then thats what you can realise.

Yes but with shares you tend to own them on top of your house, unless you've more than one property to get your equity you'd have to give up your home.

But this thread is about BTL queen

Oh yeah. Please pay no attention whatsoever to me. Durrrr.

Jim G

You are quite correct! That was my point.

I did come across flippant, but there is a reason. I wont hide my feelings about my views on BTL. I really think its turned this country into the have's and have nots.

I believe this is dangerous, stupid and immoral. BUT, what really gets my back up, is the way people buy a property in the last 10 years and it has always risen. They have known nothing else. They then make out that they were 'clever' and astute????

Pure luck on timing - thats all,

or the minority have seen the HPI graphs and seen an opportunity. For those that did the latter, good on you! I commend you!

This brings me onto a simile.

I remember a few years back when Manchester United had a bit of a torrid time. They were calling for Alex Fergusons head becuase they did not win the Title or other domestic trophies.

What they failed to realise is that Alex Ferguson is the most SUCCESSFUL manager of modern times and the most successful in Manchester United's history!

Now that hurt me saying that, as I am a TRUE LIVERPOOL SUPPORTER.

MY point of relevance is the fact that a lot of people have only even known Manchester United as a successful side. When they do OK, and not brilliant, they want Fergies head????

This is applicable to house prices now. Both domestic and BTL (keeping it on topic).

People are still doing BTL because they have only ever seen rises. When it goes down (which I strongly believe it will) you will see all these amatuer (clever, astute) people complaining that they are losing money. They will then probably claim that they were mis-sold the BTL mortgage or declare themselves bankrupt.

When this happens (coming to a town near you soon) then people will realise that BTL is not a viable option and houses are seriously over-valued.

Anyone trying BTL now is either very clever and has a good LTV RATIO or completely STUPID. In my opinion

Its really not an issue where I live. Any houses close to me that are rented were not bought for the purposes of renting out, they were bought as homes and when they moved on they decided to rent them out rather than sell.

I may or may not do that myself. My boyfriend thinks I should but I don't know that I can be bothered with it.

quote:

Originally posted by Simulcra:

quote:

Originally posted by Bletsoe:
Just helped a couple of investors who are new to property investment to make £12,000 in equity profit through a Buy to Let investment in 7 months. Original outlay was £7,000 including costs.

There is still money to be made in property, if you know where to look.

Equity profit is only realised when you sell.

When you say helped. You didnt help them make a profit. This silly market is what has caused the rise. If anything I would say Journalists probably helped them make this VIRTUAL money, not you.

Dont flatter yourself

Equity profit HAS been released in the form of a re-mortgage. The property was bought for £35,000. A re-mortgage was requested in line with the property portfolio plan, this came back with a valuation of £47,000 and the money has been drawn out. This also covers your VIRTUAL money statement.

As far as me helping them. Don't think that it was the Journalists that released the story of the local council compulsary purchasing houses in the nearby area for regeneration had much to do with it. The fact that I told my clients about the plan 6 months ago probably meant that they bought they house under it's value. So yes due to my research, advice and direction I would claim the credit. Something that these guys have been endorsing.

quote:

Originally posted by Bletsoe:
Equity profit HAS been released in the form of a re-mortgage. The property was bought for £35,000. A re-mortgage was requested in line with the property portfolio plan, this came back with a valuation of £47,000 and the money has been drawn out. This also covers your VIRTUAL money statement.

As far as me helping them. Don't think that it was the Journalists that released the story of the local council compulsary purchasing houses in the nearby area for regeneration had much to do with it. The fact that I told my clients about the plan 6 months ago probably meant that they bought they house under it's value. So yes due to my research, advice and direction I would claim the credit. Something that these guys have been endorsing.

Surely they haven't realised any "equity profit" but have just secured another debt on the asset. Should that asset reduce in value they will still "own" that debt.

No doubt should their good fortune turn sour at some later stage you will be claiming credit for that too?

quote:

Originally posted by BTLOptingOut:

quote:

Originally posted by Bletsoe:
Equity profit HAS been released in the form of a re-mortgage. The property was bought for £35,000. A re-mortgage was requested in line with the property portfolio plan, this came back with a valuation of £47,000 and the money has been drawn out. This also covers your VIRTUAL money statement.

As far as me helping them. Don't think that it was the Journalists that released the story of the local council compulsary purchasing houses in the nearby area for regeneration had much to do with it. The fact that I told my clients about the plan 6 months ago probably meant that they bought they house under it's value. So yes due to my research, advice and direction I would claim the credit. Something that these guys have been endorsing.

Surely they haven't realised any "equity profit" but have just secured another debt on the asset. Should that asset reduce in value they will still "own" that debt.

No doubt should their good fortune turn sour at some later stage you will be claiming credit for that too?

Depends on how you wish to spin what they have made or borrowed. It is worth remembering that very, very few people make money by investing their own money into a project. There are a number of examples of this, as Manchester United have been used before as an example then Galziers takeover would be a good example. There could also be other business examples to be used. The other side of the equation would be that after an intial deposit of £6,500 these guys now have two investment properties valued at £97,000 with mortgages of £82,450. Therefore, they have virtual profit of £14,550. The mortgages are covered by the rent, with a little extra every month to make it a little more worthwhile.

If the good fortune turns sour, I will take the ultimate responsibility on this as the company that I own and have built up over the last four years will have a pretty poor reputation and will not get the high level of referals that we currently do. This will lead me further to losing MY INVESTMENT and having to find a new job.

Slightly more responsibility than advisors who offer advice on stocks and shares don't you think?

Also let's get back to the original reponse I posted. It was in relation to a fact that there is no money to be made from investment/buy to let properties. I gave an example of one this week, I could reel off a high number of examples where money has been made over the last 2 years.

Profit from property is not impossible now, it is far more difficult and needs a lot more thought and planning

One of the upsides of BTL is that multiple house ownership has become more democratic. My parents rented all their lives and the properties were typically owned by wealthy individuals who bought up whole streets and investment trusts.
Now the house may well belong to a plumber or a housewife. As I don't recall the good old days with any affection, especially as a bedroom ceiling remained unfixed for three years, the myth of social provision needs addressing. Financial borrowing was, until recently, the preserve of a select few who'd hived off the assets among themselves.
The system isn't perfect now but at least the rent doesn't go to Lord Fopperty and his land agent.

quote:

The other side of the equation would be that after an intial deposit of £6,500 these guys now have two investment properties valued at £97,000 with mortgages of £82,450. Therefore, they have virtual profit of £14,550. The mortgages are covered by the rent, with a little extra every month to make it a little more worthwhile.

Umm, minus the £6,500 deposit. The "virtual profit" is now only £8,050. Given the cost and work of maintaining the properties, and the aggravation of dealing with possibly unreliable tenents, how worthwhile do you think this is in comparison to an ISA or high-interest current account?

quote:

Originally posted by bob of the bobblyooklies:

quote:

The other side of the equation would be that after an intial deposit of £6,500 these guys now have two investment properties valued at £97,000 with mortgages of £82,450. Therefore, they have virtual profit of £14,550. The mortgages are covered by the rent, with a little extra every month to make it a little more worthwhile.

Umm, minus the £6,500 deposit. The "virtual profit" is now only £8,050. Given the cost and work of maintaining the properties, and the aggravation of dealing with possibly unreliable tenents, how worthwhile do you think this is in comparison to an ISA or high-interest current account?

Does an ISA pay a return of 123% in 7 months?

PS. No costs so far, same tennant in as day of completion Paying £303 pcm, against their mortgage of £170 pcm.

Look all I am trying to say here (as I did on the first post) is that there is still money to be made from Buy To Let. If there are those of you who refuse to believe this, fine.

Maybe some people should look at what the property market is doing outside their own area.

Bletsoe

Just read through your remarks. I am still not convinced that BTL is a good proposition TODAY!

My analogy of Manchester United was based around the fact that for the last 10-15 years they have always won something or produced. I believe (feel free to lay into me people) that a lot of Manchester United supporters have only been Man U supporters for <15 years. The reason - becuase we all like to back a winner.

My point is, I strongly believe that the housing market is at its peak. Its starting to decline and imho FLATS will take the biggest hit. This is BTL fodder.

I am simply stating that when it is general knowledge that the investments that are losing money, but are countering it with HPI, suddely get NEGATIVE HPI then the house of cards will fall down.

Now, your PRO's who have the CAPITAL to maybe get 60% LTV CAN weather this storm and be in it for the long term. The amateur BTL's who will obviously do the mandatory 80% LTV will panic sell.

On top of this, there are a lot of these flats/luxury apartments that have been bought by FTB's and a lot are I/O mortgages. The predicted hikes in IR's will also make the payemts harder for the BTL's and the FTB's.

Its all about momentum. We are on the cliff edge of the housing market and it only takes a high wind to push it over.

I am simply stating that there are too many factors, or risks, to do BTL at this stage in the cycle. Just because something worked 5 years ago does not mean it work now.

quote:

Originally posted by Simulcra:
Bletsoe

Just read through your remarks. I am still not convinced that BTL is a good proposition TODAY!

My analogy of Manchester United was based around the fact that for the last 10-15 years they have always won something or produced. I believe (feel free to lay into me people) that a lot of Manchester United supporters have only been Man U supporters for <15 years. The reason - becuase we all like to back a winner.

My point is, I strongly believe that the housing market is at its peak. Its starting to decline and imho FLATS will take the biggest hit. This is BTL fodder.

I am simply stating that when it is general knowledge that the investments that are losing money, but are countering it with HPI, suddely get NEGATIVE HPI then the house of cards will fall down.

Now, your PRO's who have the CAPITAL to maybe get 60% LTV CAN weather this storm and be in it for the long term. The amateur BTL's who will obviously do the mandatory 80% LTV will panic sell.

On top of this, there are a lot of these flats/luxury apartments that have been bought by FTB's and a lot are I/O mortgages. The predicted hikes in IR's will also make the payemts harder for the BTL's and the FTB's.

Its all about momentum. We are on the cliff edge of the housing market and it only takes a high wind to push it over.

I am simply stating that there are too many factors, or risks, to do BTL at this stage in the cycle. Just because something worked 5 years ago does not mean it work now.

My analogy of Manchester United is that Malcolm Glazer bought Manchester United with other peoples money. The same way that many business people buy companies.

I fully agree with you on the saturation of apartment properties. I have already seen one guy get burnt (not one of my clients I would like to point out) concentrating on apartments. I always advise to stay clear of these and will continue to do so.

Good to see that we have found a common ground on an issue.

Bletsoe

I will conceed that your statement:

Profit from property is not impossible now, it is far more difficult and needs a lot more thought and planning

is reasonable.

I think a few on here would argue that the "equity profit" you state could be considered precarious and that jumping on-board the BTL boat now might be a bad idea unless the investor has a few years experience already under their belt.

Just as a matter of interest and seeing as you advise clients, what would you consider to be the yield threashold for an investment to stack up. (Yield = gross mthly rent * 12/current market value).

Aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny ipmortnat tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a toatl mses and you can sitll raed it wouthit porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe.

quote:

Originally posted by Bletsoe:

Does an ISA pay a return of 123% in 7 months?

PS. No costs so far, same tennant in as day of completion Paying £303 pcm, against their mortgage of £170 pcm.

Look all I am trying to say here (as I did on the first post) is that there is still money to be made from Buy To Let. If there are those of you who refuse to believe this, fine.

Maybe some people should look at what the property market is doing outside their own area.

I cant see how your sums add up!

£170 per month for a £40,000 odd mortgage?

From where?!

Property investors usually see their houses as part of a wider portfolio. This either/or stuff is nonsense. Property provides good yields over a long term, it shouldn't be praised on its peaks or condemned on the troughs. It isn't that sort of investment.
How long is this cliff edge analogy going to go on? I first heard it used in 2000. Do people really believe we are going back to those values? I suggest you try to buy a desirable place in London if you think there's a crisis of confidence.

quote:

Originally posted by bob of the bobblyooklies:

quote:

Originally posted by Bletsoe:

Does an ISA pay a return of 123% in 7 months?

PS. No costs so far, same tennant in as day of completion Paying £303 pcm, against their mortgage of £170 pcm.

Look all I am trying to say here (as I did on the first post) is that there is still money to be made from Buy To Let. If there are those of you who refuse to believe this, fine.

Maybe some people should look at what the property market is doing outside their own area.

I cant see how your sums add up!

£170 per month for a £40,000 odd mortgage?

From where?!

The house was bought for £35,000, there was a 15% deposit and the mortgage was on £29,750, not £40,000 odd.

The mortgage will now go up with the equity release, but then again they have just put the rent up by £5 per week as well.

quote:

Originally posted by BTLOptingOut:
Bletsoe

I will conceed that your statement:

Profit from property is not impossible now, it is far more difficult and needs a lot more thought and planning

is reasonable.

I think a few on here would argue that the "equity profit" you state could be considered precarious and that jumping on-board the BTL boat now might be a bad idea unless the investor has a few years experience already under their belt.

Just as a matter of interest and seeing as you advise clients, what would you consider to be the yield threashold for an investment to stack up. (Yield = gross mthly rent * 12/current market value).

Yields have become more and more difficult to use as a good guide for an investment and I feel are not the best guide. (Going to get more flack for that one, I can feel it already). I use the mortgage lenders calculation for ability to repay the loan as a guide for the quality of the rent return on a property. If these figures offer a good calcualtion I will consider the property for a client.

I also work on increasing the value of the property to make money from the investment not solely the monthly rent. By starting a portfolio with a growth structure it allows the ability to grow/diversify/strengthen a protfolio of properties and not become reliant on one high yielding property only.

Just my opinion.

quote:

Originally posted by Bletsoe:
Yields have become more and more difficult to use as a good guide for an investment and I feel are not the best guide. (Going to get more flack for that one, I can feel it already)........

Perhapes you have been spared as you did end it with the disclaimer Just my opinion...and you are of course entitled to one.

I must say it reminds me of back in '99 when people where lauding the "new economy" and of the "opinion" that old balance sheet basics didn't matter anymore.

I'm of the opinion that just as APR is a good benchmark for debt servicing, yield is a useful benchmark for investment performance.

Of course just like debt servicing with a standard definition of "interest" (APR) it is necessary to have a standard definition of Yield....and this is where many sharks operate......by twisting the definition of Yield.....

Just as you could eat more if you define your own version of a calorie, yield can be "increased" dramaticaly through re-definition. Typical options include using original purchase price or debt as the divisor......

Could you elaborate why you believe "yeilds are more difficult to use"? Difficult for whom? Difficult for those trying to peddle under-performing "investments" honestly?

P.S just for the record....

At present I would consider the break-even yield threashold for a long-term BTL investment to be in the region of 7%.....

Personaly I think in todays current market any less than 10% and you want your head testing.

I think you'll agree that although possible, there are very few BTL's that currently yield in that region using the correct definition of yield:

(Yield = gross mthly rent * 12/current market value).