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Turion
26th April 2008, 09:17
The era of the amateur landlord has all but ended, with banks effectively refusing to lend to new entrants to the buy-to-let market.

Thousands of existing landlords also face huge increases in the cost of remortgaging, experts said yesterday.

http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article3818913.ece

Sockpuppet
26th April 2008, 10:33
Doomed !!!

bogeyman
26th April 2008, 11:25
Back on your old hobby horse again I see, Turion :eyes

BlasterBates
26th April 2008, 11:47
Great doom posting Turion. The BTL market looks very bad indeed.

chris79
26th April 2008, 11:55
Gotta take the rough with the smooth.

BrilloPad
26th April 2008, 14:32
mortgage to let is almost finished - non-mortgage btl different.

Turion
26th April 2008, 16:41
mortgage to let is almost finished - non-mortgage btl different.

Non mortgage BTL has always existed, but had been very small. The availability of 90% leverage via loans made it affordable to the masses. Effectively they did not have to raise any money as most could use release equity in their own homes. Those that could not do this could rely on so called developer discounts and friendly mortgage brokers to 'sort' the downpayment on new builds. With low interest rates, easy mortgages, rising values and good rents, who could lose? - Now all property investors will feel pain as values drop and those who built their empires on borrowed money will be wiped out.

BrilloPad
26th April 2008, 16:47
Non mortgage BTL has always existed, but had been very small. The availability of 90% leverage via loans made it affordable to the masses. Effectively they did not have to raise any money as most could use release equity in their own homes. Those that could not do this could rely on so called developer discounts and friendly mortgage brokers to 'sort' the downpayment on new builds. With low interest rates, easy mortgages, rising values and good rents, who could lose? - Now all property investors will feel pain as values drop and those who built their empires on borrowed money will be wiped out.

and the btl sector is still relatively small. prices have risen alot last few years - all you say applies to those recent market entrants - I still think those who have been in for a while might be okay.

max
26th April 2008, 18:39
aI still think those who have been in for a while might be okay.

Agreed....those that have build up equity will be fine, they won't make a good return on investment, but they won't be hit by cash calls on mortgage renewal.

KentPhilip
27th April 2008, 00:03
Its allright for me. I never much liked bacon, lettuce, and tomato in my sandwiches in any case.

Turion
27th April 2008, 22:22
Its allright for me. I never much liked bacon, lettuce, and tomato in my sandwiches in any case.


No that's a BLT, not BTL. Both are a rip off, though if you need a mortgage to buy a BLT, your rate is too low :confused:

Diver
28th April 2008, 00:34
:rolleyes::D:p

More cheap repo'd properties for me to buy :smokin

I can afford two more for cash, as long as they are below the £180,000 mark, so c'mon bailifs and el Gordo. do yer stuff, I've tenants waiting :happy

Wonder if the bank will still give me the 500k loan at 5.69% they offered me last month, I could buy a couple more properties then, while they are still cheap.
It's great to have collateral when all about you are losing theirs.
I know!!! - I'm building an empire on the backs of those less fortunate:devil.

Who said BTL is Doomed :laugh

Turion
28th April 2008, 09:06
:rolleyes::D:p

I've tenants waiting :happy



Yeah right. Social housing for dss chavs who no other landlord will touch. Why would a tenant wait for you? They just find another place. There's tons to rent cheaply now from desperate landlords. All the decent tenants will be buying failed btl properties at knock down prices.

Jog On
28th April 2008, 10:47
This is great - I just did a google search for "buy to let+credit crunch" (no quotes) and these are some of the titles:


Buy-to-let booms as credit crunch hits first-time buyers ...

Link (http://business.scotsman.com/business/Buytolet-booms-as-credit-crunch.3883384.jp)


Buy to let industry slaughtered by credit crunch

Link (http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=9250&cat=44-0-0)


Buy-to-let sector booms amid credit crunch – aboutproperty.co.uk

Link (http://www.aboutproperty.co.uk/News/property-investment/buy-let/buy-let-booms-amid-credit-crunch-$1211106.htm)


Buy to let sector unshaken by credit crunch

Link (http://www.fairinvestment.co.uk/mortgages-news-Buy-to-let-sector-unshaken-by-credit-crunch--1025.html)

That's conclusive isn't it :yay:

KentPhilip
29th April 2008, 18:27
No that's a BLT, not BTL. Both are a rip off, though if you need a mortgage to buy a BLT, your rate is too low :confused:

Old macdonald was dyslexic O-I-E-I-E

neilawuk
30th April 2008, 09:12
I always chuckle at these so called experts telling us whats going on...

I am a BTL investor of 4 years with 8 BTL's...Its a pretty good time to be a BTL investor to be honest unless you need to liquidate your assets....Rental demand is increasing and rents are on the increase due to an upturn in demand for rental property with people not buying due to the uncertain market conditions. So for me as a BTL investors Im seeing more income, I have also just bought a bargain property 20% discount and got my 85% LTV mortgage through Birmingham midshires....so great time to grab a bargain and with a high rental demand and rents on the increase....A bad time for me???

NOT LIKELY!!!! :D

ferret
30th April 2008, 09:44
Your 20% discount now will be in -ve equity in a couple of years if the trend continues and could take a decade to reach the level you have just paid. Not the best move I think - but then I am not an expert like you :ohwell

Also, lots of people cannot sell and will try and rent them out to get some income. Rental demand may be rising but so are the number of rental properties on the market from what I can see. As house prices fall, potentially so will rental prices. When house prices reach the bottom lots will jump in to buy and deflate the rental market again leaving you with negative equity and no one to rent.

Good luck.

BrilloPad
30th April 2008, 09:48
Rental demand may be rising but so are the number of rental properties on the market from what I can see.

Where are these properties coming from? It is still very very hard to get PP to build anywhere?

I can see there being a difference between flats and houses - what is being built tends to be flats. very few new house builds except, maybe, at the luxury end.

Moscow Mule
30th April 2008, 09:52
More cheap repo'd properties for me to buy :smokin


I think not so much. You won't find repo'd bargains from previous downturns - banks are looking to get market value on repo'd properties and they have strict rules on what price they will accept.

You may find some bargains, but only as the market has goes down as a whole.

rootsnall
30th April 2008, 09:54
Non mortgage BTL has always existed, but had been very small.

And worked on yields of 10%+ on the sort of property now yielding 5%. Either prices have got to halve or rents double. I think we are in for a very long period of falling or stagnant property prices.

neilawuk
30th April 2008, 09:58
ferret, of course this is all speculation. I am quite happy to take the gamble of losing on my 20% discounted property. There is a big IF in all of this as you quite rightly state, if we take the worst possible scenario then it wont just be houses we will be in trouble with, recession brings with it unemployment. IF for some reason I had to sell my properties I might lose on some but have lots of equity built up in others to offset loses to a point. OF course if I had to sell I'd sell one with equity not one I would be guaranteed to lose on....common sense....

On the matter of rentals, not sure I agree with you analogy. People wont rent them if they cant sell them if they are owner occupier as they themselves still need somewhere to live. OK they could rent out their house if it doesnt sell but then they will have to rent negating your argument of lots of rentals available and oversupply.

neilawuk
30th April 2008, 10:06
one more comment, dont assume that a 30% correction in the market would leave all BTL investors in a bad place. You cannot guess how much equity an investor has in a property, I stopped remortgaging two years ago to give myself a buffer. Even if I get a 30% correction I can still sell everything and retire....

PS - as with all recessions they start with doom sayers, people talk themselves and others into a recession. Scaremongering costs us all dearly...

ferret
30th April 2008, 12:17
ferret, of course this is all speculation. I am quite happy to take the gamble of losing on my 20% discounted property. There is a big IF in all of this as you quite rightly state, if we take the worst possible scenario then it wont just be houses we will be in trouble with, recession brings with it unemployment. IF for some reason I had to sell my properties I might lose on some but have lots of equity built up in others to offset loses to a point. OF course if I had to sell I'd sell one with equity not one I would be guaranteed to lose on....common sense....

On the matter of rentals, not sure I agree with you analogy. People wont rent them if they cant sell them if they are owner occupier as they themselves still need somewhere to live. OK they could rent out their house if it doesnt sell but then they will have to rent negating your argument of lots of rentals available and oversupply.

When you see that the average long term wage to loan ratio is 3.5 and it currently stands at around 6 (maybe even more) then it suggests that the market is hugely over-valued and some would argue that even a 20% reduction is not enough. I personally don't think there is a big IF, I think it is a dead cert that we are in for an almighty drop in prices. Bet you a tenner :happy

If you had to sell then you may not be able to get a buyer if the current news is anything to go by. Buyers (even the thick ones) are now pulling out or gazundering.

Rental analogy - BTL landlords who want to sell but can't will still rent - and anectdotal evidence suggests rents are being dropped to secure tenants. Houses left as part of a deceased's estate are being let out as they cannot sell. Lots of Eastern Europeans going home - more rental properties on the market. This is what I meant. Yes, some people are selling and moving into rented but a lot of people are still of the mindset that you need to own your own home and will sell and buy at reduces rates rather than take a gamble.

ferret
30th April 2008, 12:23
one more comment, dont assume that a 30% correction in the market would leave all BTL investors in a bad place. You cannot guess how much equity an investor has in a property, I stopped remortgaging two years ago to give myself a buffer. Even if I get a 30% correction I can still sell everything and retire....

PS - as with all recessions they start with doom sayers, people talk themselves and others into a recession. Scaremongering costs us all dearly...

I understand not all BTL investors will be stung by this - only those who bought at over-inflated prices and got into it recently.

Just as I cannot guess at how much equity an investor has in a property I don't think the investor will themselves. Those Y-o-Y gains went negative today - and these of course will be from sales that went through at the tail end of last year / beginning of this when all the news was still relatively positive about house prices.

If we get a 30% correction then you can put your houses on the market - whether they will sell or not will be dictated by the market at the time :wink

PS - I have been a doom-monger since 2002! Houses have been over-inflated for a long time and the natural balance of the housing market is now being restored IMO. Banks being bailed out, record levels of debt in the country, "credit crunch" drying up all that money that was sloshing about, inflation soaring (don't believe the official figures do you?) Yeah, none of these make for a recession do they? Just people like me giving a different opinion to you makes it all happen. Repeat after me: "It will be alright, Gordon will save us."

ratewhore
30th April 2008, 12:30
Your 20% discount now will be in -ve equity in a couple of years if the trend continues and could take a decade to reach the level you have just paid. Not the best move I think - but then I am not an expert like you :ohwell

Not according to HBOS:


The new Halifax forecast today means it believes house prices could fall by 20% in real terms from their peak at the end of last year, with no recovery until 2010. Even with a swift recovery, it could be 2011 or 2012 before prices get back to their levels of 2007.

neilawuk
30th April 2008, 12:36
to an extent I think people do talk themselves into recession. Inflation is a bit tricky agreed but people can be putting off buying things like property and large purchases on the basis that others are saying "you'll be sorry, its all gonna go wrong". Not everyone can take a balanced view and roll the dice either way. Of course we cant control things like utility fuel and petrol prices (which incidentally are the main reason we have inlation at the moment). But if enough people tell other people not to buy a house cos its too risky then they just might not. and that is when we start the stagnation, drive down demand and start the spiral....

And yes people like you (no offence intended) have been saying since 2002 it will all end in tears and if you keep saying it for long enough, statistically you will hit the jackpot. People I have challenged in the past have said "well it didnt happen this year granted but wait til next year" next year came and went with no crash, repeat infinitum....

and for all that sitting on the hands some people I know have done has cost them in lost potential a vast sum of money. If you had bought in 2002 even with a 30% reduction that people are suggesting the property if it were London based would have at least doubled in value. You would be looking to make a 70% return. And if as you say you couldnt sell it then take it to auction and only make a 50% return, poor thing! :rolleyes:
lets make it £20?

ferret
30th April 2008, 14:31
to an extent I think people do talk themselves into recession. Inflation is a bit tricky agreed but people can be putting off buying things like property and large purchases on the basis that others are saying "you'll be sorry, its all gonna go wrong". Not everyone can take a balanced view and roll the dice either way. Of course we cant control things like utility fuel and petrol prices (which incidentally are the main reason we have inlation at the moment). But if enough people tell other people not to buy a house cos its too risky then they just might not. and that is when we start the stagnation, drive down demand and start the spiral....

And yes people like you (no offence intended) have been saying since 2002 it will all end in tears and if you keep saying it for long enough, statistically you will hit the jackpot. People I have challenged in the past have said "well it didnt happen this year granted but wait til next year" next year came and went with no crash, repeat infinitum....

and for all that sitting on the hands some people I know have done has cost them in lost potential a vast sum of money. If you had bought in 2002 even with a 30% reduction that people are suggesting the property if it were London based would have at least doubled in value. You would be looking to make a 70% return. And if as you say you couldnt sell it then take it to auction and only make a 50% return, poor thing! :rolleyes:
lets make it £20?

My Dad told my brother it was not the time to buy in 2001 - he bought anyway, due to waying up the pro's and con's. I do not see though how FTBs can get on the first rung now - average wages are still in the low twenties so even with a combined income at 3.5 times one plus the other you are still looking at a sensible borrowing amount of £112,500 for a couple on £25k each (which would be above average). When you can hardly buy a one bed flat for this something is badly out of kilter.

Luckily the banks have had to act due to credit drying up so first time buyers, even if they wanted to get a stupidly priced house, could not now as no-one will lend to them. With no first time buyers the whole pyramid collapses. This is not due to people "talking it up" just the way things have gone.

Yes, people have been saying it will end in tears for years - mainly because historically that is what has happened. Every bubble like this has ended eventually. A lot of people called the market too early, I remember reading about a financial advisor who sold to rent in 2002. Missed out on a hell of a lot of growth and, if lucky, might be able to buy back at the kind of price he sold for.

Fair enough, £20 says we will see a plus 30% drop in house prices (from peak) within 36 months. Come back in April 2011 and tap me up if I am wrong! I am really hoping they don't drop much more than this as, like you said, this will be bad news for all in terms of recession, repossessions and negative equity for a lot of people and that makes for a miserable life for all...

neilawuk
30th April 2008, 14:53
I also think a lot of the new build developers are offering part buy schemes to help FTB's out which is a great idea. One of the larger develops is offering a 75% part buy scheme. Ok you have a lock in period during which time if you sell then you pay them 25% of the profits but better than not having a home you still take 75% of any profits.....I do think that banks and the government will do their damdest to stem a complete crash. Neither the banks nor government can afford a repeat of the early nineties and that only really came about due to the unwise exchange rate mechanism withdrawal at the time.....

I take your point about salary multipliers and think banks will start to reconsider their products criteria if they find nobody is qualifying and they are effectively losing money. All you have to do is look at the recent relaxing of BTL criteria to see they are reacting (it used to be 125% rental income vs mortgage payment, now you can get 110% and even 100%)....

As a business Im suer they would rather risk some people defaulting due to a relaxed lending rate rather than not selling any products and a negative equity position which will ultimately lead to repossession increase as people become cornered....

all very exciting and I cant wait to see where we are in 6 months!

ferret
30th April 2008, 16:38
I also think a lot of the new build developers are offering part buy schemes to help FTB's out which is a great idea. One of the larger develops is offering a 75% part buy scheme. Ok you have a lock in period during which time if you sell then you pay them 25% of the profits but better than not having a home you still take 75% of any profits.....

Sounds like desperation to me! Why not just suggest a 60 year mortgage. Or how about you club together with mates rather than getting a home of your own? All of these things pointed towards an unsustainably inflated market.


I do think that banks and the government will do their damdest to stem a complete crash. Neither the banks nor government can afford a repeat of the early nineties and that only really came about due to the unwise exchange rate mechanism withdrawal at the time.....

The Gov has spent our money bailing out Northern Rock and is now stumping up £50BN of tax payer's cash to prop up the banks (and have suggested it may climb to £100BN) and it was the freaking banks who got us into this mess in the first place! They should have restricted their lending criteria which would have helped keep house prices at more sensible levels. The banks will take this money and use it to prop themselves up, not to start giving away 125% mortgages again - this $50BN will not feed back into the housing market. The Gov will not be able to afford to put much more cash in so not sure what else they can do really. Buggered which ever way they turn.


I take your point about salary multipliers and think banks will start to reconsider their products criteria if they find nobody is qualifying and they are effectively losing money. All you have to do is look at the recent relaxing of BTL criteria to see they are reacting (it used to be 125% rental income vs mortgage payment, now you can get 110% and even 100%)....

Not at all - they are fighting to not be the best in the market at the minute, arrangement fees and deposit ratios are climbing like mad. They want to keep their money rather than lend at the minute as they can see the thunder clouds in the distance. I cannot see any relaxing of BTL lending criteria, a lot of the BTL lenders have withdrawn products completely. I cannot see any BTL lenders with a 100% income to payment deal. You also said yours was an 85% LTV so they have 15% of your house already should it stuff up.


As a business Im suer they would rather risk some people defaulting due to a relaxed lending rate rather than not selling any products and a negative equity position which will ultimately lead to repossession increase as people become cornered....

Like I said, my view is that they are happy not to lend much at the minute. They loaned so much over the last few years and have balance books full with lots of money coming in so they have no worries there. They are losing billions from crunch write downs but still have more than enough for themselves. The banks aren't worried, they have shafted us all and are now grinning from ear to ear as the Gov has bailed them out with tax payer's money! Shocking.

Not sure if we will go into full on mass unemployed recession but I do agree with your last line.


all very exciting and I cant wait to see where we are in 6 months!

Interesting times indeed.

Bagpuss
30th April 2008, 18:04
I always chuckle at these so called experts telling us whats going on...

I am a BTL investor of 4 years with 8 BTL's...Its a pretty good time to be a BTL investor to be honest unless you need to liquidate your assets....Rental demand is increasing and rents are on the increase due to an upturn in demand for rental property with people not buying due to the uncertain market conditions. So for me as a BTL investors Im seeing more income, I have also just bought a bargain property 20% discount and got my 85% LTV mortgage through Birmingham midshires....so great time to grab a bargain and with a high rental demand and rents on the increase....A bad time for me???

NOT LIKELY!!!! :D

Hands up who came up with this comedy character?:laugh

ferret
30th April 2008, 18:22
Hands up who came up with this comedy character?:laugh

Nooooo! Not been trolled again :emb

neilawuk
30th April 2008, 18:49
all I would say is actually be in the BTL game and you will see whats going on, if you arent in it you will only have half the story. I can get a 100% rental to mortgage payment product tomorrow, gonna pay thru the nose but of course u would. Its true that some banks withdrew some products but only to revamp them and relaunch. Now the BOE has injected cash back into the market Libor's have started to calm down and products are available...PS 85% LTV is the norm so dont get your point ferret?

sorry you are wrong about BTL mortgage products do some research, one of my lenders mortgage express has just revamped their BTL product to 110% rental to mortgage payment down from 125% for people who have been BTL for 12 months or more. so you are just wrong....

arrangements fees are on average 2% for a good deal. I just got Birmingham midshires 3yr racker LTV 85% 5.7%

neilawuk
30th April 2008, 18:50
bagpuss in what respect?? do you want all of my managing agents details to verify my story, send me an email and I will reply....

Bagpuss
30th April 2008, 19:35
bagpuss in what respect?? do you want all of my managing agents details to verify my story, send me an email and I will reply....

Your post sounds like an advert, one question, how do you cover the mortgage on an 85% LTV property in the current market?

neilawuk
30th April 2008, 21:01
Bagpuss let me use my latest purhase to illustrate.......

I have bought a 2 bed flat in SW16 for £185k, it was on the market for £215k...mortgage on 85% LTV is £157.5k. that is circa £750 per month on my tracker product and rental is £1000 valuation per month as per valuation from birmingham midshires. I need to spend about £10k to get it inhabitable....

thats how...

neilawuk
30th April 2008, 21:04
another example....my purchase in EC1. 3 bed flat purchase price £505k, big discount as no chain buyer. 10% down and mortgaged £450k so 90% LTV, mortgage £2086 per month rental £750 per week....

anymore??

KentPhilip
30th April 2008, 21:07
Even if I get a 30% correction I can still sell everything and retire....


OK that is true. With a 30% correction you can sell everything at the price you paid for it (because when you started 4 years ago prices were around 30% less than they are today). You can then retire? not from the money from BTL then surely, given the above. Well I presume you must have other capital to allow you to retire.

Now what happens if prices drop by 50%, which is quite likely. Then you have lost an additional 20% on 8 * £150K (say) = £240K. So this will take a big chunk out of your retirement fund.

rather you than me.

neilawuk
30th April 2008, 21:14
philip get in the real world.....:eek

Im sitting on a very large equity and I can tell you that remove 30% I can still retire.

You have no idea what my break down is, my equity, or even total portfolio value....If say I am sitting on £2m equity then take 30% away yes I can still retire thanks.....

not that I am of course but u get my point, I could have £20m....so dont speculate

neilawuk
30th April 2008, 21:15
I cant actually think u think a 50% drop is likely.....:laugh:laugh:laugh:laugh:laugh:laugh

KentPhilip
30th April 2008, 21:17
Bagpuss let me use my latest purhase to illustrate.......

I have bought a 2 bed flat in SW16 for £185k, it was on the market for £215k...mortgage on 85% LTV is £157.5k. that is circa £750 per month on my tracker product and rental is £1000 valuation per month as per valuation from birmingham midshires. I need to spend about £10k to get it inhabitable....

thats how...

What about voids? Factoring them in at 10% reduces your effective rental to £900/month.
You (will) have 15% + £10K capital tied up in that property. Effective loss of interest = £50/month - brings it down to £850/month.

So you are making £100/month net.
What about insurance costs against the tenants trashing the place?
What about the cost of your time running the whole thing.
What about banks hiking up rates further.

Turion
30th April 2008, 21:18
OK that is true. With a 30% correction you can sell everything at the price you paid for it (because when you started 4 years ago prices were around 30% less than they are today). You can then retire? not from the money from BTL then surely, given the above. Well I presume you must have other capital to allow you to retire.

Now what happens if prices drop by 50%, which is quite likely. Then you have lost an additional 20% on 8 * £150K (say) = £240K. So this will take a big chunk out of your retirement fund.

rather you than me.

Agree with this. He is highy leveraged and hence very vunerable to a wipe out. Even a small 20% correction will see him in negative equity with no chance of re-mortaging in 3 yrs time without injecting significant equity. Where will this money come from? From his savings/retirement funds probably or a fire sale of assets if things get desperate. These amateur landlords have their heads in the sand. Wouldn't want to be in his shoes.

KentPhilip
30th April 2008, 21:22
philip get in the real world.....:eek

Im sitting on a very large equity and I can tell you that remove 30% I can still retire.

You have no idea what my break down is, my equity, or even total portfolio value....If say I am sitting on £2m equity then take 30% away yes I can still retire thanks.....

not that I am of course but u get my point, I could have £20m....so dont speculate

I'm going on what you have said in your posts - obviously I know nothing about your finances outside of that.
You said you have been in the BTL game for 4 years, and you have bought 8 properties. And I think we can agree that these have risen by around 30% in the past 4 years or so (maybe a bit more for London). So the equity you have in the properties cannot be more than this 30%. (unless you count your original deposits, but that really is savings - you would have had that in any case).
So if property goes down 30% then you are back to prices from 4 years ago, and your equity is zilch.

neilawuk
30th April 2008, 21:22
ok let me answer....

the fact I have many properties means the profit from others offset voids. If all of them sat empty of course it would cost me but money built up in previous yields would cover some of it.

insurance is covered as part of the service charge on most, the houses have buildings landlord insurance which covers me for trashing the place.

My mortgages are a mix of fixed and discount. If the rates go up on one then I could be break even or worse off but the fixed balance the risk and remember rentals go up with inflation....

You guys do what ya like, this thread started saying BTL is dead, it isnt and I have proved it....pickking apart any business model will illustrate some element of risk, so dont really get your point? are you looking for a dead cert, cos guess what, there isnt one. :grin

neilawuk
30th April 2008, 21:24
totally disagree about 30% in 4 years......I have seen 25% in one year for some as I have properties nationwide....you cant make assumptions like that....

but.....if I was put back to pure deposit status then thats a very nice nest egg which I could retire on, remember you dont know hoe much money I initially put in and what my portfolio is worth.... :wink

KentPhilip
30th April 2008, 21:25
I cant actually think u think a 50% drop is likely.....:laugh:laugh:laugh:laugh:laugh:laugh

The BTL boom is an investment bubble. All bubbles burst (dot com, tulips (that was a shit investment), south sea)
UK property is around 30% overvalued, and when it crashes it will overshoot by around 20% or so.
50%.

KentPhilip
30th April 2008, 21:27
totally disagree about 30% in 4 years......I have seen 25% in one year for some as I have properties nationwide....you cant make assumptions like that....

but.....if I was put back to pure deposit status then thats a very nice nest egg which I could retire on, remember you dont know hoe much money I initially put in and what my portfolio is worth.... :wink

I think the UK property market as a whole has risen by around 30% in 4 years. Of course had you bought in Sandbanks or been otherwise a very canny selector of property then you might have done much better. But there's nothing to indicate from your posts that this is the case.

neilawuk
30th April 2008, 21:27
dya know what, i hope they do drop 50% I will be the first one in the queue at the estate agents buying blocks of the buggers!!! waiting 5 years then remortgaging the entire lot....hmmmm now what kind of wood did I want in that yacht...:glasses

KentPhilip
30th April 2008, 21:32
ok let me answer....

the fact I have many properties means the profit from others offset voids. If all of them sat empty of course it would cost me but money built up in previous yields would cover some of it.

insurance is covered as part of the service charge on most, the houses have buildings landlord insurance which covers me for trashing the place.

My mortgages are a mix of fixed and discount. If the rates go up on one then I could be break even or worse off but the fixed balance the risk and remember rentals go up with inflation....

You guys do what ya like, this thread started saying BTL is dead, it isnt and I have proved it....pickking apart any business model will illustrate some element of risk, so dont really get your point? are you looking for a dead cert, cos guess what, there isnt one. :grin

Do you mean profit or capital gain? Only the former can cover for voids (unless you sell and realise the gain). And as 80% or thereabouts of income goes to pay the mortgage there is not much profit I would say.

I think you should have sold 6 months ago with a huge capital gain, and invested in oil or something. Or even just kept the money in the bank as I have. Then in a few years with 30% off you could buy much more for your money.

Anyway nice chat, and it sounds like you're loaded anyway (a guess) so I think its all a game to you. Life's a game is it not?

KentPhilip
30th April 2008, 21:35
dya know what, i hope they do drop 50% I will be the first one in the queue at the estate agents buying blocks of the buggers!!! waiting 5 years then remortgaging the entire lot....hmmmm now what kind of wood did I want in that yacht...:glasses

That is my game-plan too. Wait for the drop and buy in as a cash buyer.

Check out the housepricecrash forum at:http://www.housepricecrash.co.uk/forum

You would be a "bull" as opposed to a "bear", and I can assure you of lively debate should you stick your head over that parapet :smile

vetran
30th April 2008, 22:38
OK

BTL equation is

profit = Money in + mortgage payments + cost of administering < value of property + value of income.


So long as its positive you are OK

neilawuk
1st May 2008, 08:45
Kent, one last point....if you have one BTL or are just getting into the game without much knowledge or having done much research then its risky as with any venture....I run this as a ltd company and put all my rents and mortgage payments thru my LTD company.....re voids I can honestly say Ive had a total of one property empty for two months in the 4 years Ive been in business. Now taking my couple of let properties I detailed previously as an example....The first one in SW16; I will be making a small margin but thats all about capital growth, dont care about income yields as long as I cover costs....The second one in EC1 (if you go back a couple of pages I detail it) that is yielding circa £1000 per month after all fees (mortgage and service chg)...so u can see that just using these two as an example, the one in SW16 could sit empty forever and the profit from the EC1 flat covers it and still gives me a profit....

anyway good chat and lets see where BTL goes, I personally dont see it dying anytime soon, you can still borrow on BTL and demand (in my experience) is still there. I have just signed up new tenants in a flat in sheffield and demand is growing again there after a stagnant year....

DimPrawn
1st May 2008, 09:09
Kent, one last point....if you have one BTL or are just getting into the game without much knowledge or having done much research then its risky as with any venture....I run this as a ltd company and put all my rents and mortgage payments thru my LTD company.....re voids I can honestly say Ive had a total of one property empty for two months in the 4 years Ive been in business. Now taking my couple of let properties I detailed previously as an example....The first one in SW16; I will be making a small margin but thats all about capital growth, dont care about income yields as long as I cover costs....The second one in EC1 (if you go back a couple of pages I detail it) that is yielding circa £1000 per month after all fees (mortgage and service chg)...so u can see that just using these two as an example, the one in SW16 could sit empty forever and the profit from the EC1 flat covers it and still gives me a profit....

anyway good chat and lets see where BTL goes, I personally dont see it dying anytime soon, you can still borrow on BTL and demand (in my experience) is still there. I have just signed up new tenants in a flat in sheffield and demand is growing again there after a stagnant year....


Boomed!

Get them BTLs now whilst they are rock bottom!

Bagpuss
1st May 2008, 10:06
Bagpuss let me use my latest purhase to illustrate.......

I have bought a 2 bed flat in SW16 for £185k, it was on the market for £215k...mortgage on 85% LTV is £157.5k. that is circa £750 per month on my tracker product and rental is £1000 valuation per month as per valuation from birmingham midshires. I need to spend about £10k to get it inhabitable....

thats how...

so it will cost you 195, Circa 37.5k of you own cash. If you put that in the bank, you are looking at circa 200 interest per month.

so £750 mortgage add 200 interest loss on your own cash = £950

£950 to get £1000 a month back.

assuming no voids, no repairs.

and this doesn't consider stamp duty, solicitors fees, mortgage arangement fees.

Your example proves at the moment BTL doesn't work.

You are willing to write this off for capital growth yet prices need to drop before the BTL model works again

BlasterBates
1st May 2008, 10:33
Hang-on 200K, and work to put up to scratch, and a senior member of the bank of England expecting house prices to drop by up to 30%.

You do realise that shares on average give you a 10% return,as I'm sure the same members of the BOE policy commitee will tell you.

Now think about this. Eminent economists are telling is that house prices will drop by 30% and that shares will rise by 10% a year ad infinitum. If everything works out well you'll get £250 per month max.

Wouldn't it be wiser to put the money in some exchange traded funds, and sit back and enjoy, than taking out a loan on an asset that will be worth 70% of its value in 3-5 years :confused:

neilawuk
1st May 2008, 10:59
bagpuss read my previous post, I have a portfolio, some give greater yields than others...If I had this one and only this one then I would be at risk of making a loss if I couldnt rent it and/or had to pay for repairs. However across my portfolio I am making a bottom line profit for this financial year........

Everyone is hanging BTL doesnt work on a speculation we will see a 30% drop...Remember you only make a loss if u sell....Even if I get a 30% drop across my portfolio I suspect my bottom line for 08/09 will still be pretty much the same....unless I had to sell one or two of them and even then its questionable I would make a loss based on previous year rises...

Not being funny but unless you are in the game its very difficult for you to argue these points. If you were BTL landlords (which would be a much more meaningful debate) we could discuss bottom lines and actual situations rather than speculative scenarios....

Bagpuss
1st May 2008, 11:24
bagpuss read my previous post, I have a portfolio, some give greater yields than others...If I had this one and only this one then I would be at risk of making a loss if I couldnt rent it and/or had to pay for repairs. However across my portfolio I am making a bottom line profit for this financial year........

Everyone is hanging BTL doesnt work on a speculation we will see a 30% drop...Remember you only make a loss if u sell....Even if I get a 30% drop across my portfolio I suspect my bottom line for 08/09 will still be pretty much the same....unless I had to sell one or two of them and even then its questionable I would make a loss based on previous year rises...

Not being funny but unless you are in the game its very difficult for you to argue these points. If you were BTL landlords (which would be a much more meaningful debate) we could discuss bottom lines and actual situations rather than speculative scenarios....


My assertion is BTL does not work in the current market. Yes if you have bought several years ago you profits from those properties can offset the losses you have now. But why would you want to lose money?
Anyone starting in BLT now will have to subsidise the property if buying using an 85% LTV mortgage, as you have proved. That has never been the way to run a BTL, it's a recent phenomenon that relies on the property boom continueing i.e. guaranteed growth in equity over yield, making a loss for presumed equity, which isn't happening now. How would someone now reinvest in new property with negative or no equity? Moreover, why would anyone get into BTL near the top of the market when prices are starting to fall?

I'm not anti BTL, well done on what you have made so far, but the model (mortgaged) is knackered until prices fall or rents increase or both.

neilawuk
1st May 2008, 11:51
bagpuss I still argue it does work....MY SW16 flat for £185 after spending £10k on rennovating it will be worth circa £240k (using current comparables of what has actually sold, not asking price). On that basis it would be returning a profit even after stamp, fees (which are about £3k anyway so hardly a big amount) if I had to sell....the beauty of buying to rennovate and let is that after its rennovated, I could remortgage back upto 85% to pull money back out for the next one, okay my mortgage would go up but that could potentially (if Im smart) offest that with profits from the next BTL....Its not as easy to make money granted, but I dont know of many businesses where it is easy or we would all be doing it. Creative business plans are the only way to make money...Its very easy to say "but what if this happens your screwed" etc etc...you could say that to any business at varying degrees of creativity.
You could say that to Mr Sugar with the iplayer and media centre emergence and the threats to his Sky box empire. I bet I know what his answer would be as would any business owner and entrepreneur...You adapt your business model to keep you in business and react to market forces. If you dont you die as a business, the same applies to my BTL business. If we get a drop of 30% I wont sell anything and ride the storm. If all hell breaks loss and we get a massive drop with nothing renting I will go to auction and buy as many bargains as I can, flip them (rennovate and sell) at a profit and pay off as many mortgages as I can on the existing portfolio with the profits to ensure I retain an income...thats one example of being agile...

If you buy wisely at the appropriate price, in the right area then it still works....for now..

At the end of the day "what if" people (not saying anyone here is) do not become entrepreneurs as they are inherently risk averse. If the likes of Mr Branson had been a what if sort of person we wouldnt have Virgin today....he took so many risks (read his biog its great) and if you ask anyone including Peter jones from dragons den you will get the same profile and answer "its not a dead cert but if it works I make a fortune" Unless you dip your toe in and see what its like and whats really going on you will never know. Its easy to pull together theoretical "this doesnt work, that doesnt work" scenarios but unless you are actually in the business yourself its very arrogant to tell someone else their business doesnt work, particularly if in fact they are operating quite nicely....

Bagpuss
1st May 2008, 12:12
At the end of the day "what if" people (not saying anyone here is) do not become entrepreneurs as they are inherently risk averse. If the likes of Mr Branson had been a what if sort of person we wouldnt have Virgin today....he took so many risks (read his biog its great) and if you ask anyone including Peter jones from dragons den you will get the same profile and answer "its not a dead cert but if it works I make a fortune" Unless you dip your toe in and see what its like and whats really going on you will never know. Its easy to pull together theoretical "this doesnt work, that doesnt work" scenarios but unless you are actually in the business yourself its very arrogant to tell someone else their business doesnt work, particularly if in fact they are operating quite nicely....

You aren't listening again, I am saying for new entrants the traditional model of BTL does not work in the current market. Your figures back that up, if you can flip the house at a profit all well and good but you do so in a hard market, hence your 20% 'discount'.

Anyone starting out now would have to be prepared to subsidise the purchase over and above the achievable rent. In a falling market that is stupidity. The BTL model does not work on subsidy.

"What if" is the only way to proceed, people that don't consider the downside tend to either spectacularly succeed or spectacularly fail.Of course in a bubble it's hard not to make money, but that doesn't mean those making money were astute. Making considered informed choices based on the range of outcomes and the current financial climate indicate BTL is a non starter as 85% LTV until the market drops, your protestations based on buying over several years do not alter the fact for first timers it no longer stacks up, for now at least.

neilawuk
1st May 2008, 12:15
i still think if you went to auction and/or bought wisely you could make the BTL model work...lets see if we get this spectacular drop...:grin

tim123
1st May 2008, 12:20
philip get in the real world.....:eek

Im sitting on a very large equity and I can tell you that remove 30% I can still retire.

Now you are contradicting yourself.

You said you were buying on 90% LTV.

In any case, you are in a very small minority of BTLers. Most will be sitting on large losses if prices drop 30%.

And why is it that you are here talking the market up? We are a small community of 'consultants' who have our own opinions on general financial matters and frankly, most of us don't give a toss that you have a mega million pound portfolio - in profit or not!

tim

tim123
1st May 2008, 12:23
ok let me answer....

the fact I have many properties means the profit from others offset voids.

No it doesn't. Voids cost you money off the total potential yield - end of.

tim

tim123
1st May 2008, 12:28
bagpuss I still argue it does work....MY SW16 flat for £185 after spending £10k on rennovating it will be worth circa £240k ....

No it won't.

It was "worth 215k" last month, but because of market conditions you bought if for 185k.

If those same market conditions prevail in a year's time you will not be getting a buyer at 240!


tim

Bagpuss
1st May 2008, 12:31
i still think if you went to auction and/or bought wisely you could make the BTL model work...lets see if we get this spectacular drop...:grin

I've been keeping a close eye on auctions throught the UK, you can do this online now. Less properties are selling, one I looked at 2 days ago circa 70% of properties didn't sell, many were offloaded BTL and repos. A year ago hardly any properties at this auction were not selling.

Lucy
1st May 2008, 12:35
I've been keeping a close eye on auctions throught the UK, you can do this online now. Less properties are selling, one I looked at 2 days ago circa 70% of properties didn't sell, many were offloaded BTL and repos. A year ago hardly any properties at this auction were not selling.

You can hardly call 'Homes Under the Hammer' research, now, can you?:moon:

neilawuk
1st May 2008, 12:39
Tim....once again (I feel like a broken record) IF

Tim, I didnt get it cos of market conditions, I got it cos I am an investor with no chain and its needs rennovating...my god how arrogant can you be to say you know why something happened without any knowledge of the paramteres in which something happened, its laughable....:rollin: So tell me do you think its worth less or more than I paid for it as you have obviously seen it and know it intimately from a valuation perspective?

its just ridiculous to say something doesnt work in case such and such might happen, Im bored now of saying the same thing, its all speculation on what might happen....

if you keep saying it enough times you will propogate it....

cya guys...:wave:

Bagpuss
1st May 2008, 12:40
You can hardly call 'Homes Under the Hammer' research, now, can you?:moon:

I like homes under the hammer, but it was recorded last year, soon they will have to call it Nuts under the Hammer as it goes the way of Property Ladder

neilawuk
1st May 2008, 12:45
The UK's property auction market will remain strong, according to one expert.

The UK's property auction market will remain strong, according to one expert.

Despite the global credit crunch and a recent downturn in the number of properties being sold at auction, Savills is confident that the auction market will remain.

A recent report from the Essential Information Group showed that the number of properties sold in this way fell by 9.9 per cent annually in February.

However, Chris Coleman-Smith, auctioneer director at Savills, said that he believes there will always be a market for property auctions, particularly as the market can adjust so quickly.

"We've been through these [times before]. You go back to '89-'91 and think 'God, how the hell did we sell anything then?' But we did," he commented.

"Auctions are here and they always will be; good or bad times there's always a market there.

"I think auctioneers have to adjust quicker because if they don't adjust they're not going to sell the stuff," continued Mr Coleman-Smith.

neilawuk
1st May 2008, 12:57
read this for a balanced view:

http://news.bbc.co.uk/1/hi/business/7375069.stm

bogeyman
1st May 2008, 13:00
read this for a balanced view:

http://news.bbc.co.uk/1/hi/business/7375069.stm

Reading the BBC for a 'balanced view' - now that's a novel way of thinking.

neilawuk
1st May 2008, 13:05
only on the basis they have a few comments from economists, its not their view

bogeyman
1st May 2008, 13:39
only on the basis they have a few comments from economists, its not their view

How touching.

Just imagine that BBC editors: -

a) did not elicit quotes from their stable of tame economists

b) did not edit the quotes to fit the agenda of their paymasters

Bloody hell Neil, you don't know much about journalism do you?

neilawuk
1st May 2008, 13:42
look at this just out:

http://news.bbc.co.uk/1/hi/business/7375881.stm

BOE saying crash is overstated and its becoming a self fulfiling prophecy...what have I said all along....NOW STOP ALL THIS STUPID DOOM TALK FOR GODS SAKE!!!!!! :mad

neilawuk
1st May 2008, 13:44
bogeyman, I know u can always twist words and quotes, particularly those with "....." in them :wink

as long as you take a balanced view then read away....not saying I believe it all by any stretch, interesting read tho

bogeyman
1st May 2008, 13:51
bogeyman, I know u can always twish words and quotes, particularly those with "....." in them :wink

as long as you take a balanced view then read away....not saying I believe it all by any stretch, interesting read tho

I never twish words old boy...

neilawuk
1st May 2008, 13:55
damned lisp.....:laugh

Bagpuss
1st May 2008, 14:08
Neil you work for inside track and I claim my £5 of equity

oops no, they went bust

neilawuk
1st May 2008, 14:39
bagpuss even Im not stupid enough to pay another company for something I could do....Idont actually know what their business model is, how did their business model work (sorry fail!) :wink

tim123
2nd May 2008, 09:51
Tim....once again (I feel like a broken record) IF

Tim, I didnt get it cos of market conditions, I got it cos I am an investor with no chain


Utter twaddle. You do not get 20% off because you have no chain.



and its needs rennovating...
:

It needed renovating when the agent priced it at 215. It didn't magically need renovating becuse you came along with a silly offer.




my god how arrogant can you be to say you know why something happened without any knowledge of the paramteres in which something happened, its laughable....:rollin: So tell me do you think its worth less or more than I paid for it as you have obviously seen it and know it intimately from a valuation perspective?

Insulting the person you are having a discussion with wins the arguement, how precisely?

I do not need to see the condition of the property to determine the logistical relationship between the price asked and the price paid. You told me that.

The logic is: The value of the property needing renovation was 215 because when renovated it will be worth 240. But you got it for 185. This is most likley because there are no takers at 215.

Thus it is a FACT that the EA HAS got the unrenovated value wrong and therfore it is a racing certainty that he got the renovated value wrong as well.

tim

tim123
2nd May 2008, 10:02
read this for a balanced view:

http://news.bbc.co.uk/1/hi/business/7375069.stm

It says that house prices are going to go down.

So why are you advocating buying now?

You seem to be argueing that it is OK to buy now just because you can still make a profit in the long term at that price. But if you wait you will get the asset even cheaper and thus make even more money.

ISTM that buying now, in a market where you accept that the cost of the item you are buying will be lower in the short term, is a decision that no savvy businessman would take.

And please don't reply saying that you are getting in now in order to be ready to move quickly when the market turn upwards. If you do this, I will wager you will lose more money in the "waiting" period than you can ever gain from the "moving quickly". And that's before you factor in the risk that there will be no quick upturn in property, which there wasn't after the 1989 crash!)

tim

neilawuk
2nd May 2008, 13:26
wait for BOE's statement to work its magic...remember stats are collated over a defined period based on sales in the previous period...I bet there flatline very very soon...PS - I am not advocating buying on the basis it will drop....my whole crystal ball analogy is that they wont fall any further, and guess what BOE's statement yesterday partially backs that up! who am I to argue with MR King!

oracleslave
2nd May 2008, 13:55
wait for BOE's statement to work its magic...

Don't hold your breath.