Buy to let. A good investment or not?

Discussion in 'Diamond Lil's' started by slim, Nov 2, 2007.

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  1. Maxi mentioned buy to let in a Current affairs topic. i thought it would be good to have a discussion on it.
    1. Is buy to let a guaranteed way to make a fortune?
    2. Driving up the price of houses?
    3. Greedy people trying to capitalise on poor people?
    4. Capitalists investing wisely.
    5. Other?

    The floor is now open.................
  2. Seaweed

    Seaweed War Hero Book Reviewer

    There has to be a commercial rental market, particularly for people who want to change jobs (or have to) or get moved around the country. BtL services this. BtL is a business investment proposition like any other. BtL is an important source of finance for house/flat building - houses only get built, and goodness knows we need more of them, if there is money coming in to finance them. To my mind what inflates house prices is unscrupulous/injudicious lending/borrowing; immigration; and more 'single' households.
  3. A few quick answers to get it started

    1 It depends on whether you employ CDF or not, many people do very well out of it

    2 Certainly the numpties do, the ones who know what they are doing never pay over the odds.

    3 Thats the numpty brigade and many of them are getting their just deserts

    4 Once again the sensible ones

    5 The 'Buy to Let' thing seems to be another 'private pensions' scam, greedy people being conned by unscupulous salesmen into buying too expensive properties with too big a loan and that will never wash their face as they say.
  4. I noticed an article in a newspaper recently where someone who had bought to let was regretting it. She had bought a property using 100%borrowed capital expecting the rental to completely cover all costs.
    Wrong in this world you very rarely get something for nothing and certainly not in the short term. Many have managed to do this but I believe they are the ones that got in on the ground floor before all the television programs persuaded the numpty brigade that it was an easy money maker.
    Having said that in my experience property has always been an excellent long term investment. I bought my bungalow in wales for £75,000 seven years ago, it's now worth about £160,000. How much would my £75,000 be worth had it still been in the building society. true I have had to pay council tax and other outgoings but the return is still far better than any saving account.
  5. Sat back in my fully paid for house in Thailand financed by my kind tennants in Plymouth I can see nothing wrong with being a money grabbing landlord. There is certainly a market for house letting so why not profit from it. At present the UK market is a bit steep for more investment for me but here in Thailand after the coup ex-pats dont seem to want to buy therefore prices for purchase are dropping and rental prices rising, guess what I'm doing next?
  6. Nice place to be Rab, it used to be that non Thais were unable to but land so were limited to having to buy apartments, is this still the case?
  7. It can be a minefield.

    Ie lazy ass tenants one a plumber who would not even tighten up dripping radiator resulting in new carpet. Excuse I pay rent why should I do repairs which is the typical statement from a crap tenant. On the lower end of the market we have bedsitter shiteholes run by those who know not the Queens English but know what to charge. Dirty smelly curry faced bastards!!
  8. I don't think this one is a good one to get into just know it's had it's day.
    The sums just don't add up. Expected rent on a property is on average 6% of the value minus tax and maintenance . A buy to let mortgage on average is 6.3%.The average house price increase is 6% and may be there is a correction coming.To put it short the market is saturated.
    On the other hand Unit trusts and Isa's go up at the rate of about 7/8%
    If you are married you can take out up to £17000 year tax free.
    unmarried £8500.
    Not as interesting as buy to let and still some risk.But you never get out for nowt. its just my take on it.I could be wrong.
  9. Slim
    True foreigners (Farangs) still cant buy, but by arranging a mortgage for my partner with me as the money lender and tying it up for 30 years its possible to buy a little bit of paradise.
  10. I did hear that the government were going to change the rules and alow Farangs to buy a few Rai, enough to put a house on. Sounds like it was just a rumour.
  11. Long term, property is a good investment. However the market at the moment is full of new developments that have had to drop their prices and I know of a few property developers that are now renting out brand new houses as they can't get buyers. These boys have to make repayments on chunky loans that they took out from Banks to buy the land and finance the construction & labour costs. There are now a few first time buyers with a wee house 6 months ago they paid £225K for and the same house is sitting at £205K. If they had a 100% mortgage then they are sitting with negative equity. Lots of people jumped on the bandwagon. What we are now seeing is a natural correction of over inflated prices. Remember it's not a sprint it's a marathon. At the moment stock prices are falling. If you have the appetite (and don't want to turn a paper loss into a real one) then I think that any FTSE Bank Stock is a bargain at the moment. There is auld saying "Buy when the canons are roaring" and sell when the sun shines. In the next 18 months I think that with dividends reinvested that anyone with a brass neck or balls will throw a few wee pund into Bank stocks, rather than buy to let. The 'J' Curve or hockey stick graph recovery will be fantastic. Thats my humble opinion in the next 18-24 months.
  12. I have seen several similar reports, and when they get into the detail it is quite clear the 'advisers' could see a sucker every time. Rates of rental income clearly were unachievable, loans unrealistic as a proportion of the property value, especially as the property values were probably inflated.

    Too many people have bought into 'executive' developments when the real market for renting is students/council house waiting lists/migrant workers. They want low cost relatively short term rentals and in most cases pay their bills. Too many of the 'executive' renters are people who have had houses repossessed, or who have failed in some other way on the property ladder though their inability to manage their money, now are they going to pay your mortgage for you, they can'y pay their own that's why they are there.

    In the present climate I would suggest that if you cannot pay the bills with 50% occupancy in the executive market ot 75% in the lower end you are heading for unhappiness.
  13. I think you have put it in a nutshell Maxi.
    Too many are jumping on the bandwagon thinking that they will make a quick buck. Unfortunately they are not always doing their maths right.
  14. Slim/Maxi
    I didn't buy to let, but those of us who already have property and move on should seriously look at hanging on to it rather than selling. If I had sold in 2000 I would have made a profit of 60K but instead I have had 400-550/ month and the property is now woth 180K whch is a 150K profit. I can not reccommend a buy to let now, but those with property and plans to move should look at it.
  15. Buy to let is a good idea full stop. the trick is to buy at a good price, borrow sensibly if you must borrow, and research your market before getting committed. I suspect the professionels are rubbing their hands at the moment, lots of amateurs getting out and seeling cheap because they must sell when there is no tennant, and with no income must sell quickly, which means discounts, though I suspect that most professionals will not touch some of the property being unloaded now as it was never a good buy to let prospect in the first place.

    The buy to let boom was created by people pulling out of pension products after the pension misselling fiasco and the same goons who sold them the duff pensions sold them the duff buy to let plans, some people are either too greedy or too stupid.
  16. I know a young! (40) lady who was left two large homes due to death of grand parents, sold large homes and bought, "usually" failed mortgage homes, she also leases a pub
    Using her wiles, she gets her punters in the pub to do painting decorating woodworking etc the tradesmen, who are willing to work for next to nothing and a few beers

    She has invested wisely in a student UNI area, now has over a fifty homes worth about £4m as capital, and has about six students or unemployed in each home, raising 250k a year rent

    OTOH I bought a house two weeks before I was drafted to Singers with my wife, we furnished it throughout, rented it out and flew away, after three months we got a bank statement and there was nil in the account
    Wrote letters to tennants, no reply, wrote at great expence to our solicitor who took it up, as we were thousands of miles away, After a large solicitors bill, and a year later, wife returned on leave to find the house totally empty, all carpets and furnishings gone and the windows out, and our bank account even worse off having to pay the solicitor for his letters to the tennants

    Yes it is brilliant to become a millionaire, but you have to have the initial capital, to buy outright so not buy on a mortgage to rent
    You only need the intial cash to buy the first one, the others follow as you get more rent than outlay

    Prey on the weak, who have defaulted on their mortgage

    You have to be around to keep an eye on things, and be able to get tough if the rent is not coming in
    (renting to DSS customers they may trash the place but the DWP pay the rent ontime every month)

    Like my car Piston Broke
  17. Good advice. Any hints on where to find listings of defaulters?
  18. A lot of them used to be auctioned but round here quite a few of the mortgage companies have been selling them through estate agents. In reality if you have done enough research to be able to make a decent profit you will know where to find the property you need in your area. That is the real thing, like anything else if you want to make money you need to do your research and planning first. Just because a property is a cheap repossion does not mean it will be easy to let at a rent that makes a profit.
  19. As long as one is prepared to invest time in finding the right properties; ensuring a sustainable market, buy at the right price and put in place the right deal to deliver the capital funding then it's a reasonably low risk method of accumulating in the long term.

    However unless one is actually managing a portfolio of properties then there does need to be some method in place to assure cash flow during the times that the property lies empty. as ever it's going to be cash flow, rather than profitability, that could cause it to go wrong. Even managing a portfolio could go wrong if the balance isn't right; lower revenue but consistent occupation rates allows some compensation for higher revenue properties which might require more investment and may have lower occupancy rates.

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