Buy to Let with Uncertain Future

yes

No, so long as you are not using borrowed money, can take a long term view, and have sufficient other resources to deal with unexpected capital expenditure and void periods.

Even then you have to find the right property.

and the right tenant!

Think very carefully about your risk exposure. How much will you put down, what price fall gives you negative equity? How long a void period can you stand? How far do interest rates go up before you are in trouble? What are the key industries in S. Yorks, and will they continue? eg in London it is financial services, and that is in a bad way right now. What do your tenants do for a living and is that sustainable (eg students are pretty stable demand, so are NHS workers).

In London, buy to let is yielding 3-4%, max, after all costs (management, repairs etc.). This seems a very unattractive return for such a lot of work and risk.

If you can get 7% yield, net, say, in S. Yorkshire, then the investment seems worthwhile, even if in 20 years time the property is not worth more than you paid for it (after repairs).

But if it is below 7%, then you have to think very carefully.

There is no question buy to let has been a great wheeze the last 10 years. Probably, for an investor with a 20 year time horizon and patience and hard work, it will always be a great idea. But right now, the risks are a lot higher than they were.

So if we used our own capital then you would say it is not a "risk". I am considering some of the lower end properties, in the South Yorkshire Area, where small terraces are availabe from 17K and upwards. I was hoping that if there was a price deflation, these types of properties would be spared at least due to their low original price.

That seems to be the difficult part. I was thinking of properties around

17K to 25K in South Yorks area. You can see lots of them on

Thanks "darkness" for your reply. I am not worried by the fact that many people seemed to have done this already, instead, I am more concerned about all the talk of lower prices for houses. The problem with South Yorks is that the economy is not good, the places I'm thinking of have cheap houses

15K to 25K but they are having economic depressions, eg. ex mining areas. etc. So I was wondering if due to their original low price, that if there is a house deflation then these properties will get away uneffected?

Thankyou, that seems to be what can be deduced. In summary, therefore after having read a few of these related topics, people seem to suggest, that go ahead if you are buying with cash, but try to avoid mortgages if you do so.

That also seems to come out of it for sure.good summary of the situation.

"The risks are a lot higher than they were"! Thanks, I'll go away with that in mind.

Still kicking myself (proverbially) for not buying a 1 bed-room flat south of Norwich a few years back. Asking price was 19,500, IIRC. Minimum rent should be about 50 pw = a gross yield of 10%, based on 80% pa occupancy. Probably doubled in value too. :(

I was "persuaded" a new car was the better option.

However, the bandwagon may well have rolled on.

I mean telemarketing!

Peter Saxton from London snipped-for-privacy@petersaxton.co.uk

As a rule the milk of human kindness positively oozes from my every pore. But I'm prepared to make an exception when it is well deserved.

Does he have teaching qualifications, or at least a thorough grasp of a subject? Any subject.

What I don't understand is how this transition from furniture magnate to unemployed came about. Perhaps he was crushed by the marketing might of Messrs Ikea & Habitat.

In message , Tim writes

Yes, but the area I think he is thinking of is influenced by increases or decreases. It has a low correlation to house prices generally.

My personal view is that BTL investments should be considered solely for the purposes of rental yield NOT capital appreciation. If you can buy right, with the right tenant, then income and cash is king.

In message , Doug Ramage writes

I agree with everything except not using borrowed money.

Not to mention VAT.

In article , Ronald Raygun writes

Or Phileas Fogg, I believe that was set up by ex-miners.

The problem with houses at the bottom end of the market is that when there is a down-turn you can't sell them at all. There tends to be no takers for the bottom rung when the next is affordable.

Tim

I hadn't thought about that at all. Looking at the surface of it, it seems strange that the lower end properties would not be moving. I would have thought, that if people could not afford to buy other houses, due to increased price, then logic would dictate that people bought up houses they can afford, eg. the cheaper ones in cheaper areas.

>

"Moonface" wrote

Do you ever read other people's posts properly, GG?

(1) tim said "... when the next [rung] is affordable ..." -- hence you say "... could not afford to buy other houses ..."

(2) tim said "... when there is a down-turn ..." -- hence you say "... due to increased price ..."

Quite often a downturn in the market can mean sales have stopped due to prices having increased so much as in the current situation. I was talking about it from a slightly different perspective.

Do you mean now, or later (when the market dips). People *are* buying them now, some will probably regret it (this doesn't just apply to cheap houses in rough areas, studio flats, except in very prime locations, are very difficult to offload in a slow market)

tim