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.
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
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.
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.
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
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.
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
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.
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.
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 ..."
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)