I know this is a bit OT but
I am about to exchange contracts on my first buy to let property in
the next 3 weeks and im getting cold feet.
I have re-mortgaged my house to release the equity to pay for this its
something I have always wanted to do.
Due to the turmoil in the housing and finance market I am beginning to
question my judgment and timing
Is anyone on this forum in this business that could offer advice.
He's right though. Read up about financial bubbles. They are a perfectly
natural phenomenon, that has been around for thousands of years. We are
currently in the middle of such a bubble, and you are about to buy just
before it bursts.
Look at it short term and run a mile!..
Look at it long term .. and yep, good as investment as any.
I reckon that the UK housing market will wobble quite a bit as its well
over priced and has been that way for a long time.
And I suppose you have done your homework about the times when you don't
have any tenants and allowed for maintenance costs etc...
Which is probably true. It is surprising therefore that if you go into a
bank and ask to borrow 200k to buy a buy-to-let they won't bat an
eyelid. Go in and ask to borrow 200k to invest in a FTSE100 tracker and
you might get a different response.
The reason that people have made such a profit over the last ten years
is not just the general rise in prices but the fact that a lot of that
investment has been leveraged. But just as that is an advantage in a
rising market is is a _big_ problem in a falling market.
In the long term it doesn't matter if property underperforms the stock
market slightly. If three-quarters of your investment is coming from the
bank your profit is increased four-fold.
Oh, I am sure you could do it but I think that any financial adviser
would be far more concerned with making sure it was documented that they
had pointed out the potential downsides than they would it it was BTL.
Beware! That place is a support group for the dispossessed, not a
place for rational analysis of the housing market. A considerable
number of them sold up in 2003 and have been calling a crash everyday
since. I'd put about as much credence on their opinions as I would on
PWC produce monthly roundups of the whole British Economy which are
pretty comprehensive, and rather better informed. Latest one is here,
see pp.22-26 on the housing market. Their "central" prediction is slow
growth. Their worst-case (5% probability) scenario is not a disaster.
Fair point, although even small capital growth can more than make up
for mediocre rental returns. Also I'd steer well clear of city centre
2 bed "luxury apartments". These are notoriously overpriced, you're
competing with every other landlord in the block to get them let, and
they've been falling in value while the rest of the market has boomed.
On Thu, 08 Nov 2007 07:38:49 -0800, Anita Palley wrote:
People do well to remember that a brand new dwelling has about a 20% mark
up over a >10 year home. It escapes me why people should want to buy
something that is going to take a certain amount of snagging (hassle if
not cost) just to have everything new but perhaps not as practical/durable
Ed Sirett - Property maintainer and registered gas fitter.
The FAQ for uk.diy is at http://www.diyfaq.org.uk
And in the short term may actually lose value. It will cease to be a
shiny new house quite quickly, and builders will be building shinier
newer houses all the time. People may realise the houses were overpriced
to start with.
> It escapes me why people should want to buy
New houses can come with lots of problems, some minor, some not so (if
your builder forgot to use wall ties).
I know they're usually execrably styled, but the 1970s were probably
fairly good for houses. Fairly up to date compared to current building
regs, room and plot sizes usually reasonable compared to new build. They
can look shabby, but a quick makeover of kitchen and bathroom and a
repaint can turn them round. Also they're often on nice mature estates
with some trees.
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