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Red 4
Original Poster
1,355 posts
56 months
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Hello all
Please share your views on buying rental properties in the current climate.
I'm considering buying a few houses/ flats at the lower end of the market (£40-50k ish). Lower if I can find the right properties. Rental yields are quite good at present, somewhere in the region of 12% +. Properties will be in the North West, Liverpool to be precise.
I'm considering BTL with a deposit of about £10k on each, mortgaging the balance to say £35k.
Rental returns are about £450 PCM. Mortgage payments, insurance, etc. will be around £200 PCM.
I have factored in interest rate rises. It doesn't matter so much when the mortgages are relatively small and rents are increasingly yearly.
My main concern is whether to buy now or wait a while to see what happens to property prices.
The rental market (at the lower end at least) is still quite buoyant due to yields.
Bearing in mind we are in a depression which seems set to last, the difficulties with the Euro/ European markets and economies and knock-on effects to the UK, most "experts" saying UK property prices are over-valued by about 20% currently, etc. etc. what are your thoughts ?
Wait a while or buy now (at the right price, obviously) ?
Ta.
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rogerthefish
835 posts
100 months
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GlenMH
3,908 posts
112 months
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Also: do you live close to these properties? Can you manage them yourself or are you going to have to trust an agent? That is a big ask....
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crankedup
9,237 posts
112 months
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My lad has taken the plunge recently into BTL, however its at the near bottom end of the market being a studio flat. He is in it for the long term and the price he paid to purchase was low meaning of course that his risk is also low so far as capital is concerned. But it is for every person who may suggest buy now another will say wait. Its down to you just how you sense where prices may go.
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Red 4
Original Poster
1,355 posts
56 months
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GlenMH said: Also: do you live close to these properties? Can you manage them yourself or are you going to have to trust an agent? That is a big ask.... I live about 15 miles away (in the posh bit  ) Yes I would be managing the properties myself. Re-decoration, general maintenance, etc. I may use an agent for the initial rental.
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Red 4
Original Poster
1,355 posts
56 months
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crankedup said: My lad has taken the plunge recently into BTL, however its at the near bottom end of the market being a studio flat. He is in it for the long term and the price he paid to purchase was low meaning of course that his risk is also low so far as capital is concerned. But it is for every person who may suggest buy now another will say wait. Its down to you just how you sense where prices may go. This is the dilemma. I think you have to be in it for the long term, there's no chance of a quick return on your money. Rental yields are good though which is keeping prices (artificially?) high. Cheers. 
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RichyBoy
2,067 posts
86 months
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I was thinking more short term; what are the chances a few years after the next labour government the yield curve will drop off a cliff because of the usual suspects - credit rating downgrade > unable to borrow at low rates > debt rises > mortgages sky rocket > inflation > fall in living standards > riots > taxes rise > rents drop etc. Also they don't have anything to squander like in 1997 so surely they are more likely to tap the investment property wealth.
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markcoznottz
1,940 posts
93 months
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RichyBoy said: I was thinking more short term; what are the chances a few years after the next labour government the yield curve will drop off a cliff because of the usual suspects - credit rating downgrade > unable to borrow at low rates > debt rises > mortgages sky rocket > inflation > fall in living standards > riots > taxes rise > rents drop etc. Also they don't have anything to squander like in 1997 so surely they are more likely to tap the investment property wealth. The last lab government was lucky, the next crowd won't have much room to manoeuvre. The markets will dictate to them what will happen. Besides which the last lab shower all had property portfolios, all the political elite do, the next lot won't be any different. The only Way the ruling class can lock in wealth and transfer it thier kids is property, so don't worry too much. Expect high prices and housing shortages, turkeys don't vote for Xmas, would a politician actively depreciate his own portfolio?.
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Derek Chevalier
662 posts
42 months
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crankedup said: and the price he paid to purchase was low . Relative to what?
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Ade07
390 posts
36 months
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Red 4 said: Hello all
Please share your views on buying rental properties in the current climate.
I'm considering buying a few houses/ flats at the lower end of the market (£40-50k ish). Lower if I can find the right properties. Rental yields are quite good at present, somewhere in the region of 12% +. Properties will be in the North West, Liverpool to be precise.
I'm considering BTL with a deposit of about £10k on each, mortgaging the balance to say £35k.
Rental returns are about £450 PCM. Mortgage payments, insurance, etc. will be around £200 PCM.
I have factored in interest rate rises. It doesn't matter so much when the mortgages are relatively small and rents are increasingly yearly.
My main concern is whether to buy now or wait a while to see what happens to property prices.
The rental market (at the lower end at least) is still quite buoyant due to yields.
Bearing in mind we are in a depression which seems set to last, the difficulties with the Euro/ European markets and economies and knock-on effects to the UK, most "experts" saying UK property prices are over-valued by about 20% currently, etc. etc. what are your thoughts ?
Wait a while or buy now (at the right price, obviously) ?
Ta. I do this, not just in Liverpool but across the North West. Ideal conditions to be honest, low purchase prices combined with a very strong rental demand = good healthy rental yields. For example; just recently purchased a large end terrace property, nice village location, previously converted to 2 x one bed flats, very nicely done as well, gross rental yield is 14%. It also has a garden/basement unit which may be possible to convert into a studio flat in the future. There is a huge demand at present from investors for this type of property/investment.
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DickHerpes
818 posts
28 months
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It depends how much you're stretching yourself to finance in the first place. At the bottom of the market like this it's a bit like buying that 4k M5. It might all come up roses, but you get some bad tenants in and the money might come along slowly, if at all for several months until you can get them out. Then the place needs redecorating....
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Derek Chevalier
662 posts
42 months
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Ade07 said: low purchase prices....... There is a huge demand at present from investors for this type of property/investment. Something doesn't make sense to me. Why are prices low if there is huge demand? And how are people determining what is a low price?
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Grandad Gaz
3,728 posts
115 months
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I've said it before and I'll say it again.
What happens when interest rates rise? They can't stay this low forever!
You say you have allowed for rises. How have you done this?
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markcoznottz
1,940 posts
93 months
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Grandad Gaz said: I've said it before and I'll say it again.
What happens when interest rates rise? They can't stay this low forever!
You say you have allowed for rises. How have you done this?
That will only be politically acceptable if say 5 years down the line people have cleared enough debt to prevent massive defaults across the board. With a prime minister who is more interested in pasties than cutting state spending, quangos and red tape this remains to be seen.
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Red 4
Original Poster
1,355 posts
56 months
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Grandad Gaz said: I've said it before and I'll say it again.
What happens when interest rates rise? They can't stay this low forever!
You say you have allowed for rises. How have you done this?
In the medium term interest rates are unlikely to change much. £30k mortgage on repayment is about £160 PCM at 4% £30k mortgage on repayment is about £210 PCM at 7% Rents are rising in any case.
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Red 4
Original Poster
1,355 posts
56 months
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Derek Chevalier said: Ade07 said: low purchase prices....... There is a huge demand at present from investors for this type of property/investment. Something doesn't make sense to me. Why are prices low if there is huge demand? And how are people determining what is a low price? Prices aren't really that low But it comes down to yields which is keeping the lower end of the market buoyant Buy for £40k. Realise £450 a month in rent. (£5400 pa).
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raptor600
1,356 posts
15 months
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Red 4 said: Prices aren't really that low
But it comes down to yields which is keeping the lower end of the market buoyant
Buy for £40k. Realise £450 a month in rent. (£5400 pa). Invest where Groak does - he would pay £15k for a £5.5k yield (apparently).
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groak
3,254 posts
48 months
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raptor600 said: Red 4 said: Prices aren't really that low
But it comes down to yields which is keeping the lower end of the market buoyant
Buy for £40k. Realise £450 a month in rent. (£5400 pa). Invest where Groak does - he would pay £15k for a £5.5k yield (apparently). There's a Harman Healy auction in Kensington Town Hall on Thursday 7th where Lot 73 is guide priced at £8k. It's a 3 bed and will need a few k to turn into first class. Then, in the right hands, it'll produce £600pcm. I can't go to this auction or I'd definitely be bidding on it. Offered them £15k prior but got knocked back. My guess? £20k tops. But I could be wrong as there's been a fair bit of viewing interest. Meanwhile, I'm waiting on a guy coming to see me to offer me a 1-bed in a building with a structural problem for £12k. It'll produce £400pcm.
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Trommel
10,469 posts
128 months
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What's wrong with a proxy or phone bid?
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groak
3,254 posts
48 months
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Trommel said: What's wrong with a proxy or phone bid? They won't let me use a phone on a plane. And thanks to Her Majesty's fun days it won't be possible to get all the junk they require for a proxy 48 hours before Thursday now. Anyway, it's no biggie. There's loads more. Lose one, 3 more turn up. Anyway, I don't really like auctions. Much prefer just making a deal.
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