Retirement funded by BTL - Reality after 1 year.
Discussion
drainbrain said:
The unfortunate thing about 'risk' is that even with the best 'understanding' ( = opinion) nothing finite is actually ever understood. If anyone understood risk it wouldn't be long till everyone understood it and by applying this understanding there would be no risk anymore other than deliberate risk.
Thinking you understand risk is kidding yourself.
Here's a risk……. that hostile aliens arrive and eat us and then smash up our planet. At least according to Prof Hawking it's a risk.
Bet YOU'VE got a few pet risks as well.
The standard answer in property to perceived risk of many kinds is insurance. Some people insure against every conceivable risk. What they all succeed in doing is creating another risk. And that's the risk that the cost of insuring all these risks exceeds their profits. Now that's a very real risk. To me the only risk if I embark on any venture. The risk that it becomes unprofitable. The rest is confusing risk and chance or risk and certainty.
Can anyone translate into English?Thinking you understand risk is kidding yourself.
Here's a risk……. that hostile aliens arrive and eat us and then smash up our planet. At least according to Prof Hawking it's a risk.
Bet YOU'VE got a few pet risks as well.
The standard answer in property to perceived risk of many kinds is insurance. Some people insure against every conceivable risk. What they all succeed in doing is creating another risk. And that's the risk that the cost of insuring all these risks exceeds their profits. Now that's a very real risk. To me the only risk if I embark on any venture. The risk that it becomes unprofitable. The rest is confusing risk and chance or risk and certainty.
Risk is relatively straight forward for conventional assets. You take the standard market data and then overlay it with what you know about yourself. False confidence is a risk but that's not the same.
Again, you can keep trying to argue all day long but it's pretty clear that you understand and agree as per usual.
Again, you can keep trying to argue all day long but it's pretty clear that you understand and agree as per usual.
drainbrain said:
The type of BTL EVERYBODY does has the same 'perspective'. What you want out of your btl is the same as me. You want the best bottom line. Every landlord I have ever met from absolute giants to the owners of a single small humble unit want the best bottom line.
Nonsense - you are completely ignoring the concept and value of "quality". Earlier in the thread you demonstrated your lack of comprehension by stating, "Many an ignoramus wants to bring growth into the picture, but BTL portfolios are for income not growth" and "Great BTL properties make the most income for the least expenditure". There are many BTL landlords for whom rent pays the bills while they look for "money" to come from capital growth.It's clear you're happy operating at the very bottom of the market. That's not the only way to play the game and it doesn't mean everybody else wants to join in.
sidicks said:
drainbrain said:
The unfortunate thing about 'risk' is that even with the best 'understanding' ( = opinion) nothing finite is actually ever understood. If anyone understood risk it wouldn't be long till everyone understood it and by applying this understanding there would be no risk anymore other than deliberate risk.
Thinking you understand risk is kidding yourself.
Here's a risk……. that hostile aliens arrive and eat us and then smash up our planet. At least according to Prof Hawking it's a risk.
Bet YOU'VE got a few pet risks as well.
The standard answer in property to perceived risk of many kinds is insurance. Some people insure against every conceivable risk. What they all succeed in doing is creating another risk. And that's the risk that the cost of insuring all these risks exceeds their profits. Now that's a very real risk. To me the only risk if I embark on any venture. The risk that it becomes unprofitable. The rest is confusing risk and chance or risk and certainty.
Can anyone translate into English?Thinking you understand risk is kidding yourself.
Here's a risk……. that hostile aliens arrive and eat us and then smash up our planet. At least according to Prof Hawking it's a risk.
Bet YOU'VE got a few pet risks as well.
The standard answer in property to perceived risk of many kinds is insurance. Some people insure against every conceivable risk. What they all succeed in doing is creating another risk. And that's the risk that the cost of insuring all these risks exceeds their profits. Now that's a very real risk. To me the only risk if I embark on any venture. The risk that it becomes unprofitable. The rest is confusing risk and chance or risk and certainty.
DonkeyApple said:
Except it isn't. My choice is corporate lets where I live. That's the area I find to be lowest risk for me and cheapest to maintain so offers me the most suitable return. I couldn't and wouldn't be remotely prepared to deal with the types of property you speak of on PH. They would be too far away and I really don't have the time, inclination or need to learn the nuances for a bit more yield that in reality would be higher risk for me. You're continual error is in trying to insist that what is right for you is catagorically right for others when it obviously is not.
….and you feel these somehow require a different ability and experience to buy and give to an agent to manage than cheaper properties in other areas do? What do you think that difference is? And what is this 'risk' you speak of? Surely not the only one I see. That the investment becomes unprofitable? The 'bottom line' risk as you could call it. The universal one everyone wants to avoid.
And just as interestingly, what 'time, inclination or need to learn the nuances' are you on about? I mean I'm talking about getting hold of a letting agent in an area. Phoning and asking if they think they could handle such-and-such a property whether posh or dungeon. Having a short chat about it. Coming off the call with an idea there's no reason not to do it. Phoning an estate agent and buying the property. Getting the letting agent to collect the keys when it settles. Nothing else if you don't want to do anything else. Like loads of people do.
Ozzie Osmond said:
Nonsense - you are completely ignoring the concept and value of "quality". Earlier in the thread you demonstrated your lack of comprehension by stating, "Many an ignoramus wants to bring growth into the picture, but BTL portfolios are for income not growth" and "Great BTL properties make the most income for the least expenditure". There are many BTL landlords for whom rent pays the bills while they look for "money" to come from capital growth.
It's clear you're happy operating at the very bottom of the market. That's not the only way to play the game and it doesn't mean everybody else wants to join in.
So what happened to the custard test?It's clear you're happy operating at the very bottom of the market. That's not the only way to play the game and it doesn't mean everybody else wants to join in.
What do you think the L stands for in btl ? It stands for 'let'. Bought to….LET.
Of course people buy- to- sell too. And it's going to be a lot of fun here once the 3 Ugly Sisters start spouting their 'expertise' about how THAT one's done!
bOZo don't be so silly. BTLs an income game. Now just concentrate on that custard test. Give us a tip that'll make us 9% over the next year. The spendable type of 9%. Not the theoretical type. Over to you, Warren…..
drainbrain said:
So what happened to the custard test?
What do you think the L stands for in btl ? It stands for 'let'. Bought to….LET.
Of course people buy- to- sell too. And it's going to be a lot of fun here once the 3 Ugly Sisters start spouting their 'expertise' about how THAT one's done!
bOZo don't be so silly. BTLs an income game. Now just concentrate on that custard test. Give us a tip that'll make us 9% over the next year. The spendable type of 9%. Not the theoretical type. Over to you, Warren…..
The point is that there isn't without risk. And whatever you say you are taking a certain risk on BTL. Just takes a big recession to hit (which in normal economic time cycles might happen around now) and a number of your tenants to lose their jobs and not be able to pay. Then depending on how much you are relying on rent to pay off all the mortgages you could be in trouble.What do you think the L stands for in btl ? It stands for 'let'. Bought to….LET.
Of course people buy- to- sell too. And it's going to be a lot of fun here once the 3 Ugly Sisters start spouting their 'expertise' about how THAT one's done!
bOZo don't be so silly. BTLs an income game. Now just concentrate on that custard test. Give us a tip that'll make us 9% over the next year. The spendable type of 9%. Not the theoretical type. Over to you, Warren…..
NRS said:
The point is that there isn't without risk. And whatever you say you are taking a certain risk on BTL. Just takes a big recession to hit (which in normal economic time cycles might happen around now) and a number of your tenants to lose their jobs and not be able to pay. Then depending on how much you are relying on rent to pay off all the mortgages you could be in trouble.
So the risk is that the tenants don't pay rent because of recession. I COULD ask you why you think that in the Biggest Recession Ever Known to Man not only mine but virtually every letting business in Britain boomed?
But, hey, you're the risk expert so it would seem rude to get you to have to explain why your example is nonsensical.
But aren't you exemplifying one situation which could lead to the btl venture being UNPROFITABLE?
Come on, give me a REAL btl risk as you see risk. Tenants not paying isn't a risk. It's a certainty. Or is the flat needing expenditure at some point a…risk??
drainbrain said:
bOZo don't be so silly. BTLs an income game. Now just concentrate on that custard test. Give us a tip that'll make us 9% over the next year. The spendable type of 9%. Not the theoretical type. Over to you, Warren…..
Straight from the man himself... https://www.youtube.com/watch?v=Ha_I03sZLdM
drainbrain said:
Okay. I've 10 minutes and then must go. Humour me: Give me two 'risks' investing in a btl property could encounter.
OK, I'll bite.Risk (1) cap rates move out and you sell the properties for less than you paid for them
Risk (2) tax changes mean that your net cash yield is eroded
RIsk (3) interest rates go up faster than rents and you can't service mortgages on the properties
Risk (4) you need your money out quickly for some reason and the relative illiquidity of property and length of tenure means that you can't get your money out quickly
etc etc
None of these are risks that one would only encounter with BTL, but they are risks nonetheless.
drainbrain said:
So the risk is that the tenants don't pay rent because of recession.
I COULD ask you why you think that in the Biggest Recession Ever Known to Man not only mine but virtually every letting business in Britain boomed?
But, hey, you're the risk expert so it would seem rude to get you to have to explain why your example is nonsensical.
But aren't you exemplifying one situation which could lead to the btl venture being UNPROFITABLE?
Come on, give me a REAL btl risk as you see risk. Tenants not paying isn't a risk. It's a certainty. Or is the flat needing expenditure at some point a…risk??
I'm not a risk expert, and never claimed to be. However I have a relatively ok understanding of it as part of my job is helping quantify what risk is acceptable or not to proceed with on multi-billion pound projects for certain areas of the project. I COULD ask you why you think that in the Biggest Recession Ever Known to Man not only mine but virtually every letting business in Britain boomed?
But, hey, you're the risk expert so it would seem rude to get you to have to explain why your example is nonsensical.
But aren't you exemplifying one situation which could lead to the btl venture being UNPROFITABLE?
Come on, give me a REAL btl risk as you see risk. Tenants not paying isn't a risk. It's a certainty. Or is the flat needing expenditure at some point a…risk??
However if it's so easy and has no risk to make such good gains then why is everyone not doing it in these days of such low interest rates?
A flat needing a lot of money put into it is a risk in that if you purchase somewhere and it turns out to be a complete dump and need lots of money put into it then it could wipe out any profits. Obviously you have mitigated this risk by having more houses, which means if you need to put a bit more money into one then the others should cover it. Some tenants not paying rent is a certainty, but if something causes the market to drop then you can make the business unprofitable - as you said. However if something is unprofitable for long enough then it potentially put you at risk financially - it all depends on the repayment flexibility/ amount you have with the bank on any remaining mortgages and your cash reserves.
drainbrain said:
DonkeyApple said:
Except it isn't. My choice is corporate lets where I live. That's the area I find to be lowest risk for me and cheapest to maintain so offers me the most suitable return. I couldn't and wouldn't be remotely prepared to deal with the types of property you speak of on PH. They would be too far away and I really don't have the time, inclination or need to learn the nuances for a bit more yield that in reality would be higher risk for me. You're continual error is in trying to insist that what is right for you is catagorically right for others when it obviously is not.
….and you feel these somehow require a different ability and experience to buy and give to an agent to manage than cheaper properties in other areas do? What do you think that difference is? And what is this 'risk' you speak of? Surely not the only one I see. That the investment becomes unprofitable? The 'bottom line' risk as you could call it. The universal one everyone wants to avoid.
And just as interestingly, what 'time, inclination or need to learn the nuances' are you on about? I mean I'm talking about getting hold of a letting agent in an area. Phoning and asking if they think they could handle such-and-such a property whether posh or dungeon. Having a short chat about it. Coming off the call with an idea there's no reason not to do it. Phoning an estate agent and buying the property. Getting the letting agent to collect the keys when it settles. Nothing else if you don't want to do anything else. Like loads of people do.
You don't even practice what you preach. You're doing the same as me, keeping it local and using personal contacts but desperate to argue.
. When you move your business to South Wales and get the same return for the same risk and the same effort as you do where you live then I might not think you're a prize plum. drainbrain said:
BTLs an income game. Now just concentrate on that custard test. Give us a tip that'll make us 9% over the next year. The spendable type of 9%. Not the theoretical type. Over to you, Warren…..
That you have a clear grasp of one aspect of one business is clear - summarised earlier in this thread as slumlandlording. That you feel the need to deny the existence of other viable approaches to property and other forms of investment shows a big insecurity.Why are you actually running this thread? You started out with a deception; turning up with a new name and extolling the benefits of BTL as a retirement investment. Yet it turns out you've been slumlandlording all your life and are still doing it today. You're not what most people would recognise as a BTLer, you're a professional landlord. Frankly, it makes no more sense than if I was turn up on here saying, "I recommend everyone should buy a car dealership for when they retire."
As regards your comment about returns just remember YOU will never know your actual level of return until you finally cash out. Or "retire" as some people might put it...
Open your eyes and and have a look around - you might find there's an interesting world out there.
drainbrain said:
So the risk is that the tenants don't pay rent because of recession.
I COULD ask you why you think that in the Biggest Recession Ever Known to Man not only mine but virtually every letting business in Britain boomed?
You mean in 2007-2009 when average property prices fell by 20%??I COULD ask you why you think that in the Biggest Recession Ever Known to Man not only mine but virtually every letting business in Britain boomed?
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