rent or sell

[ProPlus]

C-Cup said:

Maxf said:

Buy in London if you can! London is rapidly becomming it's own market, seperate from the rest of the UK. Foreign money and short supply are keeping prices very bouyant - and likely to remain so for the foreseable future, IMO.

If we could buy in london we would - but we just wont have the cash to cover stamp duty and deposits, and with never having really been there let alone lived there I'd rather rent for at least 6 months so that we dont end up somewhere we hate. Location is a bit of an issue as I will be working in Hounslow and my other half in Canary Wharf, but thats a whole different thread!!

if canary wharf and hounslow.... seriously think about the balham/clapham area. Hounslow is about 30ish minutes from Clapham junction and canary wharf is roughly the same....

Email me if you would like further info/advice...

I currently live balham/clapham and commute to canary wharf every day. And Im looking to buy now in Clapham North.

Si

Edited by ProPlus on Thursday 31st May 13:20

[gizmo.mp3]

David_s said:

I'm selling, you make your own mind up.

You're selling a 2-bed flat in London for £165k?
Er... just purely out of interest, where is it? M'self and the flatmate are pondering what we do when the rental comes up on the flat we have, and one option *may* be to buy - as a place to live, not an investment ...

[David_s]

gizmo.mp3 said:

David_s said:

I'm selling, you make your own mind up.

You're selling a 2-bed flat in London for £165k?
Er... just purely out of interest, where is it? M'self and the flatmate are pondering what we do when the rental comes up on the flat we have, and one option *may* be to buy - as a place to live, not an investment ...

Outer London, Chigwell in fact. The money is about right, I checked www.ourproperty.co.uk and the last one sold a year ago for £161k. If you want it I can do a good deal for cash...

[mcflurry]

If you do rent it out, I would suggest one of the breakdown policies you can get for about £20 a month. That way if the fridge breaks / boiler stops / water plumbing leaks etc then the tenant can call someone and get an expert within an hour, rather than waking you up

[M400 NBL]

£165k for a flat in London is cheap. Well to Londoners anyway.

It depends on how much the redemption penalty is (I have one on my place but it equates to £600 or there abouts so it's not worth waiting, the trend in your area...and more importantly, whether it is an up and coming area. The appreciation that you've had is not spectacular imo so there could be more scope for increases.


Or do you bank to wedge in a high interest account or invest it in ISA's or something.

Location, location, location. It very much depends where you are.

[C-Cup]

mcflurry said:

If you do rent it out, I would suggest one of the breakdown policies you can get for about £20 a month. That way if the fridge breaks / boiler stops / water plumbing leaks etc then the tenant can call someone and get an expert within an hour, rather than waking you up

Good tip, I didn't actually know this was a available ! I clearly need to do some research !!

[stevieb]

David_s said:

Maxf said:

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

It's no longer a return on a £60k investment, it's a return on the £165k it is currently worth. Think of it this way, I am currently in the process of taking out a large mortgage which could be reduced by the value of the flat if I sold. So, if I get a mortgage at a rate of about 6% the cost of borrowing the extra £165k that I wouldn't have to borrow if I sold the flat would be slightly less than £10k, if I only get £8400 for my flat I am out of pocket, and if the place is damaged or un-let I lose even more. So I would be betting on an increase in property values to make good the loss, and I don't think it is going to happen, there aren't sufficient people in the 2 bed flat market who can afford more than £165k. Better off taking the £100k capital gain and the £80k odd rent and move on to a market with better potential. As I said before, I am selling.

Its not a return on investment of £165k you need to discount this o a base year so if the purchased the house/flat 10 years ago you current investment worth is about £122k based on vales of 1997 the purchase year!

People ofter fail to discount there investments back to a common year for comparisons

[David_s]

stevieb said:

David_s said:

Maxf said:

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

It's no longer a return on a £60k investment, it's a return on the £165k it is currently worth. Think of it this way, I am currently in the process of taking out a large mortgage which could be reduced by the value of the flat if I sold. So, if I get a mortgage at a rate of about 6% the cost of borrowing the extra £165k that I wouldn't have to borrow if I sold the flat would be slightly less than £10k, if I only get £8400 for my flat I am out of pocket, and if the place is damaged or un-let I lose even more. So I would be betting on an increase in property values to make good the loss, and I don't think it is going to happen, there aren't sufficient people in the 2 bed flat market who can afford more than £165k. Better off taking the £100k capital gain and the £80k odd rent and move on to a market with better potential. As I said before, I am selling.

Its not a return on investment of £165k you need to discount this o a base year so if the purchased the house/flat 10 years ago you current investment worth is about £122k based on vales of 1997 the purchase year!

People ofter fail to discount there investments back to a common year for comparisons

What is important me is the current return on capital if you prefer, or even opportunity cost. In todays values there is a lump of cash sitting there, £165k not £122k not £60k, that is effectively costing me more than it returns. I could do better with the money it represents by investing elsewhere, or offsetting against a mortgage. The only way to take decisions is to consider current values, what it actually cost is totally irrelevant today.

[taffyracer]

I did a similar thing in 2002, for the 1st few years it was ok, covered the mortgage and the house appreciated nicely, in 2005 I got messed about with tenants badly, lost 5 months rent and decided to sell up, I lost 8 months rent in total destroying any profit, but the house appreciation was worth iin the short term and funded the reduction of my current mortgage by nearly 50%, personally I would sell, its alot of hassle for not alot of return, I doubt the market will appreciate over the next few years as they did 5 years ago

[stevieb]

David_s said:

stevieb said:

David_s said:

Maxf said:

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

It's no longer a return on a £60k investment, it's a return on the £165k it is currently worth. Think of it this way, I am currently in the process of taking out a large mortgage which could be reduced by the value of the flat if I sold. So, if I get a mortgage at a rate of about 6% the cost of borrowing the extra £165k that I wouldn't have to borrow if I sold the flat would be slightly less than £10k, if I only get £8400 for my flat I am out of pocket, and if the place is damaged or un-let I lose even more. So I would be betting on an increase in property values to make good the loss, and I don't think it is going to happen, there aren't sufficient people in the 2 bed flat market who can afford more than £165k. Better off taking the £100k capital gain and the £80k odd rent and move on to a market with better potential. As I said before, I am selling.

Its not a return on investment of £165k you need to discount this o a base year so if the purchased the house/flat 10 years ago you current investment worth is about £122k based on vales of 1997 the purchase year!

People ofter fail to discount there investments back to a common year for comparisons

What is important me is the current return on capital if you prefer, or even opportunity cost. In todays values there is a lump of cash sitting there, £165k not £122k not £60k, that is effectively costing me more than it returns. I could do better with the money it represents by investing elsewhere, or offsetting against a mortgage. The only way to take decisions is to consider current values, what it actually cost is totally irrelevant today.

All i am trying to say is that you need to tranlat the money vale of 10 years ago into a its REAL value now!

So you are comparing a house purchased at 60k 1997 (2007 money is 81k.) so trying to say you have made 105k on the propert is false. you have acutally made 84k in real terms.

[David_s]

stevieb said:

David_s said:

stevieb said:

David_s said:

Maxf said:

You seriously don't think your London flat will ever be worth more than £165k? 27% in the last year was being reported by Knight Frank! Sure, yours might not have gone up, yet, but as people get priced out of previously 'poverty' areas like Balham, Brixton etc prices of flats further out should increase.

I'd have thought you'd be in a decent position having bought at 60k - its the mugs buying now at 200k trying to buy-to-let who are going to get burned. Your £8,400pa return is pretty hot on a £60k outlay!

It's no longer a return on a £60k investment, it's a return on the £165k it is currently worth. Think of it this way, I am currently in the process of taking out a large mortgage which could be reduced by the value of the flat if I sold. So, if I get a mortgage at a rate of about 6% the cost of borrowing the extra £165k that I wouldn't have to borrow if I sold the flat would be slightly less than £10k, if I only get £8400 for my flat I am out of pocket, and if the place is damaged or un-let I lose even more. So I would be betting on an increase in property values to make good the loss, and I don't think it is going to happen, there aren't sufficient people in the 2 bed flat market who can afford more than £165k. Better off taking the £100k capital gain and the £80k odd rent and move on to a market with better potential. As I said before, I am selling.

Its not a return on investment of £165k you need to discount this o a base year so if the purchased the house/flat 10 years ago you current investment worth is about £122k based on vales of 1997 the purchase year!

People ofter fail to discount there investments back to a common year for comparisons

What is important me is the current return on capital if you prefer, or even opportunity cost. In todays values there is a lump of cash sitting there, £165k not £122k not £60k, that is effectively costing me more than it returns. I could do better with the money it represents by investing elsewhere, or offsetting against a mortgage. The only way to take decisions is to consider current values, what it actually cost is totally irrelevant today.

All i am trying to say is that you need to tranlat the money vale of 10 years ago into a its REAL value now!

So you are comparing a house purchased at 60k 1997 (2007 money is 81k.) so trying to say you have made 105k on the propert is false. you have acutally made 84k in real terms.

I am familiar with the concept of discounted cash flow.

I wasn't making a point about profit to date other than to say I think I have had the best years already, and if I were I would have included the previous rental yield, tax paid on the rental income and capital gains implications. The point I was trying to make is that rental yields have fallen to the point that I would be better selling and using the money to reduce my main mortgage. The original purchase price, even in pounds shillings and pence, has no bearing on today's decision making process, it has a value TODAY and a opportunity cost TODAY, and a future value that may or may not rise.