House prices rise in June

[Moscow Mule]

meaning?

You can make more money on the stock market than in BTL?

[SallyAnne]

4 children, plus need a guest room / office.

Have you got 4 kids?!!!! Ahhhhhhhhhhhhh!!!!

[BlasterBates]

Perhaps I can explain this with the following example.

The price of an apple is 50p and the price of a Pear is 60p. Over one month an apple is now worth 51p but a pear is worth 80p.

In this case price of a pear has risen faster than the apple.

[pickle]

Perhaps I can explain this with the following example.

The price of an apple is 50p and the price of a Pear is 60p. Over one month an apple is now worth 51p but a pear is worth 80p.

In this case price of a pear has risen faster than the apple.

Ah, but the bank wont borrow you shed loads of cash at low intrest rates to buy pears. Only apples.

[DimPrawn]

With BTL you have leveraged gains.

So the if you have £10K to invest, and you buy stocks and stocks go up 15% in a year, you have made £1.5K profit.

If you get a 90% BTL mortgage, borrow £90K and buy a £100K house and it goes up 10% you have made £10K profit. Doubled your money.

Also, stocks can go to zero and become worthless. Property may fall, but unlikely houses are going to be free.

HTH

[Chugnut]

Ah, but the bank wont borrow you shed loads of cash at low intrest rates to buy pears. Only apples.

H

Presumably if you want to avoid apples and pears, you buy a bungalow.

[Sockpuppet]

The main problem with the BTL millionaires are that they must sell the property to make the cash.

Now this if fine if people sold at a steady rate/ However the first time a property show called s"elling your house before the crash" comes on they will sell in droves and this is what I think will cause the normalisation.

I reckon it will "tip" when the rates hit 6.25%

[BlasterBates]

The leveraged gains on BTL can be positive, but...if you invest 10K in a house worth 100K and it goes down by 20% you have -£20,000. Yes you have a house worth £80,000 but then you have a loan of £100,000. Whereas if you plonk 10 grand on the stock market and it goes down 50% you still have £5000, which is decidely better than £-20000. ...and yes a single stock can go to 0, but then you don't invest in single shares; lets say you invest in a fund representing the FTSE 100, as far as I know the FTSE has been up and down but I've never known it to go to 0, not yet.

So basically in whatever asset category you choose you can take a high risk or a low risk. So leverage is one thing the other is what return you expect on the asset itself. I mean you can always mortgage your house and put the proceeds on the stock market.

[BrilloPad]

The main problem with the BTL millionaires are that they must sell the property to make the cash.

Now this if fine if people sold at a steady rate/ However the first time a property show called s"elling your house before the crash" comes on they will sell in droves and this is what I think will cause the normalisation.

I reckon it will "tip" when the rates hit 6.25%

indeed - remember all the dot com paper millionaires?

[Moscow Mule]

The leveraged gains on BTL can be positive, but...if you invest 10K in a house worth 100K and it goes down by 20% you have -£20,000. Yes you have a house worth £80,000 but then you have a loan of £100,000. Whereas if you plonk 10 grand on the stock market and it goes down 50% you still have £5000, which is decidely better than £-20000. ...and yes a single stock can go to 0, but then you don't invest in single shares; lets say you invest in a fund representing the FTSE 100, as far as I know the FTSE has been up and down but I've never known it to go to 0, not yet.

So basically in whatever asset category you choose you can take a high risk or a low risk. So leverage is one thing the other is what return you expect on the asset itself. I mean you can always mortgage your house and put the proceeds on the stock market.

Or you could leverage your 10K to do some spread betting - IMHO a much easier way to invest in the indices.