Sell! Sell! Sell!

[Muttley08]

So long as Kirsty Allsop is taken off the screens, I think most people would be in favour of a real estate correction (crash)

Correction is pretty much a done deal now. I just hope the contract market can hold up for the next 3 years (my game plan) before the next downturn.

It's all gone very quiet in the estate agency game....couple of them have even admitted it. Numbers of sale boards are rising. Saying that, if the BoE lower IR's, it'll kick on again.

And don't knock Kirsty...quite cute, if a bit of a chuffer these days

[BlasterBates]

What determines a reasonable price is what rent can you get.

A BTL should give you a reasonable return without capital appreciation. If houses are overpriced it is because investors assume capital appreciation. That works for a while but acts like a pyramid scheme, to make money, you need some mug to buy your flat at a higher price.

So you can work out easily what prices should be, whatever they are, just look at the rent and the costs, which includes interest payments. It should be a couple of percentage points above what you get in a building society.

[King Cnvt]

Doesn't that just mean current rents are artificially low rather than prices artificially high?

[Muttley08]

What determines a reasonable price is what rent can you get.

Not an expert at all on these sorta things but...

Isn't a good rule of thumb 7% return, which equals the magic 14 year doubling of an investment?

So, if capital appreciation + rent= 7% (above mortgage payments), then it's worth buying, if not, then it's not.

Currently, I've heard BTL's are returning 1-2%, or less in some city centres (such as Leeds).

[BlasterBates]

Yes I agree 7% is about right, for equities it is roughly 10%.

In the UK its more a less a free market you can charge whatever rent you like. The artificially low rent only applies when governments restrict rents, as they do to some extent in Germany.