Reply to: Buy to Let [ sort of ]

[Ardesco]

I was just pondering on the way in to work this morning when might be an ideal time to buy in to the BTL market.

Does anyone have any thoughts about when the BTL market is likely to be at its trough?

I would guess it will be at its trough when has prices have gone about as low as they are going to and all the people who have been renting and sitting on a pile of cash start buying.

[Ardesco]

You mean I might not be able to afford the lear jet and the sunseeker on the back of a couple of flats ?

What I was curious about was whether you proposed to sell or not, whether you regarded primarily as an income generating asset or a capital asset. For me I view it as an income generating asset. Traditionally this is what property has been. It really is only in the last 20 or so years that rates of growth have muddied this picture.

It may well be the case that I do sell my property. This looks increasingly likely in order to give the money to the kids so they can afford somewhere to live.

I would like it to be a continuous income, but if I haven't managed to pay off my main mortgage when the term is up is is there to cover the main mortgage so that I have somewhere to live when I'm old and wrinkly. Expecting it to continuously generate income indefinitely is not realistic IMHO, areas change and what is a good flat in a good area with a great rental market now make be a good flat in a dive that nobody wants to live in in 30 years time.

When the kids are old enough to go to university I will be looking into the student rental area. It would be much cheaper to buy a house near whatever university they go to and then give them a room and fill up the other rooms with fellow students then to try and subsidise rental IMHO and if all goes well each child will then have a property that they can either live in or sell to buy a home when they leave uni. Again this all depends on a number of factors, what the rental situation is like in the area they go to uni, if they do go to uni, if I have enough of a deposit to actually purchase something, etc.

[THEPUMA]

I was just pondering on the way in to work this morning when might be an ideal time to buy in to the BTL market.

Does anyone have any thoughts about when the BTL market is likely to be at its trough?

[ASB]

I am expecting that my BTL will be worth enough when I sell it to cover the mortgage on my main property. Anything extra will be a nice bonus. If I have paid off my main mortgage I will either have a stack of cash to spend/invest or an income in my elderly years thanks to the tenants living in my BTL property.

It is one area I have put my money for future investment, but I'm not banking on BTL to make me a millionaire and provide a jet setting lifestyle when I retire, only an idiot would

You mean I might not be able to afford the lear jet and the sunseeker on the back of a couple of flats ?

What I was curious about was whether you proposed to sell or not, whether you regarded primarily as an income generating asset or a capital asset. For me I view it as an income generating asset. Traditionally this is what property has been. It really is only in the last 20 or so years that rates of growth have muddied this picture.

It may well be the case that I do sell my property. This looks increasingly likely in order to give the money to the kids so they can afford somewhere to live.

[Ardesco]

I'm curious. What do you actually see your property investment giving to you? It's a loaded question - but I think you have a similar view to me. I'll 'fess up after you do.

I am expecting that my BTL will be worth enough when I sell it to cover the mortgage on my main property. Anything extra will be a nice bonus. If I have paid off my main mortgage I will either have a stack of cash to spend/invest or an income in my elderly years thanks to the tenants living in my BTL property.

It is one area I have put my money for future investment, but I'm not banking on BTL to make me a millionaire and provide a jet setting lifestyle when I retire, only an idiot would

[ASB]

A couple of points on this:-

It is possible to get interest relief up to the value of the property when first made available to let, which is often the same amount but for people who occupied the property themselves before renting, it can be substantially more.

Also, I believe it may be possible to claim tax relief against rental profits on interest on a mortgage secured on your main residence up to this same amount.

1) That's what I was trying (and failed) to say. When I started letting a property I had lived in for a few used I increased the mortgage and used it to pay off my residential mortgage.

2) Yes, though establishing the audit trail can be tricky. A chap I know has done this on occasions and had no real problems getting it thorugh HMIT. In his case each further advance is a separate folio on his account and statemented individually (interest only of course since obviously he wants all the capital allocated against the residential part). He does this because he finds he can pay considerably less for the money and avoids fees.

[THEPUMA]

One other point on this. You can increase the mortgage on the BTL and use that to pay off all (or some of) your residential mortgage. The thing to be careful of is that the mortgage on the BTL should not exceed it's original purchase price. Obviously it depends on circumstances whether this can help or not.

A couple of points on this:-

It is possible to get interest relief up to the value of the property when first made available to let, which is often the same amount but for people who occupied the property themselves before renting, it can be substantially more.

Also, I believe it may be possible to claim tax relief against rental profits on interest on a mortgage secured on your main residence up to this same amount.

[smalldog]

just for a change here comes Kentphilip with his "The end is nigh" sandwich board

[ASB]

Conversely I will quite happily laugh all the way to the bank in 30 years time when i have a nice income for doing very little, a nice property portfolio and the ability to cash in my properties for a substantial chunk of money while you are still renting your place while waiting for property prices to hit "rock bottom" before you buy...

I'm curious. What do you actually see your property investment giving to you? It's a loaded question - but I think you have a similar view to me. I'll 'fess up after you do.

[KentPhilip]

kentphilip, thats why people like you should never dable in something you dont understand. Keep your cash in a bank account nice and safe....

Just try and understand this tiny but crucial tip for any investment product, property, shares, unit trusts, investment trusts, classic cars, gold, silver...get the picture?....

DONT SELL WHEN THE MARKET IS AT OR NEAR THE BOTTOM...AND DONT INVEST MONEY YOU MIGHT NEED TO GET AT IN A HURRY OTHERWISE YOU MIGHT LOSE....

tell me someone, is that too hard to grasp? DOH!!!

No way is housing near the bottom. The bubble is just starting to burst now. Hang on to your hats - you'll be needing to eat yours soon

[KentPhilip]

No capital loss yet, and capital loss is meaningless anyway unless you need to sell. If my properties are not worth substantially more than I paid for them in 30 years time I will be extremely surprised and then you will be able to laugh at my misfortune.

Conversely I will quite happily laugh all the way to the bank in 30 years time when i have a nice income for doing very little, a nice property portfolio and the ability to cash in my properties for a substantial chunk of money while you are still renting your place while waiting for property prices to hit "rock bottom" before you buy...

After the great crash in the US in 1929 it took I think until 1954 before stock prices rose up to the levels they crashed from. If, as is looking likely, something similar happens to the housing market now then your houses will indeed give you a "substantial chunk of money" in today's terms. But in 30 years that won't buy you much due to inflation.
If you wait until after the forthcoming crash then you'll get much more for your money, and have a much better chance to weather the storm.

[smalldog]

kentphilip, thats why people like you should never dable in something you dont understand. Keep your cash in a bank account nice and safe....

Just try and understand this tiny but crucial tip for any investment product, property, shares, unit trusts, investment trusts, classic cars, gold, silver...get the picture?....

DONT SELL WHEN THE MARKET IS AT OR NEAR THE BOTTOM...AND DONT INVEST MONEY YOU MIGHT NEED TO GET AT IN A HURRY OTHERWISE YOU MIGHT LOSE....

tell me someone, is that too hard to grasp? DOH!!!

[Ardesco]

Are you all enjoying making your capital losses at the moment, as the housing market crashes into the ground...?

No capital loss yet, and capital loss is meaningless anyway unless you need to sell. If my properties are not worth substantially more than I paid for them in 30 years time I will be extremely surprised and then you will be able to laugh at my misfortune.

Conversely I will quite happily laugh all the way to the bank in 30 years time when i have a nice income for doing very little, a nice property portfolio and the ability to cash in my properties for a substantial chunk of money while you are still renting your place while waiting for property prices to hit "rock bottom" before you buy...

[smalldog]

sure, each to their own but I cant be assed...had my fill of ikea trips and flat pack fun....I dont pay any tax on it anyway as I dont take profits so dont pay CT, it all gets reinvested....Will probably pay a bit of CT this year as will take a small div.

My worst ever weekend was hiring a van on a friday night, driving to Brum IKEA. leaving there at 11PM, driving to sheffield and getting there at 1:30AM. Getting up at 7AM, painting the interior of the house, driving to Manchester for a party, driving back to sheffield sunday AM, finish painting then furnish three bedrooms with flatpack bed, chest, wardrobe etc....then drive back to London for midnight Sunday....

Oh and a lot of my trips coincided with New year, xmas, clashed with weddings etc....No TA!

[KentPhilip]

Are you all enjoying making your capital losses at the moment, as the housing market crashes into the ground...?