Reply to: Bye To Let

[Bagpuss]

I always thought that yield was after the mortgage payments.

Yield is just the money it earns (imagine if you bought cash, think of it like an interest rate), the mortgage is a negative cost on the yield, Yields are less than mortgage repayments in most cases.That's why BTL doesn't work at the moment for those with low deposit. It's working nicely for those who bought a few years ago and can afford to sit it out though.

[Sockpuppet]

Yields of 6.3%, a mortgage of 6.6%, no brainer,a small price to pay for the negative equity growth.

I always thought that yield was after the mortgage payments.

[Bagpuss]

From the guys at Contractor Financials:

Yields of 6.3%, a mortgage of 6.6%, no brainer,a small price to pay for the negative equity growth.

[Sockpuppet]

From the guys at Contractor Financials:

From people who make money selling and providing moretgages.

Not really going to say "the markets shagged put your money in gold" are they?

[Ardesco]

Totally unmodernised terrace in a rough part of town, had 2 offers in the 80Ks fall through 6ish months back. Looking at recent auctions of similar properties I reckon I'd be lucky to get 60K.

Rent it out to the council for their temporary homeless unit (criminals just out of jail and people they can't house anywhere else). You'll make a bit of money on it and won't have to worry about paying council tax. Bodge it together quickly to make it barely liveable and jobs a goodun.

HTH

[ratewhore]

boomed!!

From the guys at Contractor Financials:

Buy to Let Yields Soar
The buy to let market is flying in the face of much of the doom and gloom thats being reported elsewhere.

The simple reason that Landlords are in bouyant mood is that renting is becoming an increasing necessity for many would be first time buyers who are priced out of the market due to the tightening of mortgage lending criteria.

Demand for rental accommodation has therefore pushed buy-to-let yields up to 6.3 per cent, according to Paragon one of the leading buy to let mortgage lenders. Average rental incomes reached £11,886 in February - a 2.4 per cent increase on January's peak and 5.2 per cent more than the previous quarter.

An exit route from Contracting

Many of our buy to let clients are just starting out on the path to building a property portfolio and after a relatively profitable time contracting, the rental market holds attractive possibilities to invest hard earned cash.

Many ultimately see this as an exit strategy from a demanding profession that can sometimes seem an increasingly young mans game. The pressures of an office based 9-5 routine, commuting and keeping your skill set up to scratch without the backup of a large employer can all take their toll as the grey hairs appear. Buy to let offers a real future alternative.

Good news from the taxman!

Some Contractors in the past have used their Limited Company as a means to buy but personal investment may now be more favourable.

Recent tax changes have come into the equation and whereas Capital Gains Tax used to apply on profits over and above the annual allowance at at a rate of 40% for most of our clients , this is now 18%. This allows greater flexibility to trade without crystalising enormous tax bills.

One mans pain.....

The number of agreed mortgage applications has dropped substantially, with mortgage lenders being more cautious as to who they lend money to in leaner times.

This is leading increasingly to stagnant market conditions with people needing and wanting to move but next time buyers are unwilling to pay what the they think are over the odds for properties. They are playing the ‘wait and see’ game but Landlords can exploit these doldrums.

Those with cash in the bank for deposits can afford to be cheeky when it comes to offers made.

Right time to buy?

In recent years we have seen achievable rents overtaken by interest rate rises, leaving some landlords to make up the shortfall or to sell up.

Now with the changing market and falling interest rates theres an opportunity to snap up long term investments.

Our advice to those looking into this option is that serious Landlords tend to look at the long-term perspective, based on the underlying dynamics of supply and demand.

They hold their property investment assets for more than 10 years and decide to buy or sell based on sound commercial considerations rather than short-term signals in house prices or economic sentiment.

Many clients therefore see the current mortgage squeeze as a buying opportunity.

Let to Buy

Contractors who are having difficulty in selling so that they can trade up can avoid having to accept low, speculative offers themselves by using ‘Let to Buy’.

Let to Buy uses a remortgage of the current property on to a buy to let scheme to simultanously release equity enabling you to move on to the new home. The equity released can form a deposit and stamp duty on the new purchase and again you may be in a position to put in a cheeky offer as you wont have a place to sell and so will be in a stronger position than other potential buyers.

The start of a portfolio

For contractors 'let to buy' can be a good first step into the rental market as you know your current home well and can manage the property easily once you have tenants. In this way you overcome the initial fear factor of being a hands on Landlord and it will be far easier to then buy a second and third rental property using the experience gained.

Those who take contracts in various parts of the Country can also find ‘let to buy’ is a canny way to keep hold of an existing property to gain a rental return whilst ultimately also enabling you to return to an area if a contract opportunity dictates that you need to live in that area again in the future. In this way we have some clients who own a string of properties in the main population centres which they can use for their own private needs as work dictates.

[Lucy]

I'll buy it - in a year or two. For a fiver.

Your net worth, winnebago boy?

[Sockpuppet]

Other valuations are always a possibility. I think however it is much more likely that people have done their own research and comparisons and know that the one next door or similar completed at X recently and are reluctant to accept the market has changed.

I think a lot of people are still refusing the believe that prices have changed mainly because they have risen so fast for so long they are blinkered thinking that they will change.

Also unless they know some FTBs they are not seeing how hard getting a mortgage is.

[ASB]

Maybe the punter is getting undisclosed evaluations from other estate agents? Though they would probably have gone with them unless you're mate was charging less.

Often we see on Property Ladder a quite substantial difference in valuations by the three agents they get in. Proves they're mostly just guessing at the end of the day.

Would make more sense to put it on the market at the lower valuation but request offers over, then hopefully they'll get a few interested parties trying to outbid each other.

Other valuations are always a possibility. I think however it is much more likely that people have done their own research and comparisons and know that the one next door or similar completed at X recently and are reluctant to accept the market has changed.

[Lockhouse]

My BTL has been on the market for 5 months - not a sausage. I left it too long to sell - should have done it last summer but had pesky tenants. I could sell it now for peanuts but have decided to have some work done on it and rent it out again instead.

[PAH]

He gets a punter and does a valuation at say, 120k. Punter insists it still worth 140k.

Maybe the punter is getting undisclosed evaluations from other estate agents? Though they would probably have gone with them unless your mate was charging less.

Often we see on Property Ladder a quite substantial difference in valuations by the three agents they get in. Proves they're mostly just guessing at the end of the day.

Would make more sense to put it on the market at the lower valuation but request offers over, then hopefully they'll get a few interested parties trying to outbid each other.

[ASB]

People are still deluding themselves that they can ask any price and it will get paid or that putting £10k on the price people will only drop it down £10k so they get the same.

This lack of realism pushes things down further as well. A mate of mine is an EA (though he hasn't traded through bad times). He gets a punter and does a valuation at say, 120k. Punter insists it still worth 140k. Net result is nobody views, or they get silly offers. After a couple of months punter is prepared to be a bit more realistic and drops to 120k. Now though no views etc because it's stale so have to go for a more aggressive cut or wait 6 months.

[PAH]

They won't start buying until they can pick up distressed sales for cash and then they just sit on them and rent them out until the next boom starts.

The changes to charge council tax/business rates on empty properties will probably have an affect on that practice, though not so sure when they're buying residential properties.

I know of an old derelict commercial property that's been stood deteriorating for years because it was bought by a similarly speculating builder. He's just started work on it now they're charging him rates on it. So it is having an affect, and maybe a positive one where there are so many derelict buildings blighting areas.

[rootsnall]

So it cost you nowt and any selling price is profit?

Greedy money grabber.

Good summary of the situation.

[Cyberman]

I don't see the market being down for too long, as long as HMG inject liquidity.

My mortgage rate is now 5% after starting at 5.5% through First Direct three months ago on a 1% discount on SVR. With more cuts in the offing to release the market logjam and to avoid recession, rates next year should be lower still, thus making mortgages very affordable again.



BTL's are a different story though !!