Reply to: Would you invest £30k in buy-to-let now?

[lukemg]

BTL – not for me thanks, I am far from certain that the property market has stabilised, especially for these flats. Add in additional costs, potential grief (mate was seriously threatened after a tenant stopped paying, took months to get them out). I am presuming you are all using up shares ISA allowance each year – now up to 10200 pa ? My Aberdeen Asia Pacific are up 40% in 2 years. Portfolio averaging 7.2%pa across a range of funds since 97 (includes serious dips in 2000 and recently).
Forget individual shares, especially in the UK, that is too risky, you don’t know enough to win. Forget the odd tale of someone getting lucky too, gamblers on horses always tell you when they win too.
If you haven’t a clue, look at fool.co.uk, maybe start with a uk index tracker (get the lowest cost one you can find) from there think about Absolute Return managed funds and diversify to Europe/US, for more risk/potential reward you have to be thinking about asia-pacific and BRIC areas.
KEY – Has to be money you don’t need for a number of years (as for a BTL) You HAVE to hold your nerve for 5-10 years and NEVER sell when the market is struggling. I haven’t sold a fund yet (although may do some pruning). Last years dog can turn around (Fidelity S.E. Asia went up 70% in a year after a few years going sideways)

[TimberWolf]

Fixed-rate Savings Accounts : protection against fluctuations in interest rates - The AA

****ers have dropped the rate to 4.55%!!! I've had the form on my desk for two weeks!!

Cheers. Might be worth putting a few quid in there, but I'll hang back. In effect it's betting inflation and the devaluation of the £ will be less than 4.55%/year over the coming years, which I don't think is looking likely.

[scooterscot]

Imagine you have £30k already in premium bonds. You are tired of receiving maybe the odd £50/month from this. You already own your own property and don't need to reduce the mortgage on it.

Would you do a buy to let on a £100k flat? £25k down, £5k for transaction cost, furniture, fittings? Get £450/month rent in? This would cover the £75k buy-to-let mortgage.

Long term it could be a good deal. Rents would go up over time. Property value would increase over time. All for a £30k investment now.

Thoughts?

This is almost exactly the same outlay I put out on the Glasgow flat except I get £625 pm,

[MarillionFan]

well for the last 8 weeks they havent stopped going up, so if u bought at the beginning of that cycle or buy at the beginning of the next then you are guaranteed money. One contractor in my current gig make a couple of 100k in a year cos he knows his stuff when it comes to shares.

and I've made quite a lot over the year. But word of advice. Dont get caught by one persons story of 100k.

Happened to me during the dot com boom, stopped buying houses and started buying shares. I lost 50k pure hard cash!

Do your own research!

[NorthWestPerm2Contr]

well for the last 8 weeks they havent stopped going up, so if u bought at the beginning of that cycle or buy at the beginning of the next then you are guaranteed money. One contractor in my current gig make a couple of 100k in a year cos he knows his stuff when it comes to shares.

[MarillionFan]

Here is a secret:

RBS and LLoyds are government backed, I know people who are making 20k per cycle on each of those shares. They have gone up 30% in the last 8 weeks alone.

No better than stocks at the moment if you ask me. As soon as the econonmy recovers you will be making ****loads

Both shares have a cap, they are presently at that cap. They can only go down IMO or go sideways.

Boat missed!

[NorthWestPerm2Contr]

Here is a secret:

RBS and LLoyds are government backed, I know people who are making 20k per cycle on each of those shares. They have gone up 30% in the last 8 weeks alone.

No better than stocks at the moment if you ask me. As soon as the econonmy recovers you will be making ****loads

[MarillionFan]

Where do I get me one of those?

Fixed-rate Savings Accounts : protection against fluctuations in interest rates - The AA

****ers have dropped the rate to 4.55%!!! I've had the form on my desk for two weeks!!

[northernladuk]

I'd like to know that too.

Back to the BTL issue. Yes when you take into account transaction costs - solicitor, surveyor etc. and the Capital gains tax bombshell one day if you sell it... it makes the whole thing rather unattractive. Less hassle to leave money in Premium Bonds and hope for a £1m prize,

Yep. Less hassle than someone paying your mortgage so investment costs you a few grand and the house prices rising 40-50% in the next 5 years or so and giving you free money

Capital gains is on a sliding scale over time, all to do with the value of money. £10 10 years ago is very different to £10 now. If you keep it long term it will slide to nothing..

And anway... I would be happy to pay captial gains on my PROFIT! Profit - captial gains still = Profit.

I wouldn't be so quick to write it off at the moment.

[contractor79]

Don't rape and pillage Holy scripture on this thread please, thanks.

[thunderlizard]

What would Jesus do?
I think he would give it away to worthy causes

John 12 1-10:

1Six days before the Passover Jesus came to Bethany, the home of Lazarus, whom he had raised from the dead. 2There they gave a dinner for him. Martha served, and Lazarus was one of those at the table with him.
3Mary took a pound of costly perfume made of pure nard, anointed Jesus’ feet, and wiped them* with her hair. The house was filled with the fragrance of the perfume.
4But Judas Iscariot, one of his disciples (the one who was about to betray him), said,
5‘Why was this perfume not sold for three hundred denarii* and the money given to the poor?’
6(He said this not because he cared about the poor, but because he was a thief; he kept the common purse and used to steal what was put into it.)
7Jesus said, ‘Leave her alone. She bought it* so that she might keep it for the day of my burial.
8You always have the poor with you, but you do not always have me.’

[contractor79]

Where do I get me one of those?

I'd like to know that too.

Back to the BTL issue. Yes when you take into account transaction costs - solicitor, surveyor etc. and the Capital gains tax bombshell one day if you sell it... it makes the whole thing rather unattractive. Less hassle to leave money in Premium Bonds and hope for a £1m prize,

[TimberWolf]

£30K, high interest bond paying 5.1% = £1500ish per year.

Where do I get me one of those?

[MarillionFan]

Imagine you have £30k already in premium bonds. You are tired of receiving maybe the odd £50/month from this. You already own your own property and don't need to reduce the mortgage on it.

Would you do a buy to let on a £100k flat? £25k down, £5k for transaction cost, furniture, fittings? Get £450/month rent in? This would cover the £75k buy-to-let mortgage.

Long term it could be a good deal. Rents would go up over time. Property value would increase over time. All for a £30k investment now.

Thoughts?

It depends on how many years you look at it for, with the interest you are paying.

YOU MUST figure in the cost of buying the property, solicitors, arrangement fees etc and the cost of selling, solicitors + selling fees.

To me, 70K at 4% = £2800 per year. Versus £450 x 10 (include unlet times) = £4500. £1000 to buy in fees, arrangement fee of £1500 say, cost of doing up etc means you will lose year 1, you will also lose on year(sell because of costs).

So you're making £1700 before costs on £30k. So lets call it £700 per year.

£30K, high interest bond paying 5.1% = £1500ish per year.

Lets say 2-3% Capital growth.

So you work it out and decide. I'm thinking about it, put cash is king at the mo!

[sasguru]

What would Jesus do?
I think he would give it away to worthy causes, and I don't think he'll love you if you don't. Because he can see inside you, so following the rules isn't enough.