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  1. #41
    I used to be Cheeky UnCheeky Monkey's Avatar
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    Quote Originally Posted by Chrisch View Post
    Agreed. Take out insurance.
    another cost to add to the rent ....

    I'd add that I've never been a landlord by the way ! But I've had involvement in rentals and indeed evictions in various roles

  2. #42
    Tofu eating wokerato Chrisch's Avatar
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    Quote Originally Posted by UnCheeky Monkey View Post
    another cost to add to the rent ......
    You cannot add costs to the rent - the rent is set by the market. Non payment insurance simply eats up part of the margin for the investor. Property can be a good investment and it certainly was when there was a massive capital growth in property values. However in terms of yield residential property is a rather poor investment. The finance industry were very keen to get unsophisticated people to invest in it so they could milk them. Mortgages, insurance and agency fees take far more of the available revenue than the landlord. If you own outright then you have to look at opportunity cost (unless you don't understand investment) and once again it looks like a poor choice.

    The big advantage of (residential) property as an investment is it tracks the cost of living in residential property and so the return is broadly in line with living costs. If you own outright then you can almost certainly live off the rent of three properties irrespective of what happens to the currency, to inflation or any other variable. This makes it a low risk as a retirement income. Even if there are problems with one then the other two will almost certainly generate some return. Unfortunately the huge capital growth now means that three average domestic properties are around a mill and far far more than that if you can smell the stinking M25 and what it surrounds from the garden.

    IMHO it is the small margin failing to live up to the hyperbole and latent greed that makes landlords "bad". There is nothing intrinsically wrong with providing a capital asset to someone wishing to rent it. For the tenant it is "home" and again the emotional nonsense attached to that cause the opposite viewpoint. It's hardly surprising that it causes so many problems.

  3. #43
    I used to be Cheeky UnCheeky Monkey's Avatar
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    Quote Originally Posted by Chrisch View Post
    You cannot add costs to the rent - the rent is set by the market.
    if all Landlords have to pay for insurance, then it ends up on the rent one way or another IMO because there is a shortfall (as I understand it) so Landlord's costs across the board will be a major factor in setting rent levels, since there is an under supply to meet excess demand

  4. #44
    Old but keen Mark Chase's Avatar
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    Quote Originally Posted by Chrisch View Post
    You cannot add costs to the rent - the rent is set by the market. Non payment insurance simply eats up part of the margin for the investor. Property can be a good investment and it certainly was when there was a massive capital growth in property values. However in terms of yield residential property is a rather poor investment. The finance industry were very keen to get unsophisticated people to invest in it so they could milk them. Mortgages, insurance and agency fees take far more of the available revenue than the landlord. If you own outright then you have to look at opportunity cost (unless you don't understand investment) and once again it looks like a poor choice.

    The big advantage of (residential) property as an investment is it tracks the cost of living in residential property and so the return is broadly in line with living costs. If you own outright then you can almost certainly live off the rent of three properties irrespective of what happens to the currency, to inflation or any other variable. This makes it a low risk as a retirement income. Even if there are problems with one then the other two will almost certainly generate some return. Unfortunately the huge capital growth now means that three average domestic properties are around a mill and far far more than that if you can smell the stinking M25 and what it surrounds from the garden.

    IMHO it is the small margin failing to live up to the hyperbole and latent greed that makes landlords "bad". There is nothing intrinsically wrong with providing a capital asset to someone wishing to rent it. For the tenant it is "home" and again the emotional nonsense attached to that cause the opposite viewpoint. It's hardly surprising that it causes so many problems.


    Id strongly debate the poor investment comment?

    My worst performing property is brining in 8.75% my best 17.4% my worst mortgage / loan is 5% APR most are around 4% APR

    But your right in so far as its a top up income until I pay off the mortgages, then it becomes a primary income.

    I have experienced significant capital growth but its not particularly relevant to me as its likely that wont be realised until my kids sell them all after I die. They are my only significant pension



    Your comment is correct for a specific target market investor who's investment is totally or significantly based on capital growth. To me that's a different type of investment all together. Yes its virtualy impossible to realise 5% in London but I baught a property just before Christmas for 60K that's bringing in 500 a month less 1000 service charge, that's 8.34%

    It is doable, but not in London.

    Other point is rents will continue to rise so my return in 10 years time will be significantly more than 8.34%



    It drives me nuts when people say Landlords are only in it for the money???? Yes of course we are, how many of you would go to work or invest for nill return?


    Landlords treat it as a business??? Well it is a business?



    My daughter is a Clinical Psychologist who is working in a hospital. After four years of training and a first class degree that left her with a 50K debt, shes earning 22K????

    That to me is a vocation not a job. She could earn twice that in the private sector as shes well aware.


    I like to feel I am a supportive and generous landlord, but at the end of the day if its not making me money, I am not running it as a charity.











    The point I

  5. #45
    Old but keen Mark Chase's Avatar
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    Quote Originally Posted by UnCheeky Monkey View Post
    if all Landlords have to pay for insurance, then it ends up on the rent one way or another IMO because there is a shortfall (as I understand it) so Landlord's costs across the board will be a major factor in setting rent levels, since there is an under supply to meet excess demand
    A very valid point. Every tax and cost the govt put on landlords is just passed to the tenant. Obviously

    I find it disgusting that the Govt shout loudly that they are doing it to reduce the cost of housing or grab back from greedy landlords. They are in fact just taxing the tenants but most are to daft to realise that

    I run a separate business and if my materials costs go up my rates of charge out go up to cover it. And I stay competitive because every other business is doing exactly the same


    The ONLY thing that affects my profits is if the housing market values drop massively and at the same time, lenders reduce mortgage rates and criteria for lending money is relaxed

    But that's the exact opposite of what happens when theres a property crash

    During periods of property devaluation the conditions for lending are tightened up and the cost of borrowing goes up.
    Last edited by Mark Chase; 14-05-2019 at 01:16 PM.

  6. #46
    Tofu eating wokerato Chrisch's Avatar
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    Quote Originally Posted by Mark Chase View Post
    ...
    Other point is rents will continue to rise so my return in 10 years time will be significantly more than 8.34%..
    Rents will rise or fall in respect of the market. Current yields on residential are not that brilliant as far as I am aware but I don't follow the trends. The thing to remember is the yield is relative to the capital value, so if capital value is rising faster than rental yield the yield is going down as a percentage. Most people only look at the price they paid versus the rent and also ignore inflation. When I looked last at it the yield on flats was much better than houses, with houses at or around 5% at best.

    Quote Originally Posted by Mark Chase View Post
    ...Every tax and cost the govt put on landlords is just passed to the tenant. Obviously
    Only if the market will stand it. If it will not then it reduces the margin. There is a tiny bit of truth in that if all landlords put up prices the market price goes up, but even then people just drop out the rental market to buy or to live back home with mummy.

    This myth is trotted out again and again to pretend that what is going to be paid by the investor will actually be paid by people "that can ill afford it". But the truth is if you can't afford it you don't pay it. If no one can afford it the price comes down as places stand empty. There is commercial property empty all round the country for that reason. One option with residential is to go to HMO but there are capital costs in that with the conversion of course.

    People like property because they think they understand it, but there are much better investments round if you look.

  7. #47
    Established WTF Member Spirit of Guernsey's Avatar
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    Landlords are selling up due to the recent changes by the government and a shortage of rental property is looming. It will get to the stage where those left in the market will be able to increase their prices.

    HMOs are no longer an option for most landlords as mortgages are not available for them. This means a potential greater loss of accommodation at the lower end of the market.
    There are four varieties in society: the lovers, the ambitious, observers and fools. The fools are the happiest.
    Hippolyte Taine French critic and historian (1828-93)

  8. #48
    Tofu eating wokerato Chrisch's Avatar
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    Quote Originally Posted by Spirit of Guernsey View Post
    Landlords are selling up due to the recent changes by the government and a shortage of rental property is looming. It will get to the stage where those left in the market will be able to increase their prices.
    Who are they selling to? The reality is there are a certain number of people and a certain number of properties. I rent because it is cheaper to do so, if it were cheaper to buy I would buy. Same person, one property - landlords sell up, I buy. We looked at buying here about 4 years back but the prices were bonkers. We would have rented it out when we left, but it didn't make financial sense. My neighbours rent the other half of our property and have just bought a property to rent out so they have their own place when they retire.

    People make all sorts of assumptions about what is going on to suit their own point of view. Some landlords might well be selling some might be buying. What I can say for a fact in that there is massive building going on so the supply is increasing. I would suggest the interest rate is much more of a concern than the overall market size. Don't overlook the big companies getting into rental and the build to let market. Rents track what people are prepared to pay not the other way round. Landlords are price takers not price makers, a weak position. There are better investments but your point about mortgages is correct - but then this is the one asset class you can readily borrow against if you have no real money to speak of - hence it's popularity. That favours a long term view - which begs the question of why people are selling up?

  9. #49
    Established WTF Member Spirit of Guernsey's Avatar
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    Chrisch, there have been a raft of tax increases and new regulations for the rental sector. This means that to make a profit you need to put the property in a limited company. For many smaller landlords, the only viable option is to sell up.

    My HMO is now on the market, but the government lending guidelines mean that it is only sellable as a single family dwelling. A property which has housed around 12 people at low prices will now house one well off family.
    There are four varieties in society: the lovers, the ambitious, observers and fools. The fools are the happiest.
    Hippolyte Taine French critic and historian (1828-93)

  10. #50
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    Quote Originally Posted by Chrisch View Post
    Who are they selling to?
    With Vacent possesion the open market but takes does take an extended time unless the price is substantialy reduced - 'cause full Council Tax applies to empty retal properties. With tennants in place to companies or very few 'other' Landlords again at a reduced value.

    Quote Originally Posted by Chrisch View Post
    That favours a long term view - which begs the question of why people are selling up?
    'Legal Hassel' - changes to the rules; 'Licensing' - some councils are now taking a license fee from LL's to be able to rent their property out; many items that could be replaced on maintenance (i.e. Tax Deductable) are longer possible or no longer Tax Deductable or timescales on maintenance. Morgage relief costs.
    Fear of what 'Grandpa' will do to if he gets in to power at the next GE.


 
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