Property Markets

[andrewducker]

Just throwing around some figures and briefly considering buy-to-let. It makes _no_ sense in Edinburgh, as far as I can see. Monthly rent for a decent place like this is £900 for a three bedroom place. Wandering over to a mortgage calculator, I note that for £900 mortgage repayments I could borrow about £130k, on a £160k place. Which would not get you anything like as nice a place as that, nor as close in.

Baffling - is buy-to-let as poor an investment elsewhere in the country?

Comments

[autopope.livejournal.com]

That's exactly it.

Say you've got 30K sticking around. You borrow 130K, replay 900 a month, and actually have about 700 a month coming in from some tenant, so you're paying 200 a month.

A year later, say your capital asset has risen 10% (I'm assuming a poor market, by recent standards), from 160K to 176K. So your 30K investment has made you a profit of 16K, for payments totaling 10K (if you left the building empty), or an actual net outlay of 2.4K (given that your tenant is paying most of the mortgage).

[andrewducker]

That was the conclusion I came to on the bus over - the only reason to do it is because house prices are going up so much. Liable to cause problems when interest rates go up enough to slow/stop that. Of course, when it's not a worthwhile investment it will probably cause enough people to move their investments elsewhere to cause a slump.

[ripperlyn.livejournal.com]

Plus, at the moment wouldn't the people renting have paid a lot lower for their property anyway? So in a few years, the property that you formerly charged 700/month for you can now charge 1000/month for, while your mortgage payment has stayed the same at 900/month.

[a-pawson.livejournal.com]

That would be the case if rents had kept pace with house prices, but following the ridiculous increases in house prices in the past 5 years, that hasn't happened, making buy to let a very poor investment in most parts of the country. Buy to let only really works because most landlords bought the proerty a few years ago at a time when rents were comparable to mortgage repayments.