Decided to raise the rent

whizzbang

MorningStar wrote:

Do you now know anything about the UK crash? Are you aware of what happens in a crash. I understand you don't think it will happen but are you aware of the signs and what happens in such an event

MorningStar! you are starting to sound like a crashmonger! It seems there are a lot more people here than we though who have not investigated the situation prior to investing!

MorningStar

whizzbang wrote:

MorningStar! you are starting to sound like a crashmonger! It seems there are a lot more people here than we though who have not investigated the situation prior to investing!

I am trying to ask questions to understand how people take such risks. If he knows the facts and still came to the decision that is choice if he doesn't know the risks then I might be helping. So far I am hearing there are no risks and prices will keep ing going up. That is fine I just want to clariffy is that the belief.

If you have anything to add please do otherwise there is no point in posting to comment on me personally.

whizzbang

MorningStar wrote:

LEX check out this and see what the supply of rental property is like in your area of renting. It can help estimate your potential risk in the event of a down turn. Too much rental property can mean the entire area can devalue rapidly and the same applies to falling rents

http://www.prtb.ie/pubreg.htm

Its probably worth pointing out that this is the minimum number of rental properties as many still go unregistered.

Lex Luthor

MorningStar wrote:

Do you understand that rather than investigating the aspects of how to invest in property and the dangers of it you just investigated what yoou could buy? If you didn't investigate the dangers of investing in property you did jump in feet first.
When did your friend own property? Have they a history of it or was it just the boom period? My family have been in the business for years, you can make money by luck it still isn't a great plan.

Do you now know anything about the UK crash? Are you aware of what happens in a crash. I understand you don't think it will happen but are you aware of the signs and what happens in such an event

I ask again what is your net rental yield? I am guessing you are at about -15% which is 25% below the standard advice. Have you ever watched "Property Ladder"? A show all about property devlopers/investors with expert advise all be it the UK market the same principles apply.

I've seen Property Ladder, but mainly watch it to ogle Sarah Beeny;)
This show is mostly about people buying run down properties, developing them and shifting them on within 3 months and making a profit. It deals mainly with people giving up their full time jobs and doing property development for a living. Thats not for me and I don't think its as easily done here as in the UK as there are a lot more bargains to be had over there.
I just have one small 2 bed townhouse that I rent out.

Lomb has just reiterated what I've been trying to say. The risk is small as it was only 169k. The propery has already risen 40k since I bought it which is 37k more than what I have it mortgaged for.

There are risks also in Pensions...so if there is a property crash, then ineviatebly pensions will get hit also as many peoples pensions are in equities.

I know the risks, but they are minimal to me.

I am in the process of buying a holiday home just for personal use only and not to rent it out which to me is a far greater risk than my rental property. My own home is to be fully paid off in July, so I'm in a good position. I'd rather be in my position than some people I know that have 600k mortgages on one home and get hit a lot more with the interest rate hikes.

Take it easy MorningStar, I'm flattered by your concern, but honestly, I'll be fine:p

MorningStar

Lex Luthor wrote:

Take it easy MorningStar, I'm flattered by your concern, but honestly, I'll be fine:p

I think you keep mising what I am saying. What might be good for you as a choice and risk relatively low to you it is bad business. Very few people have managed to pay off their mortgage in 10 years before investing in property. Property is a bad investment at the moment for most and that includes you. you just happen to be able to take the risk.

RainyDay

Do any/many landlords take the time taken to manage and maintain the property into account in their cost-benefit analysis? You'll get a good 4% dividend return from AIB or BOI shares, and the CEO won't ring you up at 11 pm on a Friday night to unblock the loo.

Victor

But you'll never be able to say the bank is "mine, mine, mine, mine, all mine"

antoinolachtnai

There are a lot of issues in property investment that aren't coming up in this thread. Have you guys never heard of the tax-shield? Gearing? Profit-and-loss accounting, even? C'mon, this is like an argument from the 1950's, or maybe the 1850's. No one should take anything in this thread too seriously.

MorningStar

antoinolachtnai wrote:

There are a lot of issues in property investment that aren't coming up in this thread. Have you guys never heard of the tax-shield? Gearing? Profit-and-loss accounting, even? C'mon, this is like an argument from the 1950's, or maybe the 1850's. No one should take anything in this thread too seriously.

THe principles of all you have said has been discussed we just didn't use the terms. Most people don't know the terms so there would be no point. Maybe you don't know the terms well enough to see they are there. It was kept simple for a reason by me at least.
Many people see this in simple terms.

antoinolachtnai

MorningStar wrote:

Maybe you don't know the terms well enough to see they are there.

For someone who thinks (mistakenly) that you can have a negative yield on a valuable property that is rented out, and who treats capital repayments (mistakenly) as a cost when calculating profit, these remarks are a little bit rich.

Victor

For someone who thinks (mistakenly) that you can have a negative yield on a valuable property that is rented out

I'm not sure of the context, but if expenses exceed income, you can have a negative yield. Or if the value of the property was falling.

and who treats capital repayments (mistakenly) as a cost when calculating profit, these remarks are a little bit rich.

Some people don't distinguish profit from cashflow. Also there are capital allowance when calculating profit for tax purposes (not sure if this applies to residential property).

Lex Luthor

MorningStar wrote:

LEX check out this and see what the supply of rental property is like in your area of renting. It can help estimate your potential risk in the event of a down turn. Too much rental property can mean the entire area can devalue rapidly and the same applies to falling rents

http://www.prtb.ie/pubreg.htm

I had a look and I found
3 x 2 bed apts
1 x 2 bed houses
2 x 3 bed houses
4 x 4 bed houses

and I'm not even on that list, so its a handy list to have. The area is mostly 3 & 4 bed houses and there were only 8 of the 2 bed terrace houses I bought altogether built, so there will few of them available.

Also worth noting, that if I decided to go interest only on the mortgage that I'd be in the black of about €200/month, but I'd still not pay any tax. i've just opted to try and reduce the capital aswell at the moment while I can afford it and if the $hit hits the fan, I'll go interest only for a period.

davidoco

useruser wrote:

Incredible stuff - wouldn't you be better off just sticking your money in the bank? If I were your tenant I'd just move out if you pulled this kind of nonsense on me - presumably leaving you with a refurbishment bill for the new tenant and perhaps a month or more of lost revenue while you try to find same.

If this is the fantasy land that buy-to-let "investors" inhabit it is no wonder that property prices are so high. I suspect you are in for a rude awakening.

I agree with the above. For the sake of 50 euro. Say the tenant says I'm off, it then takes a month to put a new tenant in place, you lose a months rent, how long does it take to make that back?

In my experience putting up the rent because your mortgage has gone up is like a red rag to a bull, do some improvements to the accomdation and then hike it up by 100 euro a month.

whizzbang

BoozyBabe, did you raise the rent in the end? if so how did the tennant react? Some firends of mine have had their landlord ask to raise the rent, they all said "No, and if you do I'll leave" and then the landlord backed down.

J

antoinolachtnai

Victor wrote:

I'm not sure of the context, but if expenses exceed income, you can have a negative yield. Or if the value of the property was falling.

Some people don't distinguish profit from cashflow. Also there are capital allowance when calculating profit for tax purposes (not sure if this applies to residential property).

1. For yield to mean anything, you calculate it on an EBITDA basis, i.e., the interest and capital repayments aren't included.

2. Some people don't distinguish profit from cashflow, but they are wrong. Profit has a very specific technical meaning.

In general there is no capital allowance for property.

Antoin.