Buy to let mortgage lenders slash rates

anybody borrowing money in this climate must need their head tested,there is a nasty game being played out there and none of it is good for long term investing in property, you will never be able to pay back , the governments interfearance in rules and regulation on rental property will kill that off, also landlords will for ever be enbroiled in legal battles and more .

Josh

These are unusual comments to make on a Blog for property investors. Did you expect me to publish them?

I think it's probably fair to say that most people reading this will disagree with you, particularly the ones who are spotting the opportiunities in the difficult economic climate and turning them to their advantage.

Regards

Mark

I totally agree with Josh. Residential buy-to-let is currently a dangerous trap for newbie investors, who will quickly find themselves in serious cash flow difficulties when interest rates rise, while value of properties fall. You can't make monthly positive cashflow at 5%+ interest rate, and that's after you've put in 40% deposit ! Unless property prices are soaring, stay out...

There is a saying that goes something like 'look at what everyone else is doing and do the opposite'. It may have been Warren Buffett?...Anyway, here are some definite quotes from a man who knows how to make money:
'Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years'.
'Someone's sitting in the shade today because someone planted a tree a long time ago'.
'Risk comes from not knowing what you're doing'.
'Only when the tide goes out do you discover who's been swimming naked'

So what is my point. Sorry Josh your post reminds me of a rabbit caught in the headlights.
As far as I am concerned, this is a good time to buy property, and soon (as lending eases, and better deals appear) it will also be a good time to borrow.
Now that all the 'lets jump on the buy-to-let bandwagon and make some fast money, I've watched Sarah Beanys programme how hard can it be' brigade have disappeared, the market has naturally corrected and will return to 'normality'. The quotes above illustrate BASIC RULES OF PROPERTY INVESTMENT THAT ARE WRITTEN IN STONE. Some people got carried away and lost sight of the basics - investment in property is a long-term (min 10 year plan) programme, and if you don't know what you are doing you will get caught out.

Now I am not claiming to be in the same league as Warren Buffett (yet), I am a small buy to let investor with 4 rental properties. However, I bought my first one 18 years ago before the term buy to let was even invented! I remember I needed to get written permission from my mortgage company to let my property, and they insisted on having copies of all rental agreements on their file - can you believe it! It has been a hobby for me really (whilst working full time), but I hope to get more serious about it in the next few years.

So Josh, how can a property I bought for £42,000 18 years ago, that is now worth £160,000 - generating a rental income of £780/month (with a monthly mortgage payment of only £79.40) be a bad investment?

I stopped buying property in the UK in 2006. Why, because everyone else seemed to be buying in haste, paying asking prices that were higher than what I believed the properties were worth. Five years later, I now think the time is almost right to invest in UK property again.

That being said, I used that climate to my advantage, and refinanced with some mortgage deals at the time that were unbelievable (lenders were falling over each other to attract clients - another bad sign). Thanks to Ed Gilchrist (gone from The Money Centre, but not forgotten by me) I took out lifetime base rate trackers at base rate +0.49%, as I was a firm believer that UK interest rates would fall in line with low European rates at some point in the long term.

I saw my annual morgage bill drop from nearly £28,000 to less than £5k today. I am actually making really healthy profits now. So the recession is not bad for me as I saw it coming, and battened down the hatches.

And I also used my free time from 2006 to invest in a property in Morocco - I bought a large 3 bed penthouse apartment, right on the beach on the mediterranean, for the same price as people were asking for a small 3 bedroom terrace in Liverpool. Another factor that confirmed to me that UK houses prices had spiralled out of control!
My moroccan investment shows a very healthy increase in value - whilst those 3 bed terraces in Liverpool are now 'selling' (well they have 'for sale' signs up) at a lower price than they were asking in 2006.

Sorry if this is a bit rambling, but I hope you got my point.

There is always opportunity in property if you are looking in the right places, do your homework by the bucketful, and know you can stay in for the long haul.

Hello Neil

Thank you for sharing your views which will no doubt evolve as you read through some of the wonderful examples of successful deals completed in the last year by myself and other contributors to this site.

Regards

Mark

Paul, thanks for taking the time out to respond. I have emailed you seperately and look forward to chatting with you further.

Thanks for sharing your views. I really like the content and information. Thanks & Good Day Ahead!