Meet The Landlords TV programme – fair representation?

Reply to the comment left by "John Paul" at "04/08/2013 - 11:39":

"a huge amount less than you think"

I'd not said what I think.

But I would have thought landlords with portfolios of properties at the lower end of the market would be better placed should interest rates rise.

If you are talking 5%+ interest rises, with no corresponding rise in rents/prices, then I think even some of them will suffer, with a knock on effect to tenants.

When you stress test do you take into account a landlords entire assets/liabilities?
I'm thinking now about landlords buying properties for cash and raising/ draining finances elsewhere.

What do you regard as a sensible level?

Genuinely interested.

Just worked it out
6.50% interest rates will bankrupt me and that is if I don't pay SC and GR which I don't do.
Presently am paying 2.99% on 2.29 % ABBR tracker
How long do you think I have before I just hand the keys back as have massive negative equity!?
Rents won't match the mortgage payments required if they reach 6.50 %
How many LL are in a worse position than me!?
Just pray the economy remains stalled for about a decade.
Otherwise a lot of banks will find their balance sheets severely challenged when lots of LL hand the keys back!!
And lots of tenants will be homeless!

Reply to the comment left by "Paul Barrett" at "04/08/2013 - 16:38":

Actually that is the WRONG figure

4.2 % BOE IR will bankrupt me!!!!

Reply to the comment left by "Mark Alexander" at "04/08/2013 - 10:00":

I'd had enough of being on & off the dole all me life with business ventures etc. So I decided to really go for it. Few years previous I thought it was great being self employed getting up at 10, starting work at 11, finishing at 2pm. This time, decided to put the hours in, saved like mad, bought & sold cars, playstations, motorbikes, alloy wheels, everything to make a buck. Saved all the money, got me second house as I rented out me first house, moved in with the missus, din't go on holiday for 5 years, lived like crap-Got grief for that off 'er indoors, wore same trainers for 10 year ha ha yes true, & some of these things stay with u, my missus always telling me to buy new clothes, I get gutted if me new Xmas trainers don't last for best for 2 years before they get downgraded to second best wearing 5 times a week instead of 2. I'm giving too much info out on a public wall aren't I ha ha.
I've now learn't loads, as I'm sure some of u know to, always stick to your word, be 100% reliable, keep same number. I have agents that will recommend to their client to take my offer of 20k less if they NEED to sell fast, because I am 100% reliable & stick to what I say I am going to do. And I have tenants who say to get one of my houses is like gold-dust.

Miscommunication via not verbal talking, I turn around maybe 20% of my tenants who are problems, not 20% of the whole lot. I'd guess good to me would be bad to u lot, U posh landlords if that's the right word & I only mean posh in terms of u only take working tenants, u posh landlords would insist on the rent 1st of month job done. Whereas us LHA landlords have to work with the tenants when they get paid, if it's on a Tuesday, we have to collect or DD on a Tues.
And approx 95% of my current tenants are good in the terms of we get on, they want to stop, they don't damage, 50% are unreliable ha ha, 95% respect me & me them, they decorate & carpet the house, they only ring me Mon-Fri 8-5 etc. etc. That's good to me. They want to be left alone & I don't want to visit unless I have to.

Sensible levels? I'll answer a bit on that & I would say to anyone don't buy with a mortgage unless u can be sure of paying that mortgage with interest rates at 6% & maintenance bills of £1000 a year.
I'll sell people some houses about 60k (70k value) in Nottingham, 6k rent in, approx. 10% yield, new combi boilers, new composite doors, mostly new double glazed, new fuseboard, new showers, new kitchens all laid out correctly for tenants for next 20 years, tenants been living there years, want to stop for years to come.

Reply to the comment left by "Mick Roberts" at "04/08/2013 - 16:47":

Paul, Aah leave me alone, I'm trying to get off computer. No, Paul I'm not a mortgage expert, but I think I know my bit & maybe Mark may agree, yes if rates go up, a lot of people will be in the poo, but it is for that reason I think (& I have got rates right for the last 15 years), if when people do get in the poo, few repossessions etc., at that point, economy struggle again, rates straight back down, so as u say the economy may stay stalled purely because people have buying & borrowing at 0.5% rates, some have trackers at 3-4 over-Wow, u won't have done that when rates were 6%.

Reply to the comment left by "HB Welcome" at "04/08/2013 - 14:20":

Yes you are correct, those with portfolios at the lower end do tend to be the ones that can handle the larger interest rate rise, but then again they also tend to have more repairs.

We do have one agency that manages professional lets and those are the ones where the margins are smaller

We only take into account their property portfolio, although, we did this a year ago for a LL, and he said our figures were not acceptable as he had 3 cars he needed to pay for and we needed to increase the rents to cover them. He was already getting slightly more than market rent on most of his properties

I would say 7% at a minimum, but thats down tot he areas where i live and cheaper property prices

Reply to the comment left by "Mick Roberts" at "04/08/2013 - 16:47":

I think the point you make so well is that all the ducking and diving you have done is really carried on by being a LHA LL.
You have to put the time and effort in and you effectively have to duck and dive.
For me I reckon I am one of those 'posh' LL!!!!
i.e. the ones who can't be ar-ed to to what you do and want the easier life; well that's me that is!!
Effectively you are doing a full time job and what you do CANNOT be described of a 'passive investment'; a turn of phrase so beloved of the fraudster GRQ lot.
Yours is a far more realistic template of what one has to do when dealing with the lower end of the tenant spectrum.
Most newbie LL would avoid certain types of property and tenant types if they knew what you had to do!!
I would suggest you make more money than most 'posh' LL as you are a worker; NOT so us 'posh LL'; we want the easy life and probably make less money because of it.
Well I think as you have stated; 'each to their own!!'

Reply to the comment left by "Mick Roberts" at "04/08/2013 - 16:47":

Cheers for that Mick.

I've found all your posts fascinating, a real breath of fresh air.
It's not my way but it's good to learn. I wouldn't have the patience or bottle to do what you do. Although I do have a few LHA tenants, (a couple of them in your area), I tend to go for the posher end of the benefits market and upwards, as I like the easy life. Having said that, my tenants can and do ring me up 365, day or night. Looks like you're doing that right and I'm getting it wrong!

Regarding sensible levels, I think it depends on the individual.

When I was starting out, I thought I could take on the world and if it washed it's face, I'd go for it -and I'm very glad I did. It was right for me then.

But now I'm old and daft, my sensible level is well into double figures.

Fear and greed I suppose.

I'm interested in John Paul's answer as he is advising his landlords on this and I wondered if he had a 'one size fits all' type of model for a rough guide.

Reply to the comment left by "John Paul" at "04/08/2013 - 17:11":

Thanks John, not a bad rule of thumb.

Reply to the comment left by "John Paul" at "04/08/2013 - 17:11":

Remember, though, that current lender margins are high on new lending, and typical pay rates are around the 5% mark. I'm guessing that as rates rise, lenders may compete by reducing margin (my trackers from pre-2007 are typically 2-3% over base), as this will be happening as the market improves.