If you make a net loss renting annually you'd better flipping properties than renting.
Would you set up a cafe with the intent of only making money when you sell it in 20yrs time.
The joy of being a landlord
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If you make a net loss renting annually you'd better flipping properties than renting.
Would you set up a cafe with the intent of only making money when you sell it in 20yrs time.
No, but I might set up every internet start-up company ever with those goals, maybe not with a 20-year lead time.
So your bad example isn't even correct.
So even you think
So even YOU admit what you said is not a sustainable business model AND not over 20 yrs.
The vast majority of startups fail, something like 90% or more. So your counter business plan is even less viable.
So even YOU admit what you said is not a sustainable business model AND not over 20 yrs.
The vast majority of startups fail, something like 90% or more. So your counter business plan is even less viable.
nope, not what I said, an asset growth over profit growth strategy IS a business strategy that's used in lots of fields, none of them comparable to retail.
Of course, I don't really consider hobbyist, high leveraged landlords to be running real businesses either, so there is that.
Of course, I don't really consider hobbyist, high leveraged landlords to be running real businesses either, so there is that.
Certainly someone thinking a "private" landlord should subsidise housing at their own cost certainly has no concept of business.
Its the same business if leveraged or not. Ironic to be disparaging about someone's risk while at the same suggesting a vastly higher risk business model is ok. It also suggests it not the level of risk you have a problem with at all.
Its the same business if leveraged or not. Ironic to be disparaging about someone's risk while at the same suggesting a vastly higher risk business model is ok. It also suggests it not the level of risk you have a problem with at all.
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But no doubt you're totally fine with the private landlord sector being propped up with billions in taxpayer cash, because that's different, right.
It's not a subsidising anything, and you're not a business you're a speculator, some would argue a predatory one. speculations go down as well as up, oh well.
Of course you wouldn’t do it unless you could soak up the loss for as long as needed and were happy losing money.
My point is though that only a couple of years ago interest rates going this high was unthinkable so people could easily be caught out.
I myself looked into buying my sister’s share of my parents flat to rent it out. Fortunately the various additional potential expenses put me off but the interest rate rise would mean I would be losing a lot of money even without those.
I think a lot of landlords have realised the interest rates and taxes due are going to lose them money.
Quite a few empty houses for sale in my catchment and I had a look at an auction for the sw and whole blocks of flats were for sale and hmos.
I do think an auction could be the only place to find true value at the moment, if that is actually possible.
For instance what is the projected house price over the next 5 years? Probably in 10 years things will be more predictable but I can’t wait that long. So yes flipping would be an option but the costs involved are risky and the sale price a gamble. It could be a lot of effort and cost for little reward.
A market that has severe supply shortage isn't being propped up by anything.
What was suggested was landlords rent at below market rates and make up the difference with capital gains when they sell. Thats subsidising rent. For what reason is unclear.
What was suggested was landlords rent at below market rates and make up the difference with capital gains when they sell. Thats subsidising rent. For what reason is unclear.
Yes but the hobbyist probably will set the market level as they are either forced to sell or go bankrupt.
Personally I think there should be no place for hobbyist landlords and the proper business landlords should be highly regulated and controlled.
I also believe that the letting market in particular needs a reset which will be financially punishing for those invested in it.
However I also don’t think a reset will be allowed to happen, it may be impossible to avoid though.
I certainly wasn’t suggesting they do that, for years if not decades landlords have had an advantage when finding financing. This has recently changed and the rise in rates combined with valuations coming in lower than anticipated will make it more difficult to make money.
Obviously those with plenty of margin and equity will not be affected as much but they will make less money for tax reasons alone.
I'm not sure why anyone would be "happy losing money".
The point is anyone with a long mortgage is going to go through many rises and falls in the price of property or interest rates. There would be no point waiting a long time to sell and buy and take advantage of these changes. If that's the sole reason to buy property. Yes it's work, but thats the business of flipping property.
It would make no sense to wait 20yrs and perhaps be caught out when it comes to sell. If you are only going to get a return on that gain once. Doing it long term is a different business.
You have to know which business you're in.
Can the taxpayers have the billions of extra pounds back then with the 30-40% hike in housing benefit over covid.
Housing isn't a free market, so Market rates means nothing in reality.
Yes, a real business could subsidise its short term cash flow with long term capital gains, it's not an unreasonable on the face of it. who can't do that is highly leveraged speculators.
It's not just "landlords'. It's anyone with any form of assets, capital or reliable income. They all be effected. It's not unique to landlords.
Why would any business purposly reduce its "cash flow", or annual income, effectively penalise itself, for no gain. Why? There is no reason to do that.
If the "taxpayer" doesn't want to house tenants on housing benefit with private landlords perhaps they should fund the housing of those people in hotels while also funding the building of adequate supply of social housing and the ongoing management and maintenance of same.
Then the supply of private rentals would return to the private rental market and not be tied up with social housing.
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No landlords are affected more because of the relative recent changes to lending criteria and tax breaks.
Obviously anyone who has borrowed money will be impacted in some way unless they have an agreement for the length of time they need the money.
Refinancing of businesses is something that takes place regularly and as in the last financial crisis a lot of businesses will get a shock as they are reassessed. This will take time to feed through, but I would think many companies are eyeing up cost savings to be actioned in the future.
Their only hope is that soon inflation drops and rates follow leading to recovering demand but this seems a long shot.
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When someone finds a genuine way to make a lot of money with low risk and / or low effort their book will be a best seller
Soldato
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I don't get this logic......... if it was the hobbiest landlord renting out HMO hell holes I would get it but (at least according to panorama I think it was) some of the big business companies are renting out disgusting hell holes .
I guess you would consider my wife and I hobbiest. we only have one property (the wife won't let me get another).. it's my wife's old flat she had before she met me.... I don't want to sell as will quite possibly go to our lad in 10 years or so (and if not will be a nice retirement vehicle) .
however I suspect our tenant who is on a hell of a good deal would not be happy if we sold ...
but how would it work? would you expect us to be forced to sell our flat? if so why? it's our property.
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I actually agree with you on this mostly, however I also agree with the point that housing benefit payments have been allowed to get out of control and probably set the price of rents.
So the profitability level has been raised too high
There’s a lot of broke millionaires around trust meWhen someone finds a genuine way to make a lot of money with low risk and / or low effort their book will be a best seller
If you punish people for investing in a market they won't invest in it. If you think supply is bad now that will make it far worse.
When you say hobbyist you mean I assume small landlords. If so it's ironic to suggest they have some sort of economy of scale, some form of monopoly to set market price. While at the same time proposing large landlords big business who definitely will have the scale to do that, at least locally. They will be focused on the shareholder not the tenant. They go bankrupt just like everyone else.