Landlord's Quotes

Amateurs looking for a quick buck will now get there fingers burnt   ¤  For the amateur looking long term then property investment for a pension income has never been better. The ability to put a residential property in a pension fund will add great value.

  ¤  Don’t do the deal until the figures stack.

  ¤  Landlords will work harder to find those under market value properties.

  ¤  For a quick buck property is becoming as risky as trading shares.

  ¤  Trading ‘off plan’ will only work in a rising market, so stay well away.

  ¤  Recent interest rate rises and reduction in rental yields may have hammered the last nail in the coffin for some amateur landlords.

  ¤  Most sophisticated landlords have an eye for a bargain and like a stock market trader can make money in differing market conditions.

  ¤  Would be Sara Beeneys are paying over the odds for property at auctions.

  ¤  Some astute property developers are selling at a premium through auctions.

  ¤  Survival of Buy To Let is guaranteed, its as simple as supply and demand.

Landlords are painfully aware that interest rates rising will hurt them. In recent years landlords have struggled to justify investing based on a continual reduction in rental yields and the recent rises may have hammered the last nail in the coffin for the amateur. ie. The amateur who is highly geared and no contingency fund.

Capital growth has been strong for at least 5 years but an inevitable slowdown is on its way.

So what is the prospect given that the rental yields are still low and capital growth is likely to slow as rates rise?

I strongly believe that our most sophisticated landlord will continue to make big bucks by waiting for the right deal. These types of landlords have an eye for a bargain and like a stock market trader can make money in differing market conditions. He or she will continue to find under market value properties and renovate to add value.

He or she will be patient and not do the deal until the figures stack (ie. Expected rental against mortgage interest, looking for about 130% of mortgage interest).

They will work harder and view an increasing number of properties.

So the sophisticated landlord or better named ‘Professional landlord’ will continue to help grow the rental market… so what will happen to the amateur ie.the investor who is looking for a quick buck by buying off plan, the taxi driver who is boosting his pension ? So will these amateurs get there fingers burnt ?

For a quick buck property is becoming as risky as trading shares. Past years has seen many landlords ‘Trading off Plan’ ie. Buying new build properties in a rising market and selling before or just after completion or releasing 100% of the purchase price with a Buy To Let mortgage based on the increased value. Huge profits were made without much thought, but think again as its these deals that most of my experienced landlords are leaving on the shelf.

Unusual trend that is likely to continue… Nowadays most of my time is devoted to a handful of our most successful landlords, and this can offer a great insight into future trends. ie. A East London landlord told me that the auction room is a very different place to that of 5 years ago. He says the auction houses are full of ‘would be Sara Beeneys’ who have on numerous occasions paid well over the open market value. Serial landlords are exploiting this by selling through auctions to get a premium. They have been known to set the reserve price at market value and then bid themselves upto the reserve price hoping that some less experienced landlord will take it over the reserved price.

Long term future is as simple as supply and demand. We are painfully aware that a shortage of property is fuelling the housing market. This lack of supply will take many years to balance demand, as with any product that is in short supply you will have to pay a premium. So don’t be surprised if rents start to climb as interest rates rise, and that property prices tail off and not fall.

Copyright: Lee Grandin, Director, Landlord Mortgages.
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