A few years ago I was looking at a flat in Basingstoke UK on which the asking price was £30,000. The achievable rent at the time was £325 per month. That's a gross yield of 13%.
That was cash flow positive even with principle and interest loan, maintenance, insurance, the whole bowl of wax. It was an absolute no-brainer. (My mate bought it and I bought some larger, less yielding properties, but beside the point) Even without rampant HPI it was a great little investment.
Today that flat would sell for £140,000 and achievable rent £500 per month. That's about 4.3% gross yield; not even enough to cover interest.
Wages in the area have not moved that much in the interceding time.
Today that flat is a crap investment.
300K house but 240K loan- I wouldn't buy until I had 20%. I got the loan on 47K gross income plus around 1.5-2K investment income from shares (still under 50K per year). I have had someone in some of the time, but got the loan on the assumption there was no rental income. Any bank at that time would give me a loan for that amount- I was approved very quickly. This was 2 years ago and I am on a higher income now so things are easier at the present r.e. lifestyle, but the point is I still lived on that income paying the mortgage (even in times when I didn't have a boarder). Not on dog food either- just don't have the plasma, the leather lounge, the car loan etc.
Agreed with your argument that location etc matters.So don't buy there if your take on it suggests it's no good. It's hardly a representative sample. LOCATION MATTERS! Country, city, region, suburb, which side of the highway, which street, which.
Kat,Your 4.3% yeild today is not a true indication though, as the purchase price was in fact 30,000 not 140,000.
Look's even better if only 20% deposit was paid, 6000 ,and an interest only loan used.
Your 500 per mth would well and trully cover the 162/mth interest payment at 7.5% and the 140,000 look's like a good return on the initial 6000 investment.
Dave
If you like this sort of investment, good on you.
Phew! I was under the misapprehension that 1 AUD was roughly 1.4 SEK....buy a house for 3 million kronor and put the same property back on the market for 5.5 million...
ASX, They weren't Poms were they.
Figures.I have a feeling they might have been. Or at least one of them ie. Swedish g/f, Brit b/f...or Swedes who'd been working in London for a while. I was told today there are about 5 'renovate-or-simply-just-rip-someone-off-and-make-millions' property shows on TV there at the moment.
I'm almost certain there is a connection.
Oh My!!!
Brianna Meighan, Host of Hot Properties Panama TV
Kat,
To buy today it's a piece of crap.
Way under the bar for what I want and in the current risk riddled environment.
Don't forget that is GROSS yield, net is substantially lower.
If you like this sort of investment, good on you.
Not this little black duck.
Oh My!!!
Brianna Meighan, Host of Hot Properties Panama TV
I just thought I'd let you all know; I'm no longer interested in house prices and am moving to Panama.
Figures.
Yes, without "property pr0n" as they call it, British TV would scarcely have anything to show.
Very popular in no small part to the lady with the big, errr..... eyes.
Sarah Beeney, presenter of "Property Ladder"
I might come with you Wayne, hope they show pleanty of repeats
Big eyes... as the website says:
http://www.funjunkie.co.uk/comments.cfm/article=eb7a1495-8523-42c6-bf5d-ee952f521977
The fallout from the worst US housing bubble in history has much further to run, investor Jim Rogers has warned.
Mr Rogers, a former partner of George Soros who retired at the age of 37, told Bloomberg: "This is only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment.''
The debris from the steepest slump in US housing for almost 20 years has contributed to the turmoil in credit and equity markets.
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