Investment?

[spudulike]

 

Just re-mortgaged the house, its now worth £160,000.... The magic of property is that extra value on the house (£40,000 in this case) is ALL mine

 

Technically it isn't.............. if the property prices went down by 25%, you would now be paying a mortgage on £160k for a house worth £120k. That's negative equity but that will never happen will it? With a BoE interest rate of 0.5%, what do you think?

 

It would only be yours if you sold the house and paid off your mortgage and outstanding tax etc bills.

 

Same as shares, if you don't cash your gains and the stocks fall, you have nothing but current value and possible future gains.

[spudulike]

Does anybody know the best isa at the min? Can't find much over 1%

 

Have a look at equity based ISAs, they will be a longer term investment but will gain more than your cash based ones. The only caveat to that is that if you are nearing pension age and may need the money at short notice!

 

My father does Yorkshire Building Society ones - have a look but don't do cash ISAs myself!

[luftwaffe]

Interesting Spud, thats about 8% average per annum, can i asked you what promted the surge in the last two years, are you in individual shares or funds, cheers.

[scraggs]

Not a problem I will explain using an example of just one property in Essex:

 

Bought in 2011 for £120,000, using a 25% deposit (Thats £30,000) since then have been taking £725 rent PCM, my expenses (including mortgage) being £500. Thats £2,700 per year for 3 years= £8,100.

 

Just remortgaged the house, its now worth £160,000.... The magic of property is that extra value on the house (£40,000 in this case) is ALL mine

 

Yes I'm not allowing for tax here but you pay Capital Gains Tax when you sell the house, even so I have got my initial money back already.

 

Hope that helps.

 

It all stacks up whilst you have good tenants and interest rates are where they are now.

 

You WILL have bad tenants at some point and are you factoring in the fact that you will need to replace kitchens, bathrooms and boilers at some point, they do wear out to a point of not viable to repair, and some of the new style tenants tend to not care too much about your property.

 

I have several customers with pretty substantial portfolios of rental property and industrial units, one with nearly 100 properties now has one of the staff spending most of their week sorting court cases for eviction and damage not sufficiently covered by deposit, and chasing tenants, another has just decided to sell everything except one block of flats.

 

If I was ballsy enough I would do the stock market, as I have said in an earlier post, the only long term value in renting over other forms of investing imo is the capital gain of the property and nothing else, but even that can sometimes seem like not worth it if you get a really bad tenant, some know just how to play the system.

 

But if it works for you I am pleased for you

[SPC Trees]

Technically it isn't.............. if the property prices went down by 25%, you would now be paying a mortgage on £160k for a house worth £120k. That's negative equity but that will never happen will it? With a BoE interest rate of 0.5%, what do you think?

 

It would only be yours if you sold the house and paid off your mortgage and outstanding tax etc bills.

 

Same as shares, if you don't cash your gains and the stocks fall, you have nothing but current value and possible future gains.

 

Spud,

 

Yes you're spot on I was only giving a simple example without all the nitty gritty and as you say if I wanted out now then we're quids in. Always going to be risk with any investment I was just trying to let people know that property is a hidden gem if you have the initial deposit. All the stories in the press are stories to make money... 'House prices sky rocketing' or 'House prices plummeting'...! Drives me mad.

 

Anyway I'm done with this one :-) Good day all....

[spudulike]

Interesting Spud, thats about 8% average per annum, can i asked you what promted the surge in the last two years, are you in individual shares or funds, cheers.

 

ISAs and investment trusts, UK mid size companies and North American small - mid size companies, all funds, less risk that way.

 

It is just the way the markets go, shares had stagnated for a long time before this period making them a good purchasing prospect, funds and companies get undervalued and then people wake up to them again thinking they may be a good investment.

 

I would imagine the US housing market had turned to crap and that may have been a big influencer but if you look at history, growth rarely happens at a linear rate, you go through periods of flat lining and then big growth and then a "correction" which isn't so pleasant:thumbdown:

 

There has been plenty on the news about the US economy and have personally, always had UK funds as a good foundation to my plan!

[carpenter1]

I went the property route, with my father,

50% each, and no mortgage

We bought if from a probate case. It needed work, once its finished it will go on the market.

Thought about keeping it, but do not want the hassle of tenents.

[Richard 1234]

I think property depends on how much you buy for in the first place. If it a £30k house then rent is going to be cheap and the tenants may not be brilliant, if you have a place to rent for £1000 per month then you should in theory have less problems( doctors on 2 year contracts etc) but it's always going to be a risk.

If you don't want risk risk leave it in a current/savings account losing money(inflation wise)

Or better still buy something nice with it!!