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Tim D
Posted: 13 March 2021 00:53:55(UTC)
#23

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Re Newbie's and NMKC's posts above...

Indeed I think this is responsible for much of ordinary folks fascination with property and BTL... the fact that mere mortals can get access to leverage. And if you want to get rich, leverage helps enormously. Of course it's not without risk... e.g an old school chum was bankrupted back in the late 1980s/early 90s when they they overextended themselves attempting to grow a property empire. What did them in was the last significant episode of falling house prices and "negative equity"; but for now the "everything bubble" floats everything ever upwards.

Once you have enough in liquid assets to secure property-sized purchases on your portfolio, some interesting things become possible with margin loans. The blogger "FireVLondon" has had quite a lot to say on this topic. See e.g https://firevlondon.com/...ars-of-the-margin-loan/ but it's a recurring topic with them.
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Newbie on 13/03/2021(UTC), Steve U on 15/03/2021(UTC)
Mat1
Posted: 13 March 2021 00:58:57(UTC)
#24

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It’s actually very difficult to overleverage with traditional BTL these days. Affordability is usually stress tested to around 6.5% so you have a big margin for rates to rise or rents to fall. I believe my BTL mortgages are both under 2%.

The real danger today is people getting caught out by tax changes.

BTL is more hassle but I know of no other method to get hold of leverage so cheaply.
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Tim D on 13/03/2021(UTC), Logic Prophets on 13/03/2021(UTC)
Bulldog Drummond
Posted: 14 March 2021 12:37:06(UTC)
#25

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That leverage can work both ways. A lot of people were in negative equity in the 1990s and there were many defaults. Over-gearing at the wrong point in the cycle has also led to any number of property companies going bust in the past.
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Tim D on 14/03/2021(UTC), Logic Prophets on 15/03/2021(UTC)
New Simon T
Posted: 14 March 2021 12:50:43(UTC)
#26

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A lot of our friends in the local pub have BTLs for their future pension income - none of them that I know off have SIPPs etc

The good thing about it is they are all useful with their hands: builders, roofers, plumbers, bricklayers, painter and decorators, engineers (useful for when the plumbers need help with something really technical)

So any maintenance problems or servicing on their houses is agreed during the Sunday lunch session

There is only one person I know that isn't good with his hands who has quite a few properties and that is a City Banker (lives in a big farmhouse down the road) - but he is also on the Sunday lunch sessions

For me - I am useless with my hands - so I wouldn't touch BTL

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Tim D on 14/03/2021(UTC), NoMoreKickingCans on 14/03/2021(UTC), Logic Prophets on 15/03/2021(UTC)
Bitter Scot
Posted: 14 March 2021 13:01:47(UTC)
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Mat1;158950 wrote:
NoMoreKickingCans;158936 wrote:
Compare with TRY...

Price 10 years ago about 180p, Price now 380p - capital gain 111% (tax free in ISA)
Income estimate at 3%*10*250= 75p or 41%
Total gain over 10 years = 152%

So we invest 150k, 10k of our own capital and 140k borrowed at 5% interest...
Gain = 225k ish
Costs = 140k*5%*10 = 70k



Good luck getting an interest only, unsecured loan for £150k to invest in REITs. If you have a source please let us know.


IG or similar? IG has margin requirement of 25%, and of course you may get margin called... But is unsecured, relatively low interest....
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Mat1 on 10/09/2021(UTC)
Mat1
Posted: 15 March 2021 00:25:56(UTC)
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Bitter Scot;159200 wrote:


IG or similar? IG has margin requirement of 25%, and of course you may get margin called... But is unsecured, relatively low interest....


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Hans Seidel
Posted: 24 September 2021 01:37:04(UTC)
#30

Joined: 07/09/2021(UTC)
Posts: 26
Rental properties are one of the most common ways to create real estate passive income. Investors who play their cards properly may generate a consistent stream of cash from rental income while simultaneously improving the property and building equity.
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