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Do Renters Die Poor?

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When houses are going for 25, 20, 15k I'd just buy it for cash, even if I borrowed off family and paid it back xx amount per month.

 

This is what my Dad did when he bought his first house. Mortgages (late 1960s) were really hard to get.

Yes. There's no interest rate risk that way.

A nice simple transaction:

 

A small amount of capital is lost, but that relieves the future need to pat rents.

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Yes. There's no interest rate risk that way.

A nice simple transaction:

 

A small amount of capital is lost, but that relieves the future need to pat rents.

I think my Dad paid my uncle 5% interest on the cash, but only as as a settlement on the last but one amount. So my uncle got a 5% capital depreciation compensation at the end of the loan.

 

However the final settlement, is usually given in goods or something of value and not cash.

 

So it's pay the interest on the whole loan at the last but one payment and then pay the last payment in something else of value.

 

I'll have to ask him what the goods were.

 

I'm sure he told me years ago it was a small quantity of gold and silver (?).

 

Again this is an old Welsh tradition, which has all but died out now.

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With the example a few posts ago of the 15k house in Barrow on Humber (north Lincolnshire, England, UK), the house price is about 1.4 times minimum wage (1.4 times the lowest full-time single possible wage).

 

Even if you bought it on a mortgage and paid the full 15k (probably get it for less).

 

Say got a 20k mortgage and put 5k into refurb etc. Rates would have to rise to above 10% before buying the house was less economical than renting it (all things equal and considered).

 

Like I say, at what point does a renter think 'why don't I just buy a house?'.

 

The 15k house scenario - Likely Rent approx 80 uk pounds per week?

320 + per month? Call it 350 per month inc excess days.

 

Mortgage - 15k, 5 year repayment mortgage

 

@ 5% interest rates: Per Month

288.71 (repayment mortgage @ 5%)

62.50 (interest only " ") (You read that right 62.50 per month)

 

@ 10% Interest Rate

 

329.74 per month (repayment mortgage @10%)

125 (Interest Only @10%)

 

@ 12% Interest Rates Figures are:

 

346.76 (repayment mortgage @12%)

150 (int only mortgage @12%)

 

20k Mortgage 5 year repayment at 10% equals:

 

15k house + 5k for limited refurb

 

439.66 per month (repayment mort @10%)

166.68 (int only " ")

 

@12% interest rates: Per Month

462.34 (repay mort 12%)

200 (int only " ")

 

Capital Gains - Doubtful

 

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I've decided to resurrect this thread. With conditions. So Let's clarify them:

 

To avoid any flummery about definitions, here's a few for your benefit:

 

An Asset - A possession etc that produces more income than it costs to upkeep.

 

With regard to Rental Properties, this means it 'washes it's own face'.

 

(I reject the accountancy definition of an asset being anything of 'worth' or 'value'.

'Worth' is a subjective thing. A possession has to be sold in order to produce capital. Therefore it is not an 'Asset' until it is sold).

 

Your own home is NOT an Asset. Unless it produces an income greater than it costs to maintain it. Most homes do not qualify.

 

Buying Rental Properties - Ideally your yield would be AT LEAST 12 percent after all deductions including management fees.

 

Management of Properties - You would be paying a bona fide agency to handle the day-to-day running of your properties. You just collect the cheques.

 

This avoid all those daft nonsense discussions about 'the work that has to go into being a landlord' - there should be very little.

 

Previously we discussed 'Do Renter's Die Poor'.

 

I'm NOT talking about you who Sold-To-Let a few years ago. Because you were varying degrees of smart.

GEI is a place of information that is esoteric to most 'everyday people' (Bear that in mind).

 

Rather I'm talking about Mr 'Man in the Street' who doesn't know any better, yet.

 

We were discussing the psychological aspect of why people rent as opposed to buying?

 

And Why they would continue to rent in a place that has 'really cheap houses'?

 

So cheap in fact that it was 'easily recognisable' that it was cheaper to buy than to rent there.

 

The proviso was that you the renter would:

 

A) - Have a job, even of the minimum wage variety

 

B) - Could pay a very small mortgage easily, even if on a very low (minimum) wage

 

C) - Had decided to stay there

 

D) - May be aware of any potential 'problems' (Socio-Economic etc) that the town etc could face

 

Finally we discussed two aspects:

 

1) Buy to Live. As in buying a cheap house in your community for the sake of shelter, family, solidity

 

- Whether it is (bearing in mind the above) better to buy there than Rent

 

2) Buy to Let. As in from a yield point of view. Are any of these really cheap houses worth buying?

 

(Bearing in mind those 'really cheap houses' probably won't have any gains in value/ price. They may become 'worthless')

 

So - Please Note - I'll be posting links to 'Really Cheap Houses' and seeing how low they go in certain communities. This is as much out of curiousity as anything. I'll use Zoopla more than others. They often show the past selling prices of the property. So you can see the difference between the then and now.

 

There was a tendency to focus on the Colne Valley in Lancashire (Nelson, Burnley etc). As it has a lot of terraced 2 up - 2 downs. They go for 25k, 20k, or less.

 

However I'll also be posting other cheapies in other places. If you want to do the same please do so.

 

One last thing. If you are going to post please make your statements clear. And provide some kind of evidence, point of view.

 

Please refrain from the following:

 

- Moralising about buying Property (for whatever purpose).

 

These are just either places to live. Or potential investments just like a stock, a bond etc.

 

- Also I'd like to keep any snobbery out of it.

 

I'm not interested in whether you would deign to live in such places.

 

Rather I'd love to know your SOLUTIONS as how you would make such places (the houses, the towns etc) better.

 

So posting 'A Nuclear War' whilst witty, wouldn't pass muster. Know what I mean?

 

Finally remember this. Some of our discussion has been about 'transition-towns'. As in where to live that has the following:

 

- Good to Excellent Travel links and mass transit

- Compact towns and cities that are walkable

- Towns and Cities that COULD POTENTIALLY attract new business, small-scale manufacturing, Agric and other entrepreneurial ventures etc

 

So if I end up talking to myself that's fine. Onwards, Upwards...

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I've decided to resurrect this thread. With conditions. So Let's clarify them:

 

To avoid any flummery about definitions, here's a few for your benefit:

 

An Asset - A possession etc that produces more income than it costs to upkeep.

 

With regard to Rental Properties, this means it 'washes it's own face'.

 

(I reject the accountancy definition of an asset being anything of 'worth' or 'value'.

'Worth' is a subjective thing. A possession has to be sold in order to produce capital. Therefore it is not an 'Asset' until it is sold).

 

Your own home is NOT an Asset. Unless it produces an income greater than it costs to maintain it. Most homes do not qualify.

 

Buying Rental Properties - Ideally your yield would be AT LEAST 12 percent after all deductions including management fees.

 

Management of Properties - You would be paying a bona fide agency to handle the day-to-day running of your properties. You just collect the cheques.

 

This avoid all those daft nonsense discussions about 'the work that has to go into being a landlord' - there should be very little.

 

Previously we discussed 'Do Renter's Die Poor'.

 

I'm NOT talking about you who Sold-To-Let a few years ago. Because you were varying degrees of smart.

GEI is a place of information that is esoteric to most 'everyday people' (Bear that in mind).

 

Rather I'm talking about Mr 'Man in the Street' who doesn't know any better, yet.

 

We were discussing the psychological aspect of why people rent as opposed to buying?

 

And Why they would continue to rent in a place that has 'really cheap houses'?

 

So cheap in fact that it was 'easily recognisable' that it was cheaper to buy than to rent there.

 

The proviso was that you the renter would:

 

A) - Have a job, even of the minimum wage variety

 

B ) - Could pay a very small mortgage easily, even if on a very low (minimum) wage

 

C) - Had decided to stay there

 

D) - May be aware of any potential 'problems' (Socio-Economic etc) that the town etc could face

 

Finally we discussed two aspects:

 

1) Buy to Live. As in buying a cheap house in your community for the sake of shelter, family, solidity

 

- Whether it is (bearing in mind the above) better to buy there than Rent

 

2) Buy to Let. As in from a yield point of view. Are any of these really cheap houses worth buying?

 

(Bearing in mind those 'really cheap houses' probably won't have any gains in value/ price. They may become 'worthless')

 

So - Please Note - I'll be posting links to 'Really Cheap Houses' and seeing how low they go in certain communities. This is as much out of curiousity as anything. I'll use Zoopla more than others. They often show the past selling prices of the property. So you can see the difference between the then and now.

 

There was a tendency to focus on the Colne Valley in Lancashire (Nelson, Burnley etc). As it has a lot of terraced 2 up - 2 downs. They go for 25k, 20k, or less.

 

However I'll also be posting other cheapies in other places. If you want to do the same please do so.

 

One last thing. If you are going to post please make your statements clear. And provide some kind of evidence, point of view.

 

Please refrain from the following:

 

- Moralising about buying Property (for whatever purpose).

 

These are just either places to live. Or potential investments just like a stock, a bond etc.

 

- Also I'd like to keep any snobbery out of it.

 

I'm not interested in whether you would deign to live in such places.

 

Rather I'd love to know your SOLUTIONS as how you would make such places (the houses, the towns etc) better.

 

So posting 'A Nuclear War' whilst witty, wouldn't pass muster. Know what I mean?

 

Finally remember this. Some of our discussion has been about 'transition-towns'. As in where to live that has the following:

 

- Good to Excellent Travel links and mass transit

- Compact towns and cities that are walkable

- Towns and Cities that COULD POTENTIALLY attract new business, small-scale manufacturing, Agric and other entrepreneurial ventures etc

 

So if I end up talking to myself that's fine. Onwards, Upwards...

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Here's the first property for consideration near Bishop Auckland, County Durham in the North-East of England.

 

Standard sale not an auction.

 

19.5 k 2 up 2 down terraced. No back garden, but does have a yard and an outhouse that could potentially be used as a workshop for creating products, or an office for your business.

 

The place looks nice. The decor is fine.

 

http://www.zoopla.co.uk/for-sale/details/14755713?search_identifier=c441235e01e5d9fde07e9b693e64365e

 

Pluses:

 

Approx 1.5 miles from the central railway station and other transport links at Bishop Auckland.

 

There's an enterprise park about a mile from the house.

 

Each of those existing businesses needs some kind of goods, products and services.

 

And could potentially do joint ventures with your business if you have one or were starting one.

 

The house is in good decor and is nicely, simply decorated. Would make somebody a nice home.

 

Small community though nearer bigger towns like Bishop Auckland.

 

Hartlepool, Stockton and Middlesborough are all within 30 miles for larger excursions.

 

Depending on the price of petrol and your income, commuting may be possible via car or bus to said places.

 

Commuiting may also be possible by local train services depending on price.

 

Some beautiful countryside very nearby. You can be in the Pennines within a 10 minute drive. Places like Teesdale, Cowgill etc are only twenty or so miles away (exceptionally beautiful).

 

The north-east coast is 20 minutes away by car.

 

Minuses:

 

You would have to be very entrepreneurial and quickly suss 'the lie of the land'. (This is a plus and a minus) as

 

Work wise there are some specialist light manufacturing and other businesses in the area. But unemployment for standard jobs is high.

 

Places that are prospering nearby are mainly university and learning centres such as Durham.

 

Heavy and light industry remains the mainstay of the larger places such as Middlesborough, Stockon, Hartlepool etc.

 

-----------------------------------------------------------------------------

 

Here's another property in the same area about five miles away in Ferryhill.

 

True that community will probably only get smaller in the years to come.

 

This is an auction from 10k (yes starting at 10, 000 pounds).

 

Will it make its marker or even above - who knows.

 

Look at the price it sold for in July 2006 - 42,500k

 

The starter price at auction is a drop of 300 % BELOW the last sale price!

 

Does this mean it's a bargain? Depends why you were buying it.

 

If you were buying to let, then I doubt if you'll get many tenants.

 

Surely most will be housing benefit recipients?

 

Although the yield to price would be well into 12 to 16% range.

 

However if you were buying to live. 10 or even 20k is a bargain compared to your wages.

 

1 to 1.5 times even the minimum wage. You would surely be tempted to purchase for cash, eif you are working.

 

Maybe even if you borrowed from family with an agreed time payback plus interest??

 

http://www.zoopla.co.uk/for-sale/details/15204913?search_identifier=c441235e01e5d9fde07e9b693e64365e

 

More later....

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Here's the first property for consideration near Bishop Auckland, County Durham in the North-East of England.

 

Standard sale not an auction.

 

19.5 k 2 up 2 down terraced. No back garden, but does have a yard and an outhouse that could potentially be used as a workshop for creating products, or an office for your business.

 

The place looks nice. The decor is fine.

 

http://www.zoopla.co.uk/for-sale/details/14755713?search_identifier=c441235e01e5d9fde07e9b693e64365e

 

Pluses:

 

Approx 1.5 miles from the central railway station and other transport links at Bishop Auckland.

 

There's an enterprise park about a mile from the house.

 

Each of those existing businesses needs some kind of goods, products and services.

 

And could potentially do joint ventures with your business if you have one or were starting one.

Interesting.

 

I am going to put a link on the "Guide to Frugal Living" thread:

http://www.greenenergyinvestors.com/index.php?showtopic=15354

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Interesting.

 

I am going to put a link on the "Guide to Frugal Living" thread:

http://www.greenenergyinvestors.com/index.php?showtopic=15354

 

Here's my next one.

 

Burnley, Colne Valley, Lancashire offers over 25k

 

http://www.zoopla.co.uk/for-sale/details/15281426?search_identifier=39efec1347353f2de5b4c9c124a8ea6f

 

Quite a nice house. 1 mile away from 3 seperate railway stations.

 

Half a mile from the central shopping centre.

 

Football hooligan? Only half a mile from the Turf Moor football ground.

 

Only a paved yard at rear.

 

They reduced the price by 5k in just one month on the market, so would probably again.

 

As I say this one's well looked after.

 

I wonder what you'll be able to pick these 2up 2downs for in places like Burnley or county durham in a couple of years time?

 

I also wonder what is being done to boost the Colne Valley's economic fortunes?

 

Or is it in terminal decline?

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Mabon Estates is proud to present this 2 bedder in Shilden, County Durham.

 

Up for auction. Bids start at 20k.

 

In reasonable condition. Kitchen's a bit wierd sort of like going in to the starship enterprises's toilet block...

 

Opportunities locally?

 

Business park nearby possible leverage for goods and services.

 

Railway station Shilden is 500 yards away. Again near Bishop Auckland which seesm to be ground zero of the declining house market in the north-east o' england.

 

http://www.zoopla.co.uk/for-sale/details/15447230?search_identifier=cc7e311f2f743bc72aa1b7c8c5e039e3

 

I wonder what the future holds for such places whether they will be abandoned as settlements for dust and days?

 

Or will they experience some sort of mini-renaissance? I mean the houses are pretty cheap and you definitely get them cheaper too.

 

More later.

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A 2-Bedder in Trimdon Colliery, County Durham

 

On for 29,950 currently.

 

Last sale on 21st July 2001 was 25, 600k

 

Decent house. All new kitchen.

 

No back garden, just a small yard.

 

Opportunities locally?

 

http://www.zoopla.co.uk/for-sale/details/15380225?search_identifier=8ef3933421cc67085676fa713888179c

 

Durham 6 miles away...

 

I often wonder where th eowners go?

 

The house is empty. It's had some work done to it.

 

I mean it's a decent home. Ignore the decor, not to my taste.

 

Again, what future for small ex-mining communities like these?

 

There are hundreds of thousands of empty properties in the UK.

 

However most of them tend to be in places where people either can't afford to be (from a jobs perspective).

 

Or don't want to be.

 

The north sea coast is 5 miles away at Peterlee. Some beautiful country to the west too.

 

Nearest railways? Durham, Hartlepool??

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There was an article on this topic in DER SPIEGEL recently. People remarked that renters might save less but have better lives as they spend their money and have fun, rather than starving themselves to pay off the mortgage and then pass on a huge amount of money (in the form of a house) to some nephew of 2nd degree when they croak. So, maybe richer in monetary terms, but poorer in life experience and satisfaction? Just a thought... (and a German perspective as renting is a much better thing in Germany than in the UK).

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There was an article on this topic in DER SPIEGEL recently. People remarked that renters might save less but have better lives as they spend their money and have fun, rather than starving themselves to pay off the mortgage and then pass on a huge amount of money (in the form of a house) to some nephew of 2nd degree when they croak. So, maybe richer in monetary terms, but poorer in life experience and satisfaction? Just a thought... (and a German perspective as renting is a much better thing in Germany than in the UK).

 

I must admit that is something I have given alot of thought to and I plan to cash in my chips so to speak and rent to enable an early retirement although I am aware it's easy to put it off and put it off only to find events have overtaken you.

 

I don't mind dying poor.... In fact...That is the plan :D

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Ah, but if you own your own property WITHOUT a mortgage, your monthly living cost can be much lower.

 

Effectively, your RETURN on capital invested is A PLACE TO LIVE, and it is mostly taxfree

 

If you invest the money, you have to pay tax on the (meagre) returns

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Ah, but if you own your own property WITHOUT a mortgage, your monthly living cost can be much lower.

 

Effectively, your RETURN on capital invested is A PLACE TO LIVE, and it is mostly taxfree

 

If you invest the money, you have to pay tax on the (meagre) returns

 

I agree the returns are meagre at the moment and despite all the talk of interest rate rises I don't forsee much prospect of them improving in the medium term.

 

However, my intention was to release the equity put it in a tax free isa and use it to fund early retirement in another jurisdiction where the cost of renting is much lower ( possibly Asia ) but it would effectively make me homeless in my own country if I wanted to return for any reason. Of course I did plan to keep aside an escape fund for that eventuality.

 

In a nutshell 10 years living a good life in the sun while I am still fit and active and then back to Blighty to draw my pension and watch daytime tv . The other option would be to stay where I am continue working and enjoy mortgage free living with the associated low costs but spend the winter months in warmer climes. I must say having read this through that does seem the better option of the two ..although I might still like to free up that equity to have it at my disposal rather than give a windfall to someone who doesn't deserve it.

 

Maybe I should find myself a little caravan by the sea for the summer months :)

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I have friends who sold their property in Chiswick, paid off their mortgage,

and had more than enough money to buy a larger home in Chichester.

The new home in Chichester cost about half the price of the one they sold.

 

A good move, and one that many boomers will by copying, I expect

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