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Maths of buying vs renting, which is cheaper?


AlfredTheLittle

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On 27/07/2021 at 16:10, haroldshand said:

A few things..

I have had a handful of properties in my life and always sold at a good profit, though I was never looking for financial gains. I am renting now and have a great deal in a Village where I would struggle to buy now, but the worst house in the Village I live now is a great life.

My thoughts, I priced up a job in Cambridge recently that was ex council and looked a bit of a dump, the owner told me it was valued at £500,000, my jaw hit the floor. Even if I have the money I am not wasting it on shit like that and would sooner head for Portugal.

And should I ever be in a position in 10 years time and before retirement and still renting I will swap from being 100% self sufficient and never on welfare to becoming close to 100% a burden on society and getting my rent paid with my wealth "spread" shall we say.

Your just resting in between jobs or getting your tax back .I’ve zero interest in renting ever again .wait till electric cars become more common your rented gaff will rocket if it has off road parking 

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12 hours ago, 23rdian said:

Renting wouldn't be as bad if it wasn't for the Landlords all being cunts.

Renting wouldn't be a problem if the vast majority of landlords weren't penny pinching amateurs..

Renting really should have been left to pension firms building and managing build to rent blocks of flats. 

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sancho panza
4 minutes ago, eek said:

Renting wouldn't be a problem if the vast majority of landlords weren't penny pinching amateurs..

Renting really should have been left to pension firms building and managing build to rent blocks of flats. 

I msut say,have to agree.It's the demogrpahic that does it mainly-90%-over 50's/view tenants as losers rather than customers/tend to own one or two hosues-it's all in that UK Govt assets paper I often post.

It doesn't help that for a lot of tehm,they're not that well financed and are working off gross yields of 3% before costs/taxes.......with cost inflation running at circa 4%....whcih sort of explains why they're prone to buy the cheapest toilet seats they can source without thinking that the customer may jsut turn around at the end of the tenancy,deny viewings and give them a void.

We have a few years left renting,thankfully I've got the cash for a solicitor and I've generally found these LL's get wise  when faced with some £200 an hour bills.

Thw whole sector needs reform incl regulating the LA's properly.

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sancho panza
On 02/08/2021 at 17:04, With a crooked smile said:

What we also see a bit of up here is smaller bnbs that aren't so nice might have a 3 rooms for tourists and another 2 long term let's for workers (often EE). 

I guess the long termers provide a steady albeit lower income. Also you find the older BnB owners are often winding down and want to take it a bit easier. 

 

What's the industry of BnB's like tehse days.

 

With 11 rooms that a pretty serious operation.I used to always use small B&B's until a bad expereince at Stratford. 5/6 years ago.

I'd imagine teh old  Mom and Pop 3-5 bed operations are struggling these days as bookings have moved online.I remember in 08 the carnage that occurred in places like Blackpool.

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With a crooked smile
1 hour ago, sancho panza said:

What's the industry of BnB's like tehse days.

 

With 11 rooms that a pretty serious operation.I used to always use small B&B's until a bad expereince at Stratford. 5/6 years ago.

I'd imagine teh old  Mom and Pop 3-5 bed operations are struggling these days as bookings have moved online.I remember in 08 the carnage that occurred in places like Blackpool.

We're flat out nearly all rooms booked all the time. We always do 2 night minimum. 

Some are shifting to holiday appartments

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Frank Hovis
2 hours ago, eek said:

Renting wouldn't be a problem if the vast majority of landlords weren't penny pinching amateurs..

Renting really should have been left to pension firms building and managing build to rent blocks of flats. 

Yep.

In the South East there are Housing Association owned blocks of market rent flats; as these are run for profit they are in subsidiary companies.

To me that's the ideal housing; or would be if they did similar for houses in the SW.

You have a responsible landlord working to high standards and charging you a fair market rent backed up by a rents policy.

If such an option were available it's very likely that I would have gone that way; investing the money that I would have used to buy a house to provide the rental payments.

They then paint the exterior on a regular basis and mend anything that breaks including the roof; all covered by the rent. And they arrange the work - no trying to get a tradesman to deign to come out.

It's the nearest to hassle free housing that you can get bar living full time in a Premier Inn or going into a retirement flat.

 

Tbf my landlords were good but I think that I was fortunate in that.

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With a crooked smile
7 hours ago, sancho panza said:

With 11 rooms that a pretty serious operation

Sent you a photo via private message. The place definitely has kerb appeal, definitely something you need in the days of Internet bookings. 

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sancho panza
6 hours ago, With a crooked smile said:

Sent you a photo via private message. The place definitely has kerb appeal, definitely something you need in the days of Internet bookings. 

Much appreciated.

I've been fascnaited by the way your game has changed over the years.I remember my Dad visitng Leicester 25 years ago and there was a choice of a few B&B's and a couple of hotels in South Leicester unless you went to the city centre where The Grand was situated.

Now,I can't think of a B&B left and of the two hotels near us,one went under many years ago and the other scrapes by(I looked at it when we got married but the rooms hadn't been touched in years and it was very early/mid 20th century so the rooms were tiny because they'd crammed en suites in them).

Of the ones in the centre from that era,The Grand(lolz) is still a beautiful building but it makes most of it's revenues currently hosuing asylum seekers.It's plonk in the city centre and the business demand has shrunk over time to nothing.

Obviously,since the 90's Travelodge and Premier Inn have come in along with the internet andnhave snatched a lot fo the business.

Reason I write this is that I'd be interested in your perspective on  a few questions if you have the time:

1)whether small B&B's/independent hotels can compete in the large urban areas or do they owners need  to find areas that the chains aren't interested in?

2) is the future apartment lets,especially given how much less hassle it msut be not to have to provide cooked food?

3) can small B&B's survive(by small I mean sub 5 rooms) even if they're tech savvy and use the booking.com sites

4) is it possible for a new entrant using a commercially sourced mortgage to actually enter the market or do you need to have pre existing equity to make a living at it(not interested myself but I'm thinking more from the perspective of potentially being able to sell the business on)? Obviously,if you have no mortgage then life is good but for many a loan will be needed.

5) have the big hotel chains made it virtually impossible for average business people to make it in the trade as independents?IS the reality that only the switched on can survive against th big boys?

6) how often do you have to update/decorate the rooms to keep them fresh?

 

writing this has made me google hotels LE2 and I'd forgotten about the following one calle d The Croft,can't believe it's still in business.Reviews are laughable.I did put my Dad there once and he(being a highly paid oil company lawyer) was taken aback even 20 years back they were still in business.

https://www.google.com/maps/place/Croft+Hotel/@52.6227479,-1.1302241,14z/data=!4m11!1m2!2m1!1shotels+le2!3m7!1s0x48776137f705f6f3:0xb4bbadbcd69f6e1a!5m2!4m1!1i2!9m1!1b1!15sCgpob3RlbHMgbGUykgEFaG90ZWw

Leicester is now dominated by the big chains.Didnt realsie how much so.

 

No pressure to answer,but I hear a lot of people in my life say 'oh,I'll retire and run a B&B/restaruant'  etc etc and yet,I can't think of anything harder than runnign B&B/restaruatn unless I'm msitaken

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I rented a bedsit from a retired guy who was a great landlord. Impressive house in a small oasis of des res houses.

Moved in 1991, rent was £26 a week. When council tax came in, he paid the CT as one dwelling, (it was 6 bedsits,) and added £2 a week to everyones rent. Rent was £28 a week when I moved out in 1997.

He owned a similar house of bedsits a few doors down and he lived in a large bungalow opposite. He could have made much more money having bedsits in a rough area but he preferred an easy life.

People who get into lots of debt to become LLs have found themselves becoming people farmers who themselves are being farmed by the banks.

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10 hours ago, sancho panza said:

No pressure to answer,but I hear a lot of people in my life say 'oh,I'll retire and run a B&B/restaruant'  etc etc and yet,I can't think of anything harder than runnign B&B/restaruatn unless I'm msitaken

a pub would be harder because there isn't any escape... At least B&Bs have some downtime during the day and a Restaurant can close early on a quiet night.

Most pubs need to stay open for the regular(s) who arrive at 10pm for 1 or 2. 

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With a crooked smile

@sancho panza

I mainly know about ruralish areas but willdo my best to be honest

1)whether small B&B's/independent hotels can compete in the large urban areas or do they owners need  to find areas that the chains aren't interested in?

100% they can compete they just need to know there customers – look at Brighton they have a Premier Inn and a Travelodge plus loads of boutique places which would your other half prefer to stay in?

Travel Lodge and Premiere Inn do their jobs very well but they aren’t for everyone

 

2) is the future apartment lets,especially given how much less hassle it msut be not to have to provide cooked food?

Possibly lots seem to be going in that direction – when I was looking to buy tho and looked at the books b&bs generally made far more – you get out what you put in.

I’d also add my other half owns a flat in Brighton this was a holiday let and we were very early adopters of Airbnb – when you could make loads. We took it off Airbnb just before covid and its now a standard rental the margin wasn’t worth the effort in the end.

 

3) can small B&B's survive(by small I mean sub 5 rooms) even if they're tech savvy and use the booking.com sites

Even tho most are below VAT threshold, these are generally sold as “lifestyle” opportunities or pension top ups. Your competition is probably someone with a spare room on Airbnb who pays no tax and doesn’t follow the minimal rules.

4) is it possible for a new entrant using a commercially sourced mortgage to actually enter the market or do you need to have pre existing equity to make a living at it(not interested myself but I'm thinking more from the perspective of potentially being able to sell the business on)? Obviously,if you have no mortgage then life is good but for many a loan will be needed.

Current requirements for commercial lending is 50% LTV

5) have the big hotel chains made it virtually impossible for average business people to make it in the trade as independents?IS the reality that only the switched on can survive against th big boys?

No you just need to offer something different and know your customers. I doubt big hotels generally have gun safes or allow dogs – I know hotels that do and they make a lot from their market.

6) how often do you have to update/decorate the rooms to keep them fresh?

Most people do a 3-4 year cycle so 25% -33% a year

 

Sorry for brevity long day

 

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sancho panza
1 hour ago, With a crooked smile said:

@sancho panza

I mainly know about ruralish areas but willdo my best to be honest

1)whether small B&B's/independent hotels can compete in the large urban areas or do they owners need  to find areas that the chains aren't interested in?

100% they can compete they just need to know there customers – look at Brighton they have a Premier Inn and a Travelodge plus loads of boutique places which would your other half prefer to stay in?

Travel Lodge and Premiere Inn do their jobs very well but they aren’t for everyone

 

2) is the future apartment lets,especially given how much less hassle it msut be not to have to provide cooked food?

Possibly lots seem to be going in that direction – when I was looking to buy tho and looked at the books b&bs generally made far more – you get out what you put in.

I’d also add my other half owns a flat in Brighton this was a holiday let and we were very early adopters of Airbnb – when you could make loads. We took it off Airbnb just before covid and its now a standard rental the margin wasn’t worth the effort in the end.

 

3) can small B&B's survive(by small I mean sub 5 rooms) even if they're tech savvy and use the booking.com sites

Even tho most are below VAT threshold, these are generally sold as “lifestyle” opportunities or pension top ups. Your competition is probably someone with a spare room on Airbnb who pays no tax and doesn’t follow the minimal rules.

4) is it possible for a new entrant using a commercially sourced mortgage to actually enter the market or do you need to have pre existing equity to make a living at it(not interested myself but I'm thinking more from the perspective of potentially being able to sell the business on)? Obviously,if you have no mortgage then life is good but for many a loan will be needed.

Current requirements for commercial lending is 50% LTV

5) have the big hotel chains made it virtually impossible for average business people to make it in the trade as independents?IS the reality that only the switched on can survive against th big boys?

No you just need to offer something different and know your customers. I doubt big hotels generally have gun safes or allow dogs – I know hotels that do and they make a lot from their market.

6) how often do you have to update/decorate the rooms to keep them fresh?

Most people do a 3-4 year cycle so 25% -33% a year

 

Sorry for brevity long day

 

No worries.Thanks for answering.Fascinating insights thank you very much.

I hadn't thought about the niche markets like pets/guns which could be huge and once they've been will likely come back.

 

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Years ago I was told of a rural Welsh B&B that had a unique selling point. The guy had an auto repair garage attached to his wife's B&B. Book the B&B plus a service for your car. The bill for both would come to bit less than having the car serviced in a city.

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