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All the Perl that's Practical to Extract and Report

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  • The equity factor. Your friend would not just be making money on the rental of the property, but on its potential future value.

    Yes, this is a gamble. But it's why people get into the buy-to-rent game, because it's usually a gamble that pays off very very well (my mum is basing her retirement on it).
    • Yes, this is a gamble.

      Long term I'd expect it to always pay off, on the assumption that people will always need houses to live in. But right now it feels like a big gamble.

      I should have said that I'm aware that people are in this for the expected rise in the price of the property, which you benefit from even on an interest only mortgage. Someone I used to work for was expecting that by the time he retired the properties he owned would have paid off their mortgages, so that most of the rent would now be coming to him as "pension", so I don't think that he was intending to sell to cash in on his gain.

      I'd read that some time ago banks had started stipulating that the rent must cover the mortgage - ie they'd had problems with people borrowing to buy property to rent at a "loss", where the landlord was subsidising the mortgage in the expectation of a payoff through a massive price rise. Which would mean that right now if you don't have your own capital, and don't lie to the bank, it's getting to the point where you won't be able to get a loan.

      What was interesting to us (and my parents and my brother-in-law) - that right now prices have gone up sufficienty and rents down sufficiently that you can no longer enter the market in London and have your property break even.