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Here ya go.  5BR house on Worrin Road in Brentwood that's up for both sale and rent (always helpful when you can compare them on the same house obviously).

You can rent it for £2,950 per month or buy it for £950k.

Good way to figure out if this makes sense: Divide the annual rent by the interest rate, and adjust the interest rate up (thus the price down) to take into account maintenance, insurance, taxes, etc.

P = (RPCM*12)/i

Actual interest alone is going to run you more than 4%, but even assuming 4% the house is only worth £885k.

At 6% -- typically thought of as a good sort of indifference point between buying and renting -- the house is only worth £590k.  At 9% -- a good point to say, "Okay, time to buy before I miss my chance" -- the house is only worth £393k.

That house can't even fetch enough in rent to cover the interest payment, let alone principal and cost of ownership.

Here's another for rent at £900/month.  One next to it is selling for £215k.  At 5% interest, it's about spot on.  On a fairly generous 7% assumption, it should go for £155k.  At 9%, £120k.

That's similar to the math on Mig's place in Leyton.  It's less bubblicious than the 5BR, but still quite bad.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 1st, 2011 at 07:54:07 AM EST
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