Property leverage levels

[sidewayz]

Afternoon all

When investing in property for short term letting what level of leverage would you consider acceptable?
Maxing out makes sense in a rising market,but if the market is falling people who have maxed out their leverage have become unstuck.

On the other hand prices are lower now than before so it may make sense to leverage high?

Appreciate your thoughts.

[anonymous-user]

for me, it depends

I would be happy with higher leverage on multiple properties than on a single one.

I would be happier with higher leverage if the tenant was on a long term contract and had a strong covenant

I would be happier with higher leverage if the associated debt was on fixed terms rather than floating

Right now, I would be uncomfortable at much over 60% loan to value and wouldn't like 70% loan to value

[auditt]

Many lenders are requesting high deposits i feel this is because they feel another turnaround in the market and want to safe guard there loan/s

[sidewayz]

Thank you both! Makes eminent sense to me, I may have been over cautious at 50% then!
New to this game.

[anonymous-user]

Are you American OP?

[sidewayz]

Nope
Why the question?

[anonymous-user]

sidewayz said:

Thank you both! Makes eminent sense to me, I may have been over cautious at 50% then!
New to this game.

maybe, maybe not. leverage = risk and, in some cases lower risk is appropriate

my residential portfolio currently has a shade under 30% LTV debt. I have sufficient cash at hand to settle that entirely and I have no immediate plans to increase it: short term tenancies, falling market values, etc.

on the commercial side I am less cautious and have 51% LTV based on last valuations; the covenants of my tenants are stronger and leases are all longer than the term of the associated loan. If the right thing came up for sale at the right price, I would increase leverage to 60 or 65% to buy it.

[sidewayz]

Thank you that is also very helpful? Its a difficult balance to get right as , inevitably, it depends on the ability to predict future market moves and I have zero direct experience at this time. For me I don't think we have seen the end of the fall in values,even in London which is where I am based and claims to be a market to itself.