odecar Posted June 20, 2007 Report Share Posted June 20, 2007 http://business.timesonline.co.uk/tol/busi...icle1942072.ece Another take on Cash squeeze that is hitting people where disposable income is getting hit. Link to comment Share on other sites More sharing options...
J4L Posted June 20, 2007 Report Share Posted June 20, 2007 How very intersting, I think I may hang onto the horses until their value increases and p**s off to China with the 7 pigs I've got in the field outside. 71% increase?? You don't get that on property. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 20, 2007 Report Share Posted June 20, 2007 Marvelous! .................the welly and sailor brigade have finally seen that unless you own a thoroughbred winning race horse or a profit producing charter fleet of boats then these are not actually very good investments , more "consumables" ;at least very consuming items !!......................... Now they may just decide that investment in property is a more viable option giving them a return with which to get the boat and horse back !!!!! So will this encourage then "slump" further, or keep prices stable ? -- and by virtue of more "buying" money in the market-- actually help prices to continue climbing .......................... Simon Link to comment Share on other sites More sharing options...
Melboy Posted June 21, 2007 Report Share Posted June 21, 2007 Couldn't have put it better myself re-the Times article. Like I have said before....Batten down the hatches and keep the cash on deposit......for a while. I live in quite a nice area and when a property comes on the market it is usually snapped up in days or just a few weeks. There are 4 properties for sale at the moment and they have been on the market from 3 weeks to around 3 Months and they have not sold and what is worse, after talking to the owners, no viewings. OK, so it may not be a typical view throughout the Country but it certainly represents a snap-shot view of a situation that is not going to improve in the short-term especially, as yet again, today, we are warned by the BoE that another IR is very imminent. Mel. Link to comment Share on other sites More sharing options...
Reg Posted June 21, 2007 Report Share Posted June 21, 2007 Here's another story for all you doom mongers out there! http://business.guardian.co.uk/story/0,,2107593,00.html Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 21, 2007 Report Share Posted June 21, 2007 So rate steady for month .............. No doubt it will go up next month instead ........just factor all of this into th "equation" -- must go - got a viewing on another prop i am thinking of buying !!!!!!!!!!! Simon Slump ...at the moment i am buying one property per month ! Link to comment Share on other sites More sharing options...
Reg Posted June 21, 2007 Report Share Posted June 21, 2007 The warning bells are ringing, it's up to you if you choose not to listen Link to comment Share on other sites More sharing options...
roppa Posted June 21, 2007 Report Share Posted June 21, 2007 The warning bells are ringing, it's up to you if you choose not to listen personaly, am waiting till the interest rate's go up that extra 1% by the end of 2009 (pesonaly i think it will happen) then there will be a quite large influx of people panic selling to get there money out.. you know, the type that sit and watch that bird that used to be in brookside compleatly renovating a house in "1 hour" and think that it look's easy so they become a property investor and landlord. hundred's if not thousands of these people will panic, the market will be flooded.. and those that where sensible and bought with the veiw of "oh, i better make sure i have a decent margin JUST incase these pesky interest rates go up" will be sitting laughing at the rich picking's of quality properties coming onto the market that they will be able to snap up at 10-15% less than market value cause people are so stupid and paniced that they will sell them ASAP. i had an investor in the office today complaining to me that he had sustained bank charge's on his account... and what he should do about it.. the idiot has let out a property for the "exact" capitial and repayment mortgage repayments he has to make... so when the tenant is only but £1.00 short on the rent... the account goes overdrawn and he get's charged.. he has NO slushfund incase of repairs, he has NO overdraght facility on the account, and the tenant is now complaining over the fact that the landlord promised them that he would renew the extreamly shoddy windows in the property, and are now saying they will withhold the "top-up" payment untill he at least look's at getting them done.. there are litteraly thousands of these "i dont need advise , al go alone" landlords out there... and the more and more the interest rate's go up, the better it is for those that have planned ahead... am not complaining at picking properties up and making 10-15% on the back to back resale to people that will live in the property instead of over eager landlords panic buying anything that they are "told" they will make a decent return on. Link to comment Share on other sites More sharing options...
Pauly Posted June 21, 2007 Report Share Posted June 21, 2007 Yes, I make you right. I've have two buy-to-lets (on repayment mortgages), I'm looking in the future to buy another one, possibly two (on interest only mortgages). I have currently got the money for a deposit(s) sitting in a high interest bank account. I bought the last property two years ago, there's a slim but real chance if interest rates keep going up that this property may in fact decrease by 40% of it's current value. As it's a repayment mortgage and fixed for another 3 years, I aint too fussed because it's a long termer. But in my opinion to buy a new buy-to-let property at the moment when interest rates are still rising and house prices are sky high is foolish and unnecessary. Like Roppa asaid, let the mugs (some greedy, some just plain stupid) crash and burn and the wise bunch can clean up! Link to comment Share on other sites More sharing options...
J4L Posted June 21, 2007 Report Share Posted June 21, 2007 I sorta agree with roppa here that there's going to be an influx of properties soon (already happening here a little) with Landlords selling because they've not built in for IR increases. Like I said before in previous posts, I'm browsing the agents sites and looking for these properties to come along and waiting with my cheque book. I've just snapped one up recently that will give a 20% yield. That should be thropugh next week and then i'll be looking for another. The way I look at it is this haha Link to comment Share on other sites More sharing options...
Melboy Posted June 21, 2007 Report Share Posted June 21, 2007 So rate steady for month .............. No doubt it will go up next month instead ........just factor all of this into th "equation" -- must go - got a viewing on another prop i am thinking of buying !!!!!!!!!!! Simon Slump ...at the moment i am buying one property per month ! Yes, but Simon the price you are paying for property in your location wouldn't buy you a garden shed down here and that is the problem.....in large parts of Southern England the property prices are just too high for anyone to make money on be you a Landlord, Investor, Developer,... it makes no odds. Mel. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 21, 2007 Report Share Posted June 21, 2007 Wow lets all go jump off the nearest bridge.........! Let's be clear here ...I am not advocating "mad" purchases -my posts should be read in conjunction with "all the other posts" i make - People will get burnt, some probably many will loose everything - which is no joke. The savvy amoungst have the good sense not to get invloved in these deals. Reg - the alarm bells have been ringing for 6-7 years (coincidently the same period as i have nuilt my portfolio!) and sure the vast majority of property does not fit investment criteria, and never will. The nieve and plain stupid LL as Roopa has quoted dont stand a chance and would be well advised to stay out of the prop game period. I also watched "seasoned "property professionals do, what to me, were stupid investments getting caught up in the madia hype - completely forgetting the maths they were taught at the age of 10...... I argued with most of them that they were crazy - they in turn tried to convince me that i was for not getting involved. This is simple - people need a home - rent is paid - and mortgage is paid - The simple rule of maths: is make sure you fix your costs, on a prop with min 10% "intrinsic value", also with probably 10%-20% (but generally i look for far more like 50 - 100%)min improvement option as well, in an area of good rental demand, with rent comfortably covering mort. Now variables are irrelevant until refinance or sale time! Roppa - To wait 18 mths "am waiting till the interest rate's go up that extra 1% by the end of 2009 (pesonaly i think it will happen" seems more than a little drastic ! You trying to bankcrupt me .....!??? 2 Challenges- to anyone who is interested!!!!!!!!!!!!!!! Challenge 1 I will have an experiment with you - let us follow the next 18 mths on here very carefully - you put your money in the bank - i will go and buy another prop - You pick the figure 20k 50 k ?????you tell me ..... And we will see how the slump affects both scenario's. Challenge 2 Lets us imagine i have £20k to give away - to the first person who can find a property which , with all the above considered, they BELIEVE will return 10% equity growth over the next 2 years - whether this be thru discount buying(off true val - none of 300K BS flats!)more thru making silly offers, whilst maintaining rent above mortgage with margin (you decide how big you want ) and protecting yourself from huge interest rate rises (ie fixed deal) and you only have 8 weeks to do it ? Is 20,000 enough for motivation for you or would you need a bigger fig to make you do it ....? What about a £100 k - ? Well if you do this then GUess what IT WILL NOT BE AN IMAGINARY £20k you reall will get it -but not from me from your prop... You know i know people who have been unemployed for several years, some for several months, some for several weeks but they have all have one voice and it says the same thing "cant get a job ...no jobs out there ...I'M WAITING FOT XYZ TO OFFER, YES OFFER, ME A JOB....It's really hard ....etc" Last summer i had 28 polish guys as tenants who all arrived at the end of June 06 now I took them all on as Tenants who paid ONE WEEKS rent up front and HALF of the bond - they had no money and no job - but with my experience(of the Polish people) and the fact that they were friends of friends- I was 100% confident that all would be fine - do you know that after all of my unemployed aquaintences(some tenants)tales of "woe" i was pretty much convinced thare were no jobs !(unless you happen to be polish) Now these guys barely spoke english BUT within 10 days EVERY SINGLE ONE OF THEM had secured employment - and i dont mean fruit picking or shelf stacking- we had a civil engineer,a dental nurse, a bakery manager, a chef, an electrician etc Thers is a message in there somewhere ! If you think you can you can-if you think you cant you wont -simple. Mel, I will bet any money you like that i could find a property in your area i could make money on, slump included, within 24 hrs-either thru keen buying (put 100 ridiculous offers in -you only need 1 to be accepted - and it will be !) or thru renovation, development, or splitting of props etc. Watch over the next 18 mths I PERSONALLY GAURANTEE 100'S OF INVESTORS WILL MAKE MONEY ON YOUR DOORSTEP WHLE YOU ARE "WAITNG"! Let's see! A wise old guy once told me "if you havent got enough money" then there is a simple solution " Well, get some more ...." If you are priced out of th area then invest up the road where you can make it work ......but waiting ..........that aint gonna make you rich! Also agree that there will be rich pickings - and many fools exiting the market and also will be waiting with my cheque book ! but that does not mean i am going to put my head in a bucket for the next ???years !! I am also waiting with my fingers crossed .........................for 6 no's on a sat night ................it will be interesting to see who waits the longest... Haha!! In most markets where there are winners there are also losers - it is up to you which one you want to be ! Simon Link to comment Share on other sites More sharing options...
J4L Posted June 21, 2007 Report Share Posted June 21, 2007 I think that most people who come in here and read all the posts are getting a picture of what each individual is like. albeit just from written text and not face to face. I think that although simon and Myself sorta had a disagreement a few times on here we are actually singing from the same hymn sheet. I personally wholeheartedly agree with Simon's methodology here and I for one advocate what he's doing because I'm doing the same, only on a smaller scale. For once Simon I agree with you. haha Gareth Link to comment Share on other sites More sharing options...
lauralivesartnouveau Posted June 21, 2007 Report Share Posted June 21, 2007 Hi all I think that we are rapidly approaching the point in property values that when the percentage investment return on a property is at or below interest rates. For example a local terrace property in my target areas are now over £110,000 yet the rental achievable is only around £500pcm. This is a return of around 5.5% which is the same or below my interest rate payments. This causes a number of problems if I borrow to invest further by means of a further advance all I will succeed in achieving is diluting my existing percentage return which could cause my income to fall rather than increase. This then means that I would in effect be subsidising the tenants accommodation for the extra hassle. This approach is only sustainable during a period of capital growth however as interest rates rise capital growth could also be effected. My approach over the last ten years has been to concentrate on a healthy income return and as a result my property procurement over the past couple of years has slowed down to the few available bargains. I have found buying these a real bun fight and I have only succeeded because of higher than asking price offers and reputation. I have a couple of friends who got carried away by good salesmen and invested in property in Florida on the pretext of guaranteed capital growth only to find a slump in both capital values and also rental demand. The investment pundits are always comparing our economy to the USA if this is the case we are in for a rough ride. The good news is that uk rental inflation has remained depressed for ten years and as rents increase obviously all landlords will benefit. Oliver Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 22, 2007 Report Share Posted June 22, 2007 Hi All Gareth , talking sense, whatever next ................!!! haha Oliver , very fair point and i think exactly the same across the whole country - certainly in Cardiff Add to this the ridculous btl mortgage fees we are currently seeing - where they are effectively "Stealing" the equity from under our very noses...........fees of upto 2.5 % for 2 year deal dont sit well with me .. and no i dont pay them ! but newbies are getting slaughtered on a daily basis .. And i honestly see this as a far bigger both immediate and long term problem ...any got any thoughts on this? I agree completely about the difficulties in getting figs to stack up/dilution ...but....there are other ways ...what happens to the 110k house when it is split into 2 flats or 3 bedsits - or you get planning for another house in the garden...garage......extension...attic conversions......advertising hoardings .....even rent your drive ......or concrete the back garden and lease it for parking etc You can build a (quality) garage for around £3500 and with all the small new build "luxury" apartments and shoe box houses ....storage space is at a premium ...i have around a dozen garages attached to various houses ...i get approx £35 a week each for them .....If you build them "right" then they can be used as offices(more rent) even posh offices with heating toilet - shower maybe - then "perhaps" the could be let as a studio flat- nice big garden, oh my God-a detached studio flat with drive and garden!!!! I have very few properties that dont have scope for at least a few of these options as well as fitting my previously described criteria. Do the properties to a high(but not necassarily expensive) spec -just exceed peoples expectations and mix a bit of the above in - buy cheap - AND COUNT THE CASH !!!!!! concrete ghetos(luxury apartments 300k BsxxT), florida, bulgaria, spain etc dont work for me either overpriced-no control- no scope - not manageable (by me)=NOT EVER IN MY PORTFOLIO (as things stand !) But the same rule us boys applied in the night clubs, apply in most areas of life : If you ask enough times you will get what you want/need HAhHA just keep putting silly offers in !! A completely non disputable part of life is that people die, every day -- when they do the estate will move on - providing an opportunity for discount property from remote benificeries who just want the prop gone . also fast relocation - bridging sits - repos- breakups and divorce- ill health- redundancy- debt- expandng families These are producing motivated buyers on daily basis - become a very loud advert that you are looking - i have bought about half my portfolio from people asking ME if i want to buy their prop -NOT me chasing them ! Creative financing - lots people need to sell their home to get "cash" but want to still live in it - so help them, BUT on your terms, buy it 20-30% discount then take 3 years rent up front so getting the prop at half price ......etc I know a guy who had a shop with a grotty 2 bed flat above it - he ran a run down furniture business in the shop and there was a garage at the back full of rubbish - and wanted to sell the whole lot inc business and stock ...... because the only people looking at it were "business people " not "investors" he was strugling to sell.. I also know the guy who got the creative deal of a life time out of it !! He offered to take the property off the guy's hands for a 5K deposit, it was on the market at 150k, then drew up a full legal agreement to pay the full asking price for the property at £1000 a week for 145 weeks ...risky?? Not for the buyer!! He tidied the garage out and built an attic studio flat (very generous description for what it was!) in the roof of the garage the 2 bed flat was "painted" he employed someone to run the shop for him and sold off the dated shop stock and replaced with upto date stock also end of tce - sold to advertising company....! result garage 100pcm studio 350pcm sign 100 pcm 2 b flat 500pcm now this guy wasn' stupid as the shop was now making just under £1000 a week after paying wages and x's so that alone paid for the "mortgage"...! so was left with around £1050 pcm profit from a 5k investment (plus around £10k to "set up" the rest !!How did he fund it YEP 0% credit cards!)) What happened - well, after 2 years he sold the business to the guy running the shop including stock for 150 k then continues to rent the shop to him for £200 a week (800pcm) it doesn't stop there - as this guy is also a furniture dealer and has tied him into contract to provide 10 % of the floor space to exclusively sell his products which he supples at trade cost !! so 2 years on prop paid for, 100k lump profit, 1850pcm rent with no mortgage, dont know what he makes a month on furniture but sure to be a min of £100 pw so 4-500pcm AND an unencumbered prop probably worth around £250k Total £350k plus £2200pcm plus equity growth, long term, sure to be averaged back at min 5%PA(or loss for the pessimists!!-do you think he really cares if he loses 10-20even 30% on equity ???) that must be a zillion dillion % profit -reckon 10% of that would do me - let's not be greedy now ! Now that is creative !!and all from 5k investment. why did the original seller allow it - the buyers reputation went b4 him !!! Ask this man about "the slump" and he will say "yes please can we get it into freefall NOW please......" Next time i see him i'll tell him "dont even think about doing any thing similar - keep your money in cash??" lets have a vote on what we think he is going to say.......!!!!!!!!!!!!!!???????????? Probably a bit advanced for the average btl er but when the going gets tough the tough get going ... Time to work smarter NOT harder ...... Hope i have given someone out there some hope or inspiration - or both, and firmly pulled the retirees out of their chairs, and that cash out of the bank, isas whatever ..... yes there is a light at the end of the tunnel - for some it will be glorios sunshine, for others it will be the headlamp of the oncoming train and this will always be the case!>!>hahaha Your mind is like a parachute - it only ever works when it is open !! God i've done some typing today ! Simon Link to comment Share on other sites More sharing options...
lauralivesartnouveau Posted June 22, 2007 Report Share Posted June 22, 2007 Hi Simon It must be noted that risks remain in the property sector as capital values can rise and fall. If a landlord invests a 15 % deposit ( sourced from a further advance) in a buy to let and there is no sufficient margin to service interest rate rises or management and repair costs then this asset becomes a liability. If as a result of higher interest rates there is a sudden market correction in a downward capital values then the 15 % equity stake could be lost. This could potentially react like a domino effect if that landlord investor has grown too quickly which will result in higher gearing ratio. Therefore if caution is thrown to the wind a property investor could end up with a liability greater than his income and a diminished asset values. My current strategy is to wait for the correction to occur and only buying undervalued bargains in the meantime. Oliver Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 22, 2007 Report Share Posted June 22, 2007 Hi Oliver Cant argue with that - but that is an inherrent risk which should be taken on board when "number crunching" regardless and caution should not be thrown to the wind with property at any time - and now, more than ever, removes any space for the "gung-ho" guys! i think "proceed with caution" is the order of the day - but do not subscribe to theory of "keep out!" Simon Link to comment Share on other sites More sharing options...
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