Monday, Jun 16, 2008
How to lose £87million?
Telegraph: Property investment: 'Don't choose flats, go for houses'
"Talk of the housing market falling is misleading," says Fergus Wilson.
The Wilsons have over 877 properties in their portfolio and 35% equity. Present 'valuation' is £250,000,000.
If prices drop 35% in the next few years - they will have 'lost' £87,000,000 that they could have had now - if they could sell them all without crashing their local market...
Posted by cornishman @ 08:27 AM (1936 views) Add Comment
33 Comments
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1. cornishman said...
There's something not quite right with the figures quoted in the Telegraph.
By my reckoning, they would make the average value of each house £285,000 - which doesn't seem plausible for mainly 2-bed terraces. Maybe I've got the maths wrong - my calculator ran out of noughts.
2. Honest Valuer said...
I know a surveyor who has worked for these landlords. They are basically 85% geared on everything they own - even the house they live in. They continually over estimate the values of their properties and bully valuers to accept their valuations. They must be short of money as they were on a Watchdog programme last year where they took a tenants deposit for minor ware and tear. My friend says that any current realistic valuation would leave them with no equity of their entire portfolio as they have continually withdrawn equity whenever values have risen . Wilsonappears to me like a Robert Maxwell type character who will go belly up and the cupboard will be bare.
3. Sharpe said...
will be interesting to see when they declare bankruptcy - I reckon in 10 - 12 months
4. techieman said...
Cornishman - true. The point is though the 35% Equity. At the moment things are looking ok but if there are substantial falls (they invest i think predominantly around ashford) then erm you do the maths!
I remember seeing a documentary on these two where he said (and it was a few years ago granted - so his view may have changed) prices arent coming down any time soon.
5. it_is_going_with_a_bang said...
Tarek Fadhel is a fool. he believes he has equity because of a developer discount. How very amusing.
I don't really see why the Wilson's bother buying anymore? I mean look at them? They would hardly say anything else would they?
The 25% equity the other lot have doesnt look very safe either!
6. Fubar said...
For what it's worth I got the same figure cornishman. £285,000. Does seem a little bit off if correct.
7. techieman said...
it is going- you are wrong because it says that mr 24yr old did the research. Still he wont be shocked in ten years time will he, he would very probably have lost the place by then!
8. techieman said...
i love this comment :
"With real inlfation at 9.5 % and current mortgage rates, (if you can get one) at around 6%....doesn't that mean that it makes sense to borrow as much as possible? Cheap money?
Posted by Anna on June 16, 2008 8:03 AM"
nearly choked in my coffee!
9. Bongomag said...
If he is so rich and clever he should buy his wife something nice to wear.
10. taffee said...
a 2 bed flat in norwich is good value at £185k
sure mate...you know a good deal when you see one
11. Chasbmw said...
"I know a lot of armchair investors have got burnt, but I have done my research. I know this area and the rental demand is massive. Flats have sold since, in the same apartment block, for more than I paid."
So how come you had to drop the rent from £850 to £700............Plonker
12. str 2007 said...
Cornishman
I concur
The Wilsons numbers do not add up.
877 properties valued at 250m.
That's an average of £285k each. Given their portfolio is made up of properties upto 3 bed det. but these are out numbered 16 : 1 by 2 bed terraced houses.
The average value they claim is £285k.
I thought these people were maths teachers.
If the figures are correct they've already gone bust.
At 65% LTV they have 162.5k mortgage on each property. That's £675 per month per property interest only at 5% interest.
That doesn't count for voids, maintenance etc.
Further I wager their properties aren't worth on average anymore than 185k each. That's before prices have started to fall.
13. Ah-so said...
Tarek Fadhel was just out of nappies in the last property crash, so probably not the best person to discuss the long-term. I also have a suspicion that he does not come from Norwich. Much as I dislike the Wilsons, they talk sense in terms of getting the right type of property and knowing your local area.
14. Honest Valuer said...
His equity is more like 15%. A valuer friend of mine in Kent says that the guy is a complete exagerator and all his loans are 85%LTV on HIS estimate of valuations which are incredibly optimistic. He must now be effectively in negative equity with no where to run to as he has withdrawn equity every time values have increased. Every FTB in Ashford will massively benefit if he goes under.
15. Honest Valuer said...
Your exactly right str2007 185k now and slowly falling according to a fellow valuer. This guy is a complete bulsh*tter. Apparently all his loans were 85%LTV on his estimate of value. He is effectively bust and if I were one of his lenders I would repossess now before the others do. it is going to be a blood bath in Ashford but great for FTB's.
16. taffee said...
wonder what the lenders think of these two.......did they know the vast scale of their empire.
Perhaps the recent publicity is to reassure lenders they are solvent.
btw how do you look after 877 properties without employing staff?
all seems a bit odd to me.
17. last_days_of_disco said...
The Wilsons are doomed. Lets talk up our two bedroom terraces. So we can offload them on a bunch of idiots.
People are still in denial. This market is going down by 50% they will be "underwater" as the Americans say but that is irrelelvant.
The thing that is really going to kill them is the margin calls. Remember the little 85% equity LTV detail? What happens when their properties hit that limit. Their 35% buffer isn't looking so great anymore is it? I wonder how many of their mortgages have that little feature?
18. cornishman said...
Quick look on Rightmove - there are 215 properties available to rent in Ashford alone. 2 beds are £550/month.
There are 254 2-bed flats and houses for sale in Ashford. 2-bed flats start at £80,000 and 2-bed houses at £100,000. So the statement in the article "If I could find 20 houses for £160,000 tomorrow, I'd buy them." doesn't really make any sense either.
19. mark wadsworth said...
"If prices drop 35% in the next few years - they will have 'lost' ..."
er ... everything? (assuming 65% LTV)
20. cornishman said...
click here for Judith Wilson’s simple guide to property investment.
The number one rule is:
Never use your own money.
Love it!
21. str 2007 said...
Cornishman
How do you add a link ' with words (click here for) as link' ?
Many Thanks.
BTW interesting to see the houses they have and original purchase prices and also the details you fished out from rightmove.
The numbers from the article just don't add up.
Also what is the purpose of Judiths website, apart from bragging ?
22. drewster said...
The Wilsons are smart investors. They started buying at the low point in the mid-90s, they've always paid close attention to yield, and they've generally kept their eyes on the ball. They are active landlords, they choose their tenants carefully rather than leaving it to agents, and they've done well out of it.
We hate them for their massive "unearned" profits, but as long as the government allows people to speculate on property like this then they will continue to rake it in. Personally I wish I was half as good an investor as them....
23. taffee said...
assuming what you read is true that is
I personally think you don't need 877 properties to build a nice life
24. cornishman said...
@str2007
(a href="http://www.etc...web address of link") words that you want to show up in blue as the link (/a)
except replace both sets of brackets in the above with the greater-than and less-than symbols
Might be an idea to practise on a page from a few weeks ago first - then if you c0ck it up it doesn't matter quite so much.
25. techieman said...
interesting Drewster, and perhaps you may be right. I certainly thought the same as you when i watched the documentary on them. They would basically offer a very keen price to individuals to do a very quick deal, at a discount to the selling price. However that was on the basis of them knowing when to stop. I thought they would have stopped a few years ago - but if that were the case they would have had alot more than 35% Equity. Still them indictating (for what its worth) that they would buy more would further dilute their equity. It sounds like they have constructed the inverse pryamid which i talked about the other week.
Now they may have banked millions in rental income, and they may have set in place some offshore stuff so if it all goes pete tong they can just liquidate the company with the lenders as creditors, and escape with their stash. A bit of meglamania by the sound of it!
26. str 2007 said...
@ Cornishman
Thanks
Got to go out now, I'll have a go later.
27. crash bandicoot said...
I think that they are missing the point with flats vs houses. If the rent for a 2-bed flat is £350 a month and the rent for a 2-bed house is £550 a month there is a big incentive to live in the flat. They are trying to ignore that fact that the drop in flat prices will soon impact their 2-bed houses.
28. icarus said...
Buy in your local area, they say. That's all your eggs in one basket. As cornishman implies in his intro to his post, if you need to liquidate it's a little easier if your houses are spread around the country.
29. Jonathan said...
The mistake they've made is that all their properties are local. (I think it's called eggs / basket). If (when) the prices drop below that at which their empire is sustainable on rental income they won't be able to unload without seriously distorting the price locally (I think it's called a crash).
Mrs W glibbly says the secret is not to invest with your own money. They'll be left with the uncomfortably position of having to (for a vast 877 properties) and no way out but to scarper.
30. quiet guy said...
@drewster
"The Wilsons are smart investors."
Well they certainly appear to be successful but I wonder how much they really understood when they started. Those who make a lot of money rarely admit that they might have been a bit lucky.
It's not difficult to find a succesful business person that you can admire but I wonder what young local families in the Ashford area think of these charmless individuals.
Also, I notice that they may have used sharp practices with some tenants:
http://www.bbc.co.uk/consumer/tv_and_radio/watchdog/reports/homes/homes_20070418.shtml
Are this couple respected as a successful business couple in their home town? I wonder.
Perhaps it's just my jeaolusy but I find the idae of snapping up hundreds of properties around one town a bit sickening.
31. Jr said...
877 houses in the Ashford area...
I bet they weren't too impressed when Eurostar decided to move to Ebbsfleet
32. C'mon Correction said...
Social parasites.
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