Letsdance
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Posts posted by Letsdance
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Then you presumably understand the risks and that gearing works in both directions.
Used to hire plant and wagons out in the 90's, got sick of doing repairs during the night on a cold wet yard.
Decided to diversify in 2001 into property, bought first house for £17,000 in late 2001 early 02. Took it out over 10 years with a repayment mortgage at 7.6%.
Then bought a shop in mid 2002 for £35,000, rented the flat and used the shop for my own business, pet supplies. Bought the shop over 10 years with repayment 7.6%.
2003 bought a third house next door to my shop and made my shop bigger and made a flat above which is rented £40,000 over 10 years with again a repayment and 7.6%.
I also have my own house.
I know that I have missed the boat to sell and maybe pay off all mortgages. I obviously could not really sell the flats as I want to retain freehold of the shops. The first house I think I owe £5k so after looking at the advice you lot give I thought I would ride out the crash.
Good move??? I will find out.
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Then you presumably understand the risks and that gearing works in both directions.
For fear of being blown to pieces by you lot, well here goes I'll do an honest straight forward opinion for what its worth, you will still shout me down
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OK, I guess this is the second in my series of why most (not all*) BTLers are screwed in the event of a housing correction. Inspired by bullbearfence's thread.
One of the most interesting apsects of the housing boom has been what I call equity surfing. BTLer buys a flat, it increases in value. As equity in the flats is considered passive, the BTLer MEWs the value and uses it as a deposit for two more flats.
This process continues until he has ten flats, worth £2 million on 80% LTV mortgages. He will brag about his multi million pound property portfolio, which he built without putting a single penny down. Those mortgages are highly likely to be IR only, not only because it is difficult to cover costs on repayment basis but because only the interest part of the mortgage is tax deductible against the rent.
Most of these flats are also highly likely to be new builds as these are more attractive to the BTLer. Unlike second hand vendors, a developer can offer 'discounts' which, although no money has been exchanged act as deposits to bring the LTV of the mortgage down. Easy street. Why don't we all do this?
When it comes to the rates of the mortgages itself, the BTLer choses the most competitive deals. Because of the nature of the easy credit times, the best deals are always short term 2-3 year deals which hover near and around the base rate. The rent covers the interest payments. He puts in a little money for maintenance, but generally he has nothing to worry about.
Then the crash hits.
Over the course of 2-3 years the value of two bed flats falls by 40%. The rent stays the same. The mortgages stays the same for the moment. However, he is now due to remortgage. So he goes to Paragon, finds out that they haven't been trading for 2 years and their offices has been converted to a homeless shelter for EAs. So he finds a high street bank walks in and asks for a mortgage.
At 133% LTV.
The bank won't give him a mortgage at that level. The old mortgage holders want their money back. He can't liquidate any of his properties, because they are all in negative equity. The banks are running a balance sheet and realise that his liabilities exceed his assets and make their own margin calls.
It doesn't matter if you have cashflow or not. If your net worth drops below that of a tramp, it's a big deal. If your business plan is reliant on easy access to cheap leverage, it's a disaster.
* Exceptions to be made to those with long term mortgages and less than 60% LTV on the properties.
I do BTL
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See attached. If they were anything like as confident as they say they are, do you think they'd be walking round York stuffing letters like this through people's doors?
'Don't believe the media ... don't believe what's happening to your friends and relatives ... don't believe the deteriorating economy before your very eyes ... believe US and flog your house now!'
Sorry Ayatollah, it was Corporal Jones that said they dont like it up em, the old cold steel, them fuzzy wuzzys
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??? got to be a wind up, no?
Don't think its a wind up.
Checkout the thread, seems to be getting some plausible responses from other posters.
I think if this had been posted on HPC, it would have been hit with TROLLLLLLLLLLLLLLLLLLLL!!!!!!!!!!!!!!!!!!
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Reality is this time last year he probably could have a got self cert not taking into account his income, BTL etc. etc.
Have times really changed??
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http://www.singingpig.co.uk/forums/thread/411180.aspx
Strange post, I think this person needs some straight advice from say property guru or right freds dead
ADVICE NEEDED ON PURCHASE 11 Jan 2008, 8:29 PM
"Hi all,
We've been offered a purchase oppurtunity 22% BMV
Value: £250,000
Buy price: £195,000
We are really struggling to find a way to finance this purchase, here are a few facts:
The property is avg valued at £550-650 Rental, it will not stack on BTL
My partner & myself are new to property investment, this is our first deal and has been very tiresome so far, we have tried a remortgage & residential remortgage with MX but as this would declaring factors such as we would be living there, etc.. when we will not be, we did not want to bend the rules to the extent of what another broker labelled "Pushing bending the rules to the point of breaking"
Our combined income is not enough to raise the funds via a mortgage, unless we can find a self cert that does not go on income, OR BTL value
Our general hopes were to buy the property, a lick of paint and any minor things like that, that need doing, and then have it back on the market within 3 weeks of completion, so a no redemption mortgage is also something that would be of great value.
As far as we can see, our options are limited to:
Some godly mortgage that doesn't take income or BTL value into account
An open bridge (Would we stand a chance of getting one, the very very high prices are ovbiously worrying in our situation)
Finding another party who would be interested in going into the deal on a 50/50 basis.
We have an investor who would be prepared to put in 15%, but this still doesn't allow us to attain any of the above mortgages.
Any advice on this matter would be GREATLY appreciated.
Many thanks. "
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Good analogy...
...except that we hit the iceberg in the late summer. Most people however, are still sipping cocktails in the bar oblivious to the havoc taking place below decks.
Yeah, but thing is the government has launched high speed life boats, America has the USS navy on standby if that fails the world bank will pull the plug on the ocean.
The fact is we have all talked this up and believed the bear hype and why not, this is the same as the bulls 2 to 3 years ago. What will happen in the next three years??
Who knows, but I think we all know, we are still fighting the government, media, VI's, mates down the pub, etc. etc.
Nobody except the minority want a crash to happen!! I think some form of correction will take place, but even now as per the thread bears are very uneasy.
We will watch this space and hope the correction happens or else in 3 years the bulls will be back with avengance.
Lifeboat on port side sir!!
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You can argue with it if you want but that does not and will not change the fact that I was, am and will be totally correct.
What has begun is only just the beginning. The international monetary system is going down and will bring with it the jobs, savings, pensions, investments, property and standard of living of hundreds of millions of people in the developed world.
I URGE you all to take drastic defensive steps NOW, or you'll join the millions and live for the rest of your lives in poverty and regret for not doing so.
Don't panic, don't panic Captin Manwaring.
I'm here and they don't like it up em!!
Them fuzzy wuzzys don't like it up em!!
The old cold steel
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well well! We've flushed another troll (sorry, 'bull') out of the woodworm.
Unless of course the mods would care to check his IP.
If you aren't a pureplay troll, and sincerely believe what you are writing, try having a think next time before committing the post. No one will want to talk to uyou with 'ideas' that pathetic.
Not even me.
bye bye.
ignore list approaches maximum...
I propose PG to be a Troll.
Probably bullied at school and now hides behind a user ID.
GET A LIFE
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I've held on & held on & NOW the time is finally right to sell!!!!
I thought I'd offer you all first dibs on hpc:
http://www.rightmove.co.uk/viewdetails-182...=1&tr_t=buy
I'm planning to sell & then rent this:
Hang on, don't try and claim your victory on the worst place to live in Mbro.
I to come from the NE and am well aware of the poverty and deprevation.
Mbro came top of a pole by opinion of Phil and Krusty however Easington Colliery is known nationally as the most deprived district outside 1 or 2 boroughs in London, and not by P and K's opinion pole but by national statistics
When houses in Easington Colliery are no longer lived in or become run down they are not put up for sale for £1k, they are simply pulled down and the area grassed over. The whole street Billy Elliot was filmed on has since long gone.
Yes Easington Colliery to has a beach nicknamed "mucky bay" or a bit further up the coast "blast beach". Years of colliery tipping. The blast beach appeared in the opening scenes of the film Alien3. The beach was barren with pools of yellow stagnant water.
However one classic claim to fame "Get Carter" closing scenes filmed on the arial flight from the colliery at Blackhall into the sea.
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Very good indeed, probably with more thought and time, WE could develop a theory of war, based on the bubble graph.
I mean the bubbles are caused by human activity, its probably not much different for a war.
We could claim the invention of the WAR BUBBLE THEORY by LETS LOO, or BLOO DANCE, or Dancing Loo???
Have you patented this theory BL, why does BL give me nightmares of 1970's ecomomic doom
BL was partly nationalised in 1975 with the government creating a new holding company called Britsh Leyland Ltd which became BL Ltd (later BL plc).
Sorry nearly forgot to explain
The PW was only a small part of the war, all in the heads of the citizens of Europe.
Basically they convinced themselves nothing was wrong, the press supported this fact!!
Governments looked to cover up the fact that "all hell was about to break loose".
Apparently Germany offered a surrender however with conditions.
The British press reported unconditional surrender
So much confusion.
In Sept 39 we expected the worst
Dec 39 Bull trap nothing gonna happen, this is all hyped up.
April 40 Tally Ho Red Leader, I'll follow you in!!!!
Merry xmas!!
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What you are describing is the classic bubble graph, many of which are on this site.
The turn is followed by a drop, then a revival, this is the Bull trap, where things look like they are Ok again.
then as things are not OK, all hell breaks loose.
Its likely to happen again, although I cant see any financial drivers for it.
The classic bubble graph detail surrounding the
"phoney War"
War was declared in Sept 1939
Very little is reported to be happening in Europe with one or two skirmishes in the Atlantic.
By Spring 1940, many people had decided that war was never going to happen,
and they followed the advice of the newspaper headline which suggested: ‘Forget Hitler – take your holiday’. "The press propaganda machine have a lot to answer for even in 1940"
They stopped carrying their gas-masks.
Six million people every night tuned in to listen to ‘Lord Haw-Haw’, the British Nazi who broadcast on the wireless from Germany... "More proganada"
... until, suddenly, on 9 April 1940, Nazi forces attacked Denmark and Norway. "All hell breaks loose"
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You're guessing/predicting that gold will rise up to 6.25% against the dollar and the dollar is going to rise by 15% again the pound, but you have said that you are staying clear of gold? Why is that? Everything you say otherwise seems well researched and logical and I know you will have a good reason.
Don't hijack the thread.
Merry christmas to all
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Wonder is the Boe and government are working on a maginot line to stem back the recession
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Just wanted to wish and bestow peace, goodwill, happiness, fun, frolics and health to everyone here.
And Happy New Year to you one & all.
See you in 2008 for an interesting year...perhaps.
The guys a complete idiot and £$%£"$ and !"%£""£$. Surely he knows that New Year is not until July and next year is 2010.
Honestly where some idiots get there information!!!
Sorry only kidding, just thought I would keep in line with some of the venom provided by other posters on this site!!
Very best wishes to you
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Dear sir/madam,
From the 30th of January I will be building an extension on my house. Please find enclosed plans so you can update your records if you want, or not if you don't.
Thanks for your time,
Injin.
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Why apply for something that removes the right you have to do what you wanted in the first place?
I'll say it once -
Applying for planning permission is the mechanism that gives the council power over what you do and do not build.
Completely agree, pain in the ar$e applying. I do permitted dev everytime and look for loopholes on sizes of extensions etc.
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Obviously difficult to make any sort of judgement here not knowing all the facts however,
If the exisiting house is structurally sound with all the services why not just consider building an extension, or loft conversion with dormers. You could get around planning with and only if you have them "permitted development rights". (Allows you an extension, rear facing dormers and porch without planning permission). You could even build a detached garage under 4m high.
The costs of knocking down a property, removing the debris and starting again IMO makes little sense to off load as you are only going to get back really the price of the plot and not the structure on it.
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I've made similar allusions. Why is 'war' starred out in your post?
I've starred out war as I think it is moderated. Could moderators advise so I don't fall foul again.
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Does the local development plan for your area designate the land outlined in red and the village which it makes up as part of any development proposals.
i.e. would they consider this to be inside any development envelope.
Are you in the open coutryside without any development desgination?
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it's as though we've become immune to this type of news now, the figures are relatively small beer in relation to Citi's/UBS's writedowns, or the news that Goldmans sells 10% of stock to the Chinese to survive and Bear Sterns posts its first ever loss - only a $bil
But this news on MBIA is huge, another cog of the 'mechanism' simply corrodes? I just have a hunch we'll get something huge breaking over xmas, I dunno, Barclays going bust, or Citi throwing in the towel and filing for chapter 13 
The other day I put in a new topic which was held back by Mods because I likened the complete situation to an event in Sept 1939 to April 1940. This was known as the "Phoney ***"
Everyone expected all hell to break loose in Sept 1939 after the declaration and nothing happened. Nothing happened for 6 months.
I think we are in this period with regards to financial turmoil. We have had the declaration with the CC and NR debacle.
After 6 months in 1939 all hell did break loose and whats worse was people during the 6 months dropped their guard and became complacent believing the whole situation had been hyped up. I wonder if thats what happens here.
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what an idiot.
I am not saying I agree with this!!
What I am saying is that the sentiment of the people on this site my self included are waiting for GC2 and all the side dishes, however the goverment, banks, VI's all seem to be doing there bit to soften the blow or preparing us for the worst.
I am reading posts saying well I wasn't expecting the rate cut, I wasn't expecting the bail out. This dents confidence in GC2.
Maybe I am an idot for not agreeing.
Maybe we all could be idots??
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http://www.thisismoney.co.uk/news/article....e_id=2&ct=5
Lending crunch points to new rates drop
Hugo Duncan, Evening Standard
20 December 2007, 9:22am
Reader comments (2) | Vote | Video
The chances of further interest rate cuts were growing today after fresh evidence emerged of the slowdown facing the housing market.
The Building Societies Association (BSA) said mortgage lending tumbled last month as softening house prices and higher loan costs put off sellers and buyers. Meanwhile the Council of Mortgage Lenders said lending last month was £30.7bn, down 8% from £33.2bn for the same period last year.
The BSA also reported another jump in savings deposited at building societies as customers continued to withdraw money from Northern Rock. Customers have now withdrawn about half the £24bn of deposits held by the bank before it hit trouble.
But the housing figures will trouble the Bank of England most, and the pound fell again today as the City bet this month's interest rate cut will be followed by more in the new year. Sterling last night dropped below $2 for the first time since September, and was today down 0.24 of a cent at $1.9946.
The BSA said its members lent just £4.1bn in home loans in November, compared with £4.6bn in the same month last year. Approvals for future house purchases fell from £4.4bn to £4.2bn.
BSA director general Adrian Coles said: 'This cooling of activity since 2006 is likely to be a consequence of higher bank rates and a tightening of credit conditions more generally.'
Rates went up from 4.5% in August last year to 5.75% by July this year, adding hundreds of pounds to the cost of mortgage repayments. The Bank finally cut them to 5.5% this month after it was caught out by the severity of the crisis facing the housing market. In minutes of its monetary policy committee meeting published yesterday, the Bank admitted: 'The slowdown in the housing market seemed more pronounced than expected.'
David Brown of Bear Stearns said it looked as if the MPC 'hit the panic button for lower rates' as it realised how serious the deterioration was. Economists now think the Bank will cut rates three times next year to 4.75%, with the first move coming in January or February.
Meanwhile, the BSA said its members received £2.3bn of savings last month, almost three times the amount in November 2006, on top of the £3bn they took in October and £2.8bn in September in the wake of the crisis at Northern Rock.
Coles said: 'In the last three months, building societies have received new deposits of roughly the same value as they received in the entire 12 months of 2006.'
Looks like they want to kick start HPI again.
The governement will not allow a HPC.
So many people on this site disgree with this statement.
Is that still the case?
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I remember reading on here about how one member on this site who was still over the moon that he sold his property back in 2005 and made a 40k profit. Now he is sitting with no home, paying rent to his landlord, meanwhile the property he sold is probably worth another 50k.
From what I can gather he sold because he thought the market was going to crash – which it clearly didn’t.
While House prices may drop this year, lets say 20%, the guy is still worse off after all he has had to pay two years worth of rent and when he purchases again, there will be stamp duty and other fees to pay.
The point I am making is that, you would be wiser to buy when you can afford too, rather than wait till the price drops to a level for which you think the property is worth.
If you do buy, and the price drops, then you’ve lost out, but the other option is to wait for something that might not ever come and if it does, it still doesn’t meet your expectations.
I think the market will drop however I have always said if you can afford to then buy.
At the moment I can relate in my simple mind that the housing market is a train going around a circular track. This train used to stop at stations periodically to allow passengers to board. However in recent years the train has no longer stopped at these stations and some people waiting to board have just jumped on risking all while the train is in motion. Others have stood by and expected the train to stop as it always has always done and refused to board. Over the last few years the train has got faster and faster. Many people are now still stood on the platform waiting for the train to stop, some of these people have been stood there for years, others just waiting, confused, unsure but will eventually jump.
The questions are
At what point will these people board
Will the train come off the rails
Will the train simply slow down to a pace where people will risk and board
Will the train ever again stop in the station
If House Prices Fall By 40%, It Doesn't Matter. As Long As The Rent Covers My Mortgage, I'm In It For The Long Term.
in House prices and the economy
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As an a side, in 2001 I had been with the Yorkshire Bank for 10 years (business account).
When I approached them for mortgages I was told, yes TOLD to have
4 years good accounts for scrutiny, and they did look at them.
40% deposit on all properties. LTV 60%.
All loans over 10 years max.
3 Months pay slips from my full time job.
Only then did they give me a mortgage offer.
How did it all change????