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Dunroamin'

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Everything posted by Dunroamin'

  1. If I recall correctly from my undergraduate economics (20 yrs ago ), if the UK economy is growing at less than 2.5% per annum then unemployment will keep increasing. Don't know if this still holds, but if it does then we have a long way to go before all is rosy in the garden again.
  2. There were some amazingly stupid mortgage lenders out there don't forget. When Savills got sniffy about our £400k budget (pitying look from 20 something muppet....it was almost like I'd admitted to grinding poverty) for a new home they suggested I see if their mortgage advisor could "help". His "helpful" suggestion was that we borrow £650k (about 5x joint salary) he asured me that this was entirely gettable and servicable. Help like that I don't really need - I asked if he had any cncept of how much money that wa for two people to pay back (with interest) over 25 years - he just looked at me blankly. I decided that the world was nuts and joined this site.
  3. We bought our last house for c.50% of our budget. The EA did know our budget, but also our criteria. We also negotiated £40k off the asking price (about 15%). Although we had disclosed our budget we were also very direct as to our requirements and our key attractions as a buyer (ie. cash buyer, able to move quickly, no chain). We were very clear that we would be making offers based upon our assesment of market value and that the "guide price" of the propoerty was largely irrelevant in our thinking. We were only prepared to see houses where the EA confirmed to us that the vendor would be prepared to negotiate (a great starting position as it means that the EA has implicitly acknowledged that the house is overvalued and the vendor know's it.) We only worked with EA's who focused on our requirements rather than our budget, and in discussing potential properties kept the conversation to what the market value of the property was. EA's who described something as a "saving on our budget" were told that affordability does not imply value.
  4. Had a classic the other day...one of our portfolio companies is actually growing at 40% pa. (a arae bright spot in the portfolio). As a result more working capital is required. Nameless bank appears very keen to lend required cash against stock and debtors at LIBOR+1. All is looking good until documents arrive. As extra security bank requires us to "cash collateralise" the loan by making a blocked deposit with them, they will then charge us 3% for lend ng our money to our company....the bloke at the bank couldn't understand why we didn't consider this a good deal.
  5. Ah, I see the obvious get out. A chartered accountant discussing investments or tax, or a chartered surveyor discussing propoerty can reasonably be expected to be speaking from a knowledgeable position and hence should be prepared to take responsibility for their advise. A government minister on the other hand.......
  6. I was wondering this. I'm a Chartered Accountant - you can be struck of for giving advice like this if you haven't properly researched the financial stuation of the person you are advising and don't explain the risks. edit - spelling
  7. I work in Private Equity [dons tin hat]. It is likely that there will be payouts for those that already own shares in the business, and it is likely that there will also be share options made available to people who the PE house see as important to the future of the business. However not knowing about the specific deal or company it's hard for me to be more specific.
  8. I think they've had a lucky escape...however I also think that if you watch and wait there is a good chance that the place will come on the market again as these mysterious "cash buyers offering more than you are" have a habit of dissappearing pretty sharpish in my expereince in the current market.....in my more cynical moments I've wondered if EA's were inventing them, but that can't be right as they are "professionals".
  9. I may be cynical but i expect quantative easing to be dressed up as some form of liquidity support for the housing market. ie. The govt offers to buy mortgage backed securities from the UK banks and just swells the BOE balance sheet by printing the money. This would be sold as "freeing up the housing market to support hardworking families". So you get a reflated economy and housing market just in time for an election.
  10. looks like the online part of the group only then......still no fun for the 28 employees or the punters who have put down deposits.
  11. It's not the easiest of times, but we didn't get too caught up in the bank debt spiral of the last few years (leverage rates use the same metrics that we were using 10 years ago) and are 75% in cash. I hope to be busy buying quality businesses at good prices in six months time. It's amazing how many people in our industry haven't bothered to try improve the businesses they own before passing them on....in alot of ways the M&A market is the same as the housing market; the world has changed, and those that change their behaviour accordingly will survive.
  12. Carbon Offset - does that mean that they will plant a tree to reflect the fact that your personal finances are toast?
  13. I've been in VC/Private Equity 15 yrs plus. My firm tends to steer clear of former investment bankers as usually they don't have an appreciation of what it takes to run a company that actually makes makes something, generally being too fixated on spinning their company to appeal to whatever the latest "fad" is that is attracting the hot money and hence boosting valuations. I prefer engineers and accountants who understand their industres and have their feet rooted in reality.
  14. The OP raises an interesting point. To date the cost of owning a house has actually been falling for many existing property owners as interest rates are falling. Also significant increases in unemployment have only just started to feed in. To date the fals in house prices have been principally driven by a collapse in demand from FTB's as mortgages are no longer available at the ludicrous lending multiples that were supporting previous price levels. Given that a significant increase in unemployment is on its way. And that interest rates may well rise in late 2009/2010 to deal with the inflationary pressure caused by the printing of money by the govt, the increase in the cost of exported goods and the need to plug a huge hole in the public sector finances. Will we see a "supply side" crash in the next 18 months as the number of forced sellers rockets? I'm wondering if this second wave of downward pressure on values will cause a significant oveshoot.....could be a buying opportunity for those who are heavily in cash at the moment.
  15. You're ignoring the time value of money. Assume that the bank funds the mortgage from savers deposits (although it's equally likely they were funding it from the inter-bank market). They are basically making a spread (the difference between what they are borrowing and lending at each year). A default where they can't recover the principal means that they have to pay back the saver or interbank lender out of their own reserves.
  16. DW and myself have spent alot of time discussing this. I (currently) have a stressful job (who's isn't) that does pay well. However, given that our favourite passtimes are walking the dog, cooking, the odd pint down the pub and the occassional lower league football match we don't spend that much. We reckon that once we've paid off the mortgage about £12k - £15k per year would keep us both in a very nice lifestyle and we're saving like mad to achieve that. When you look at it it's frightening how much it costs to work...travel, suits, not having the time to do stuff yourself and hence paying someone else. Also in my game there is huge pressure to spend like you're minted.....I generally try to avoid that scene but it's not always possible - we were invited out by a potential client the other month and the whole evening cost more that we would usually spend on socialising in a month. At the end of the day time is what is really running out on you.....my objective is to maximise the amount of time I can spend with people I care about doing the things I enjoy.
  17. Gordon could declare it "credit crunch happy hour" between 9pm and 11pm on a Friday night...free booze at every pub in the land, all paid for by the taxpayer. Would stop the pubs going bust, help the brewers and maybe encourage the middle classes to start pro-creating again hence defusing the pension time bomb.
  18. sorry - yes you are correct, thanks for picking that up
  19. I'd be looking to rent if I were in your position....there are more and more "larger" properties coming onto the market. As a cash buyer who doesn't need a mortgage my guess is that you'll be able to give some over extended vendor a complete rogering in about 9 months time. In the meantime index linked gilts/Northern Rock is as safe as anywhere for cas I'd guess.
  20. snap! - we're in exactly the same position, had to move for work and after 4 years of renting and previous landlord having tried to make us leave his property so he could move his mates in we wanted security of tenure. Bought a small house with a tracker mortgage and still have 2/3rds of STR fund. Really like the house, don't see us wanting to move for a long time. Do wish we could have waited another year but sometimes happiness and security is more important than money.
  21. I may be wrong here, but I seem to recall from my dark days of tax exams that you can elect to have the interest on a joint accounts taxed say 90% on your wifes return and 10% on yours...take this with a real pinch of salt as I've worked in 3 jurisdictions in the last 10 years and so might be confused...might be worth looking into though
  22. This base rate cut is great news for the banks....I don't see it being passed onto the masses, just improving their profit margins
  23. Well, no bank has gone bust for at least two weeks, so things must be getting better...... The second flock of chickens is however on its way and will likley be here come January......
  24. It's actually because no one can possibly know what is likely to happen in any particular circumstance that it is wise to diversify an investment portfolio very widely.....having close to 100% of your wealth tied up in any one asset class, let alone in any one particular share, is very dangerous. If the gent in question had taken advice from anyone financially literate I'm sure that he would have been advised to diversify his assets. During the dotcom boom I was constantly being told by my colleagues that I was nuts for not piling into the market; at one point one chap in particular was sitting on impressive paper profits. I urged him to at least take some of the profit and diversify his risk....he answered that it would "cost too much" as he expected the market to keep rising....I'm sure that you can guess what happened a couple of months later. It's behaviour like this that causes bubbles....people can understand money, but seem to struggle with risk.
  25. I'd suggest that if you like the property just offer what you thik it's worth....say gross up the rent you think it would fetch with an 8% yield. Get the EA to work for you - tell them that you're a cash buyer, that's the highest you'll pay, and if they get their client to see reality they'll get their fee. EA's don't really care about price, only transactions. If y0ou don't hear anything for a month...put in a reduced offer "Cos you called the market wrong"
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