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House Price Crash Forum


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About costajus

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  1. And here are the greedy politicians desperately trying to fill their buckets from the flow of taxpayers money.
  2. Properties sold at auction including repossessions are usually sold at below market value for a variety of reasons: 1. You wouldn't normally get the property surveyed - properties get pulled from auction before the day for a variety of reasons and also you don't know if you will be the high bidder. You'd be mad to spend on a survey on an auction property. 2. Most auction bidders are cash buyers whereas most private transactions will involve a residential mortgage which takes time to arrange with valuations etc. 3. I've seen a few repossessions at auction - some boarded up, looted, doors kicked in, boilers and kitchen appliances gone as they've been empty so long. 4. I've recently seen properties sell with documentation missing, for example the searches hadn't come back in time for the auction. Any solicitor would advise you to leave well alone! 5. Often you can have just a week or two from noticing the property to deciding that you are definitely going to buy. This would put off most people wanting to buy it as their next home if they hadn't already sold their current property. I could go on and on. Personally I think that if they include the figures for auction/repos they should flag it as such so you know it was an undervalued sale.
  3. If property expert Kirstie Allsopp says it is the worst place then it must be, she's a "property expert" after all. Didn't she also recently say property just couldn't drop in value?
  4. I'm sure it is - read back through the posts people - I NEVER MENTIONED HULL. I'VE NEVER BEEN TO HULL. WHERE THE HELL IS HULL ANYWAY??????
  5. No, I'm not spending £40k on a house in Hull! I didn't mention Hull. I've never even been to Hull! I mentioned a house near to me in Nottingham which I had seen for sale today and when I called the estate agent to find out more details I was told someone was exchanging contracts today so it should be sold by now - so I am definitely not buying it. I AM interested in the BTL market though and am doing some research and writing a business plan spreadsheet that takes into account all scenarios however unlikely - and that means including 30% interest rates, 90% drop in value of property etc. I can then take an informed opinion on whether I should go ahead or not. I honestly think that traditional properties in reasonable areas (not slums) which can be purchased at 50% below peak value could represent the bottom of the market. I also think that new build flats that I have seen at 25% to 35% of their peak prices could be the bottom for that market. I don't think BTL is any different to the stock market. You decide your risk/reward ratio and go for it. If you can buy cheap enough and it goes wrong you should be able to get out with little loss or a small gain.
  6. How do you know for definite that property will fall 20% in value in the next 12 months? Isn't property officially supposed to be down around 20% from the peak today? If you look you can buy traditional property (not new build flats) for 50% of the peak value today. I don't think it has much further down to go than that. (Over-inflated new build flats I have seen fetching 25%-35% of their peak value at auction in places) Put it another way - if you built a 3 bed semi detached today what would it cost to build? You would struggle to build it for a total budget of £40k including land purchase. I think the bottom of the market is already being seen - maybe not from everyday private sellers but from repossessions, auctions and distressed sellers. They say that catching the bottom of any market is like catching a falling knife. How many people on here bought the DOW when it bottomed at 6500 - 2000 below where it is now? I remember the doom-mongers saying the DOW was headed straight down to 1000 at the time. Or who bought Barclays shares just a few months ago in Jan at just 47p before they went up sixfold?
  7. That's a very sobering thought. A valid point. Maybe some almost worthless houses got pumped up in value as people got more desperate to buy and looked at worse and worse areas for stuff they could afford. I looked at a house in Tamworth the other day, it was boarded up and slightly fire damaged and looked a good buy in the auction catalogue (I forget the guide price now, maybe £20k or something). It had sold for £85k I think previously and some neighbouring houses had recently fetched over £100k. When I popped down to see it in the flesh it was a REALLY rough area. The wife was scared to get out of the car and come take a look so we left sharpish. But the thing is, that was a 3 bedroom house so in theory you could buy it and let it for £500PCM to a DSS tenant. I guess that's the sort of stuff Ajay loves to buy. As for reselling it at some point in the future - who knows. Could some housing go down to negligible value in the future? With the housing shortage I'm not sure. It certainly never hurts to buy in the best area you can then you are better protected.
  8. Regarding the value of this house in question. According to houseprices.co.uk (check yourself postcode NG8 5NU) Similar properties sold for £75k in 2007 and £82,500 in 2005 (I believe it is a small cul de sac with only a few very similar houses) - these are the 2 most recent sales in that post code. At £42k the house has already deflated around 50% from peak. Where do you see the bottom? Houses worth 10% of what they used to be? If we get that low then an awful, awful lot of people will be in negative equity. In fact UK PLC will be in liquidation. I'm not saying a recovery is around the corner but I do think you can get properties either at auction, repossession sales or distressed sellers which are unlikely to drop much further any time soon. But lets say the house price does fall 20% in the next year then it will be worth £33,600. The years rent is £6,216 so if you had to sell you would still have £39,816. I personally don't see another 20% fall on a property that is already 50% down but that's a matter of opinion. I think the house is already undervalued and would be worth the same in 12 months time. I also believe £42k is a reasonable price for a 3 bed house these days - 3 x £14k annual income for a first time buyer. Or maybe you think 5 bed mansions will be fetching £50k next year? I think as a long term investment, including using it as a pension fund makes sense.
  9. Fair comment but I was talking about DSS tenants. Also, while a working person might be able to afford £266 mortgage a month, how many can manage to save up the £10k plus deposit currently required? I'll bet less than 90% are able or strong willed enough to do so.
  10. 1. No I didn't. What do you suppose that would cost for a 3 bed end terrace? 2. Professional landlords allow 2 months per year for voids. I would consider DSS tenants who qualify for the 3 bedroom allowance (between 2 and 4 kids) to be more likely to stay longer term. Even with 2 months void per year the figures are still very good. There are far fewer properties available where the landlord will accept DSS tenants so finding tenants for a clean presentable house in reasonable area would not be difficult. 3. Sorry I don't understand? With £42k in the bank you are getting diddly squat interest and inflation is eroding the value every day. 4. I already quoted at an inflated 6%. You can get BTL mortgages from 3.79%. The interest rate would need to be nearer 20% before you were subsidising the mortgage from your own pocket.
  11. Actually I must partly come to Ajay's defence. I've looked into the Local Housing Allowance he mentions in his video. I just found a three bed end terrace near me in Nottingham for £42k (repossessed). I rang up about it and apparently the contracts are due to exchange today so it is most likely sold now. A similar house in the same street is up for just under £80k. Renting to a DSS tenant I could realise approx £518 PCM rent. On a purchase price of £42k with annual rental income of £6,200 that is an annual return of almost 15%. You don't get much better than that. The house would pay for itself within 7 years if you paid cash for it. You could also get a 75% LTV mortgage on the actual purchase price which would mean putting down £10,500 and borrowing £31,500. On an interest only mortgage you would pay £157.50 (@ 6% interest) so you would still make a profit of £360.50 per month having invested £10,500 of your own money. You could also do it Ajay's way and if you could prove you bought BMV and it was actually worth approx £55k you could borrow the full £42k which would cost £210 per month @ 6% leaving £308 profit. I would not consider being as aggressive as Ajay but I would remortgage for 75% of actual purchase price to free up capital for the next purchase. It would not matter if house prices kept tumbling as I would not be selling and I could use the £4,320 annual income to pay down the loan anyway.
  12. I've been studying Ajay's website for some time (before I noticed this thread). This is one of the property deals from his website: http://user19086.websitewizard.com/files/u...cted/Feb013.pdf He has found a property "valued" at £90,000 and negotiated a purchase price of £58,000. The LHA rental income is quoted at £525 (estimated I assume) or £475 privately. I presume these figures are from his extensive knowledge of the rental market in that area. The "financials at a glance" are: Ahuja Group Fee: £3,500 Legal/bridge fees: £1,200 Broker & Survey: £800 Cash Back: £9,500 Total Cash back: £4,000 Rental income: £525 Mortgage cost: £253 Monthly profit: £272 So what does this mean? There is a house that someone values at £90k but will actually sell at £58k. It looks like by using a bridging loan and some smoke and mirrors the house is bought for £58k then resold to you for the full estimated price of £90k. You take out a loan for 75% of the £90k asking price (£67,500) The loan of £67,500 is £9,500 more than the actual sale price of £58k This £9,500 is eaten up by paying Ahuja group £3,500 finders fee, legal/bridge fees and broker/survey fees plus £4k back to yourself in cash. Great! You have just bought a house overvalued at £90k for £67,500 - but it is really only worth £58k which was the real sale price. And it has cost you £5,500 in various fees to do so. So you now have an interest only mortgage for £67,500 on a property worth only £58,000. Let's look at the rental income next: Professional landlords expect a property to be vacant on average 2 months each year. I also read that Ajay uses agents that charge 10-15% of annual rent to let his properties for him. The rental income (assuming it is correct) is a maximum £525pcm * 10 months = £5250 minus at best 10% for the letting company so that leaves £4,725 per year. Minus £2,530 mortgage payments for the year leaves £2,195 per year profit. There are many potential problems though. 1. Mortgage rates could go up considerably. 2. The figures do not allow for any repairs or maintenance. What if the boiler fails? That is easily £1k out of the £2k annual profit. 3. If you cannot find a tenant for a year you still have the £2,530 mortgage to pay, plus other fees - service charges for flats, ground rent, etc etc. 4. The quoted rentable value could be over-optimistic. 5. The property is only really worth £58k. If you were forced to sell and were able to realise this same price (and not lower) then you're instantly £10k plus out of pocket. If prices carry on downwards then you would be really shafted. I wouldn't touch any of his "great deals" with a barge pole. He is making £3-£4k a time overvaluing properties and selling them to gullible idiots for AMV - above market value. If the deals were that good he would be scooping them all up himself.
  13. I don't personally see anything wrong with BTL. I rented property several times when on short term contract in London. I happily rented a 3 bed place in the Midlands years ago rather than move back in with the parents after splitting up with a girlfriend. Renting suits a lot of people for a lot of reasons. If I hadn't been able to rent short term in London I wouldn't have been able to work down there - and in fact I wouldn't have met the girl who is now my wife. OK so maybe there is a downside
  14. Bootle has a regeneration scheme in progress. You can get terraced houses for £20k but they're cash only purchases as they may get a CPO (Compulsory purchase order) slapped on them at some point so they can demolish all the slum housing for new stuff.
  15. What a great idea for a website! I noticed this flat at approx £67k: http://www.getanoffer.co.uk/property/73/qu...on-M34-6HH.html If you lookup the postcode on houseprices.co.uk you will see that flats in that block sold for anywhere between £105k & £145k (I don't know the flat number so cannot check the actual price) I feel sorry for the seller who is having to face up to losing between £38k and £78k if he/she manages to sell at £67k. Just shows how very overpriced all these new build 2 bed flats were that popped up like mushrooms all over the UK last few years.
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