Pablo-silver or lead?

Until recently (July 2005) we lived in Florida close to Disney. I have 3 years direct experience of the vacation villa market (both sales, rental/management. Sale prices peaked about Sept 05. There are many subdivisions (estates) zoned for STR aimed at Brits. Some have over 30% of the 'New' (bought in the last 3 years) villas for sale and nothing and I mean nothing has sold in the last 7 months. Why the rush for the exit? Well the vast majority of Brits who bought in Central Florida relied on commission driven VI's for advice. They massively overestimated both the number of weeks they could rent and the price they could achieve whilst at the same time discovering cost increases (the rise in insurance and utility charges make ours look cheap), taxes and maintenance. Avoid guaranteed rental schemes unless the T&C of the contract have been read and interpreted for you by an independent Florida Real Estate Attorney. Where is the Villa your are considering investing in? Below is a comparison between figures given out in the ‘Everything America-A Place in the Sun’ magazine and the real figures. Annual running costs of a 4/5 bed Villa note Cost Fix/ Var Cost item A Place in the Sun costs 2005/06 $US Actual costs 2005/06 $US * F Mortgage? 14763.00 F Mortgage 25 yrs ($319200.00 @ 5.5%) 23520.00 ** F Property Taxes 4219.00 5700.00 *** F Tangible PP Tax Not included 144.00 F Home Owners Assoc Fee 350.00 420.00 F Pool & Lawn 2400.00 2400.00 F Insurance 1080.00 1200.00 F Minor Repairs & Replace 300.00 500.00 F Major Contingency fund Not included 1320.00 V Electricity 2040.00 2400.00 V Water 780.00 960.00 F Phone 540.00 540.00 F Cable TV 540.00 540.00 F Pest Control 360.00 540.00 V Two Cleans per Month 2400.00 2400.00 F Spring Clean + Carpet Clean Not included 360.00 **** F Admin Fee? 780.00 Not included **** F Management Fee Not included 1440.00 F Occupational License Not included 60.00 F Hotel & Motel License Not included 180.00 F Annual Air Con Service Not included 90.00 F Pool Heat Pump Service Not included 90.00 F Termite Inspect/Insurance Not included 130.00 F Account Fee/Tax return Not included 600.00 ***** Total 30552.00 45534.00 Notes * A Place in the Sun state they are using an interest rate of 4.63%. They make no mention of a deposit on the property or how much is being funded on mortgage. There is also no mention of the mortgage term i.e. 25, 30 or 50 years? ** Property tax is collected by the state and is the equivalent as UK council tax. *** TPP stands for Tangible personal property tax and is payable to the County. If your property is rented out, you are classed as a business and have to pay a tax on the value of the contents of your villa. **** A Place in the Sun state a $65.00 per month ‘Admin fee’. We have incorporated this in the $120.00 per month Management charge. ***** A Place in the Sun annual running cost came out at $31572 not the $30552 that they added up to. For the purpose of our comparison we are using their $31572. Cost Fix/Var. Only two cost items are variable relative to the occupancy rate of a villa. That is water and electricity. We have assumed these costs as at 36 weeks occupancy, because that’s the minimum quoted in A Place in the Sun. The figures came out jumbled but the bottom line is a Place in the Sun said the estimated annual running costs were $30,552 when in reality they are $45,534 and increasing. Be very, very careful Florida is like southern Spain but with more scams! Pablo Silver or Lead?

It's now way too late for the BOE MPC to get ahead of the game (using I/R increases to head off inflation and sentiment that inflation is going up). So in collectively choosing not to get ahead of the game, they've put themselves in the position of 'reactionary catch up'. This means that I/R will have to go up for higher and for longer than otherwise would have been the case. They just got the judgement call wrong. As I've posted many times before it doesn't change the outcome for inflated property prices in the UK (and other markets). It's all on track. Pablo Silver or Lead?

I/R are going up in the UK not down. Sentiment is highly suceptable to higher I/R, because many people are already robbing peter to pay paul due to being squeezed by a combination of rising 'real' living costs and massive tax burden and unemployment. One .25% rise in I/R (due july/Aug) will turn sentiment, a second befor the year end will be the catalyst. There will be further rises throughout 07. Property prices will bottom out in late 08 early 09. Property prices in the hottest areas relative to where they started their climb from will be hardest hit (especially in the north). I can see -35 tp 45% drops on many properties of a particular type in particular geographical markets. Nothing anyone can do will change these events. Pablo Silver or Lead?

I think what Merv was saying is that HPI (as opposed to house prices) is back to normal i.e. not going up much. Soft Landing/Hard landing? the main tyres have touched the tarmac but the front wheel and the rest of the plane (current house prices relative to earnings, inflation out look etc) is still un-balanced and a big risk. I/R will be going up, as will unempolyment. There are many more BTL's (second/third home owners of Uk and holiday homes) out there than currently recorded. Due to under reporting because of tax evasion and mortgage fraud. I know many friends and associates that 3 years ago were boasting about their off plan villas in Spain, Florida etc and their 2 bed uk buy to let pension properties. With out exception they've all gone very quiet. On the occasion I do engage them in conversation about 'how much they are making' in either rental yield or capital appreciation minus all costs including liquidation, they are remarkably frank about how dissapointed they are. The all say it's much more time consuming, stressful and costly (being a jonny come lately property barron) and they are going to sell, when the market picks up. Oh dear I bet they dont wait that long. Pablo Silver or Lead?

No tenant = zero gross yeild! and big negative net yield = cash burn. Pablo Silver or Lead?

Thats an EOT. Link detached is joined by the garage. Property misdescription act, case for. Pablo Silver or Lead?

As he was telling me the story I though there is no point in me explaining the the way the cycle works. As it's outside his experiance. This time arround what amazes me is the amount of people of an older generation (40 to 55) who should know better, encouraging or puting pressure on their 20 something kids to pile into property at the top. Pablo Silver or lead?

Double or Quits? Take the money! Pablo Silver or lead?

Either they play catch up and do as above, or delay and put them up in 6 to 9 .25% graduations in 07 and carry on into 08. muppetnorth choose your poison? Pablo Silver or Lead?

.25% July or Aug. One more by year end. Between 4 and 7 .25% increases in 07. Pablo Silver or lead?

This shows the begining of the end of this Bull Run of HPI. It was exactly the same last time inconsistent pricing all over the place. It works like this when the market is going up by the week/month and everything sells, pricing is easy, you just add on a couple of grand until things stop selling i.e. you consistently push the ceiling and when it stops going up, thats peak. In many areas, many types of property arn't selling. Lot of Estate Agents (unable to earn a decent living in a really tough market) have bailed out. So lots of spoty new 19 year olds doing valuations. This combined with plenty of vendor denile due to the Daily Express ect and some vendors cutting prices because the've over streched themselves, give this confusing pricing picture. With I/R increases comming to a country near you soon and for the next 2 years. Normal service will be resumed. That is vendors and EA will take a couple of grand off a week/month untill things get back into balance. Pablo Silver or Lead?

Read the contract, what does it say or is it silent on these issues? If you don't understand it. Pay a suitably qualified lawyer to give you an interpretation. Pablo Silver or Lead?

WB feels good lots of less fortunate people benefit. it's a win win, good news story. Pablo Silver or Lead?

Realistbear thats the one thanx Pablo.

There was a recent post/posts with data from either ODPM/LR/Nationwide displayed as a long list of towns/cities/regions that had fallen in price, either by qtr or year, with the % drops alongside. can anyone piont me in it's direction? Thank's inadvance for your assistance. Pablo Silver or Lead?

Tens of thousands of properties did in london and south of the M4. I was a Branch Manager of Connells EAs at the time hundreds of thousands of properties 35-50% down, tens of thaousands unsellable unless dropped 50-55%. pablo Silver or Lead?

It's the 'Spring Bounce'. Not many buyers lots of seller. The world cup is distracting people, then we go into the quiet July/Aug holiday period. By the time the pre Xmas 'Autum bounce' comes arround (Sept/Oct). The MPC will be looking at a second .25% I/R rise. The course is set, has been for 10 months now. Pablo Silver or Lead?

A story from a southern commuter town Surrey/Hants. I met a guy that worked for me ten years ago he’s now thirty. He said he had the foresight to buy 5 years ago before prices when crazy. He had received £20k comp from an accident (he’s fully recovered thankfully) and put it down as deposit on a little modern estate 2 bed house. Over two and a half years he had substantial increase in paper value (about a further £60k). Being a big fan of Phil and Krusty, he releases 30k of his 80k equity to buy a one bed in B’stoke off plan. He said he has had it 3 years, it’s not gone up in value and the costs mort/other are not totally covered buy the rent. He has just had a baby and his job £45k pa is insecure. Deciding that off plan flats are not the best for BTL he has just released another £30k of the remaining £50k in his home (which when valued had only gone up £10k in the last 2.5 years) to buy a small 2 bed estate house, again in B’stoke. So, 30 years of age, £90k (give or take £10k) in paper equity in 3 properties, £340k in mortgages, new baby, job insecurity and no prospect for capital appreciation in the foreseeable future. I really hope it works out for him His last comment was “I want to be a property millionaire, but it isn’t working at the moment!” Pablo Silver or Lead?

EA do not determine prices, only the market can do that! Pablo Silver or Lead?

US I/R will reach 6% but before that the MPC will up ours .25 followed by 5 to 6 further .25 increases by end of 2007. Anyone want to buy a 2 bed apartment in a northerm city centre for £220K? Wait 2 years and get one for £120K. Just watch. Pablo Silver or Lead.

Never ever wanted kids. Got married at 28 we had a child (unplanned) 2 years later. Daughter now in her teens and we have a 10 month old Cairn Terrier puppy. Both the best investment I ever made. Ultimately the only thing that is important is relationships. Pablo Silver or Lead?

Just like last time when they (the media especially the press) can't spin HPI anymore they will produce the biggest baddest bear headlines you can imagine. Bad news sells. just watch. Pablo Silver or Lead?

Another way of putting it. Older second time arrounnd FTB's forced to saddle themselves with huge mortgages condeming themselves to a life sentence at the top of this property cycle. Their called Forty something Unemployment fodder Counselling receiving Embittered Divorcees FUCED! Pablo Silver or Lead.

You can't get the commission if the house isn't on your books. Over value, take instruction and then talk the vendor down. Standard opertating procedure for EA. Pablo Silver or Lead?

Must be a really good IT consultant if he has to do Estate Agencey work normaly carried out by a spotty 19 year old on £10k a year. What's the world coming to? Pablo Silver or Lead?