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Ok.

It's been 3.5 years since I sold and moved to better area. Son starts school in September in amazing school so can be free to move now to less trendy area.

Big deposit, no interest being earned.

Rent high for 2 bed in great part of North London.

interest only mortgage will be less.

Thinking of just buying cheap 1 bed next winter and doing it up, adding a room and moving up in small increments eventually ending up somewhere great and with no mortgage.

I fully expect the market to keep dropping at 10 per cent per year, but if I buy 30 BMV and get out within a 6 month to a year period by selling cheap I can make a bit of a profit after buying, mortgage and selling costs (about 7-8K).

Anyone else thinking like this?

Saw some estate agents today, they say their inventory is very low, and big family houses are going like hot cakes, but no interest in flats. Their estimates of loft conversion prices and values added were very varied.

I think when the QE stops, we will see more falls, but just not as dramatic. Also, I think cheap IO mortgages will get harder and harder to come by.

Anyone ever bought at auction?

Cheers in advance

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BMV=MV

Lovely answer!

It's scary out there. The guy who bought my flat off me in 2005 updated it a bit and added 60k and still hasn't sold it 4 years later! Keeps lopping off 15k here and there (thanks Property Bee).

Could be a lot of hard work for me, but the IO mortgage is going to be so much less than the rent.

If BMV=MK then the same applies for the next step up....

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Deleveraging will wipe you out.

Rising interest rates will wipe you out.

The govt doesn't have enough money to bail you out.

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Deleveraging will wipe you out.

Rising interest rates will wipe you out.

The govt doesn't have enough money to bail you out.

I intend to get a fixed rate mortgage

Also, by deleveraging do you mean eventually having to pay off the 150000 i want to borrow? I won't need more than that and intend to keep doing this until the top of the next bubble in ... years and then downsize. I will add £50k value to each place I do up by spending £30k, enabling me to buy for £20k more each time. The 7-8k costs for each move I will find by the IO mortgage being less than my current rent per year.

Come on all you clever clogs out there. Prove me wrong!

In a dropping market, the next rung will be closer. I just have to make sure I buy for BMV at least 20 per cent each time and price realistically.

I will also be learning some valuable lessons about renovating in time for the final big project which may or may not be in a rising market.

This plan won't work as well in a rising market, as the bargains won't be there.

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I intend to get a fixed rate mortgage

Also, by deleveraging do you mean eventually having to pay off the 150000 i want to borrow? I won't need more than that and intend to keep doing this until the top of the next bubble in ... years and then downsize. I will add £50k value to each place I do up by spending £30k, enabling me to buy for £20k more each time. The 7-8k costs for each move I will find by the IO mortgage being less than my current rent per year.

Come on all you clever clogs out there. Prove me wrong!

In a dropping market, the next rung will be closer. I just have to make sure I buy for BMV at least 20 per cent each time and price realistically.

I will also be learning some valuable lessons about renovating in time for the final big project which may or may not be in a rising market.

This plan won't work as well in a rising market, as the bargains won't be there.

There is no such thing as below market value, a house is only worth what someone will pay for it hence what you pay is the market value.

If you expect prices to continue falling by 10% a year then you need to be doing more than adding a room to walk away in profit after a couple of years. Putting in a substantial ammount of hard work and cash to improve the property could be just keeping you at break even over a couple of years - net result loss of cash/labour.

IO mortgage sounds great and assuming the interest rates don't climb, which they will, if you end up trying to sell in neg equity then you have to find the cash to settle with the bank. If you take the view that you will not sell in neg equity regardless then you could be trapped for years.

This is a horrible idea, buying a falling asset and pumping money/labour into it. Sounds like something only a government would do.

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In a dropping market, the next rung will be closer. I just have to make sure I buy for BMV at least 20 per cent each time and price realistically.

I will also be learning some valuable lessons about renovating in time for the final big project which may or may not be in a rising market.

This plan won't work as well in a rising market, as the bargains won't be there.

BMV=MV

I thought you were joking, but clearly not. When the market is going down you will have bought at MV, and will spend MV+X to renovate (where X=renovation costs+mortgage costs+opportunity cost of you doing something else). When you come to sell some n months later the market will still have gone down by a further Y. So you need to sell at more than MV+X+Y to get any profit. Rather you than me mate.

There are many other business endeavours you could consider without taking on massive debt risk.

By the way, BMV=MV. :P

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I think it's a good plan. You delevered at the top, you've done well - now you are finding rent is expensive and guess what London property prices are still holding in pretty well.

Don't listen to the doom-sayers, your reasoning is solid, and should work well in a market that trades sideways/small upwards.

1 beds are probably a better bet than 2 beds I would say, so much oversupply of 2 bedroom flats on the market.

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There is no such thing as below market value, a house is only worth what someone will pay for it hence what you pay is the market value.

If you expect prices to continue falling by 10% a year then you need to be doing more than adding a room to walk away in profit after a couple of years. Putting in a substantial ammount of hard work and cash to improve the property could be just keeping you at break even over a couple of years - net result loss of cash/labour.

IO mortgage sounds great and assuming the interest rates don't climb, which they will, if you end up trying to sell in neg equity then you have to find the cash to settle with the bank. If you take the view that you will not sell in neg equity regardless then you could be trapped for years.

This is a horrible idea, buying a falling asset and pumping money/labour into it. Sounds like something only a government would do.

mm good points, but I will only get a fixed rate IO mortgage.

There is a slight problem, round here, it is a rising market at the moment! I can't take another 2005.

Also, in a rising market, the next rung up will be too far away from me without having to borrow stupid amounts of money.

I believe in BMV. Just check out the auctions. You can get a good return from the money you use to bring them into good order again. When the repos start hitting the market in earnest, there will be less people chasing the bargains. If i am in and out quickly, I believe it is doable.

I like well thought out answers by the way. I have been around for 5 years here and know all the cliches!!

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mm good points, but I will only get a fixed rate IO mortgage.

There is a slight problem, round here, it is a rising market at the moment! I can't take another 2005.

Also, in a rising market, the next rung up will be too far away from me without having to borrow stupid amounts of money.

I believe in BMV. Just check out the auctions. You can get a good return from the money you use to bring them into good order again. When the repos start hitting the market in earnest, there will be less people chasing the bargains. If i am in and out quickly, I believe it is doable.

I like well thought out answers by the way. I have been around for 5 years here and know all the cliches!!

I am in the same situation, as are many here. If this bounce becomes prolonged then the next rung will be out of reach for me and I will either have to downgrade my plans or continue to rent, neither of which I want to do.

There is no such thing as bmv. Some sale prices may look good at auction but an auction is the perfect proof that there is no such thing as bmv - in a room full of people, many of them pro's, a place only sells for what someone is willing to pay (true market value). When those pro's are only willing to pay what they do for a property then it truly is market value - not a great saving, and do not forget that many will either be traded or have that network in place to renovate. They will be spending far less than you doing any work so the margins will be nowhere near as tight.

If and when repo's start to hit the auctions then you will be up against builders and developers. At auction, you also need 10% in cash on the day for anything that you win and then need to get the mortgage sorted out. You really need to have a survey done on anything that you are going to bid on so that you know it is sound. What if you don't get the place? how many sets of survey fees can you right off? or will it cloud your judgement and have you bidding top whack to secure the place seeing as you have paid for a survey?

How are you going to be in and out quickly with no experience and no trade network established? The only place that will sell quickly will have to be in top condition and done well. To buy cheap and get a place to that standard is either going to take time or a boatload of cash, cash that will be hard to recover. With that sort of margin, any supply issues or trade issues or planning issues or anything else is going to be putting you at further risk.

The time will come for your plan but I genuinely do not believe that this is it. Look at the fundamentals, there is nothing sound to this recovery and it has no substance. Look at history, the bounces that have occured during the past downcycles, there are always ups before further downs.

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I am in the same situation, as are many here. If this bounce becomes prolonged then the next rung will be out of reach for me and I will either have to downgrade my plans or continue to rent, neither of which I want to do.

There is no such thing as bmv. Some sale prices may look good at auction but an auction is the perfect proof that there is no such thing as bmv - in a room full of people, many of them pro's, a place only sells for what someone is willing to pay (true market value). When those pro's are only willing to pay what they do for a property then it truly is market value - not a great saving, and do not forget that many will either be traded or have that network in place to renovate. They will be spending far less than you doing any work so the margins will be nowhere near as tight.

If and when repo's start to hit the auctions then you will be up against builders and developers. At auction, you also need 10% in cash on the day for anything that you win and then need to get the mortgage sorted out. You really need to have a survey done on anything that you are going to bid on so that you know it is sound. What if you don't get the place? how many sets of survey fees can you right off? or will it cloud your judgement and have you bidding top whack to secure the place seeing as you have paid for a survey?

How are you going to be in and out quickly with no experience and no trade network established? The only place that will sell quickly will have to be in top condition and done well. To buy cheap and get a place to that standard is either going to take time or a boatload of cash, cash that will be hard to recover. With that sort of margin, any supply issues or trade issues or planning issues or anything else is going to be putting you at further risk.

The time will come for your plan but I genuinely do not believe that this is it. Look at the fundamentals, there is nothing sound to this recovery and it has no substance. Look at history, the bounces that have occured during the past downcycles, there are always ups before further downs.

Yes. You make complete sense. I did think about the unlimited amount of survey gambles. I considered getting my neighbour who is a builder to come along for look rounds, and also read up on it a lot. I bought my last place without a survey and it was fine. I know a lot of builders, and plan to have them lined up.

The margins are going to be ever so tight. But with each year, I will be in a slightly larger and better property and the original debt will be the same. I hope to be more experienced by the time we flat-line/start rising. I wouldn't want to be embarking on renovating at the START of another boom, as crazy as that sounds, I want to have more equity to reach up to those 3 bed house prices.

The more I think about it, the more I think I would panic sell in a dropping market, just like I did in 2005. I don't really have the balls for all this. ****.

Thanks for your replies, they made me think a bit more.

I need to get my rent down. its £1170 pm. But for me it's worth it. It's amazing. I am self-employed and work from home.

I am going to see what it is like in the mid winter and revisit this idea/thread.

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Yes. You make complete sense. I did think about the unlimited amount of survey gambles. I considered getting my neighbour who is a builder to come along for look rounds, and also read up on it a lot. I bought my last place without a survey and it was fine. I know a lot of builders, and plan to have them lined up.

The margins are going to be ever so tight. But with each year, I will be in a slightly larger and better property and the original debt will be the same. I hope to be more experienced by the time we flat-line/start rising. I wouldn't want to be embarking on renovating at the START of another boom, as crazy as that sounds, I want to have more equity to reach up to those 3 bed house prices.

The more I think about it, the more I think I would panic sell in a dropping market, just like I did in 2005. I don't really have the balls for all this. ****.

Thanks for your replies, they made me think a bit more.

I need to get my rent down. its £1170 pm. But for me it's worth it. It's amazing. I am self-employed and work from home.

I am going to see what it is like in the mid winter and revisit this idea/thread.

don't forget that with tight margins, legal fees, stamp duty, hips and ea fees are all going to bite.

if you wait until we go flat then the worst that can happen is you don't lose much. If you wait for a rising market then it will carry you, cutting teeth in a falling market sounds like your taking worse odds than at a roulette table.

don't forget that a builder having a butchers with you around a place may not be enough. If you win a place and put down the 10% only to find it unmortgageable for some reason then you lose your 10%. Don't know about you but I couldn't risk writing off that much. Good luck.

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Ok.

It's been 3.5 years since I sold and moved to better area. Son starts school in September in amazing school so can be free to move now to less trendy area.

Big deposit, no interest being earned.

Rent high for 2 bed in great part of North London.

interest only mortgage will be less.

Thinking of just buying cheap 1 bed next winter and doing it up, adding a room and moving up in small increments eventually ending up somewhere great and with no mortgage.

I fully expect the market to keep dropping at 10 per cent per year, but if I buy 30 BMV and get out within a 6 month to a year period by selling cheap I can make a bit of a profit after buying, mortgage and selling costs (about 7-8K).

Anyone else thinking like this?

Saw some estate agents today, they say their inventory is very low, and big family houses are going like hot cakes, but no interest in flats. Their estimates of loft conversion prices and values added were very varied.

I think when the QE stops, we will see more falls, but just not as dramatic. Also, I think cheap IO mortgages will get harder and harder to come by.

Anyone ever bought at auction?

Cheers in advance

Nice idea if prices move sideways.

Is it easy to get such a mortgage where the bank is happy for a 6 month to 1 yr fix?

And in the end, that is all you are going to be able to get if you want to flip and not get hammered by the early repayment charges.

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don't forget that with tight margins, legal fees, stamp duty, hips and ea fees are all going to bite.

if you wait until we go flat then the worst that can happen is you don't lose much. If you wait for a rising market then it will carry you, cutting teeth in a falling market sounds like your taking worse odds than at a roulette table.

don't forget that a builder having a butchers with you around a place may not be enough. If you win a place and put down the 10% only to find it unmortgageable for some reason then you lose your 10%. Don't know about you but I couldn't risk writing off that much. Good luck.

Thanks

A IO mortgage on £150000 will be half what I am paying at the mo, so that will cover the 7-8k costs.

Mortgage companies do a survey valuation for this reason.

I think we are in for years of flatlining very soon.

Yes I am watching the Beeney. Yes I feel like a wally. I am losing it again, my peer group is very hard to compete with.

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Nice idea if prices move sideways.

Is it easy to get such a mortgage where the bank is happy for a 6 month to 1 yr fix?

And in the end, that is all you are going to be able to get if you want to flip and not get hammered by the early repayment charges.

Yes, I was wondering about this. Was going to phone broker tomorrow to see what is out there for us. I think IOs are quite flexible if you want to pay them off. I am probably wrong. I didn't have any probs paying off my last mortgage ofter 3 years but that was a variable repayment with B of S.

I hate borrowed money.

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