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Another Btl Tycoon Makes The Rich List

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http://www.thisismoney.co.uk/news/article.html?in_article_id=505827&in_page_id=2&ct=5

From buy-to-let to Young Rich List

By Mark Anstead

7 June 2010, 4:56pm

Starting a property portfolio from scratch eight years ago, Sean O'Connor had no idea it would eventually lead him to a place in this year's Young People's Rich List.

Sean, 30, began trading property fresh out of university and with nothing more than a graduate loan to begin with and by 2007 had built up a large buy-to-let portfolio of 40 homes.

But when the mortgage market seized up three years ago he switched to carbon trading instead.

And last month Sean became the top new entrant on the Young People's Rich List, sandwiched in sixth place between Hollywood stars Daniel Radcliffe and Keira Knightley, and estimated to be worth around £33m.

'I couldn't have achieved any of this without cutting my teeth on property,' says Sean.

'When I was trading apartments in Manchester and Leeds I met a lot of high net-worth individuals and when that market collapsed they were looking for the next opportunity as I was.

'In a way, what I do now is similar – it's a bit like buying land and getting planning permission to increase its value. Together with wealthy investors we invest in green technology and pay to install it into companies who need to save energy costs to meet their carbon targets.

'We then take a share of the extra carbon credits they receive and sell them on.'

The EU's bright idea to monitor carbon emissions and force large businesses to buy credits if they fail to meet targets has now spawned a whole new 'carbon market'.

Last month it was reported that 22 people had been arrested in cases of suspected carbon fraud, so it should come as no surprise this market, like any other, has now created its own 'carbon millionaires'.

In 2002, having finished a sports management course at Northumbria University, Sean used a graduate loan to put a £12,000 deposit on a three-bedroom home in Gateshead, Tyne and Wear.

In the following year he remortgaged it and borrowed another £20,000 to pay small deposits on four two-bedroom apartments bought off-plan in the town.

In the course of the next year Sean sold all four apartments before they were completed and made a £15,000 profit.

He continued to trade apartments bought off-plan in Manchester and Leeds until around 2005, when he switched to buying houses to keep and let. By 2007 Sean had 40 houses worth £6m, but was paying interest on mortgage loans amounting to 80% of that value.

After the collapse of Northern Rock later that year, which damped down mortgage lending, Sean decided to go into green investing as the 'next big thing'.

'I started an environmental website for people saving energy,' says Sean.

'I quickly realised that everyone needed a financial incentive and I also came across a range of fledgling companies with good ideas for creating green energy that needed finance.'

Sean's company, Clean Energy Capital PLC, is now turning over £100m annually and is on track to make £3m in profits this year.

As sole owner he has already been able to extract £1m from the business to pay down loans on his property portfolio, which is now worth £5.2m.

And early last year Sean moved out of the three-bedroom home he bought in Gateshead eight years ago into something better suited to his wealthy status.

He paid cash for a four-bedroom converted home within a spectacular stately building in Yorkshire's Rounday Park costing £499,000, but he knocked £250,000 off the asking price from 2008.

I like the fact that he is somehow worth £33m when all he is actually doing is trading the carbon credit bubble and using profits to pay down his property portfolio debt. Having extracted £1m from his carbon-credit trading scheme, he has paid down mortgage debts. Sensible man.

But hang on, his property portfolio is now worth only £5.2m. So what he's actually doing is trying to keep his head above water. If the portfolio had lost 800K without his top-up, the banks would be demanding money for him breaking LTV limits. £1m gains and 800K losses is a 200K gain. And on a portfolio "worth" £5.2m that was mortgaged 80% at £6m (£4.8m), that makes him worth £1.4m by my estimates (£5.2m equity minus £4.8m loans plus £1m carbon trading profit).

Oh, but don't forget the £500k house he's just bought himself. That makes his total debts £4.3m with houses worth £5.7m. That's a LTV ratio of 75% - I doubt any bank would accept less.

What happens to this man when house prices continue to fall and his carbon-trading scheme folds because companies cut back on their capital expenditure?

Anyone?

One to watch? Remember his name: Sean O'Connor.

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Mind you, I forgot to embolden this bit:

Last month it was reported that 22 people had been arrested in cases of suspected carbon fraud, so it should come as no surprise this market, like any other, has now created its own 'carbon millionaires'.

Says it all, really.

Edited by AvidFan

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In 2002, having finished a sports management course at Northumbria University, Sean used a graduate loan to put a £12,000 deposit on a three-bedroom home in Gateshead, Tyne and Wear.

In the following year he remortgaged it and borrowed another £20,000 to pay small deposits on four two-bedroom apartments bought off-plan in the town.

In the course of the next year Sean sold all four apartments before they were completed and made a £15,000 profit.

He continued to trade apartments bought off-plan in Manchester and Leeds until around 2005, when he switched to buying houses to keep and let. By 2007 Sean had 40 houses worth £6m, but was paying interest on mortgage loans amounting to 80% of that value.

So over the first two years he made a 'profit' of £15,000? Right, and presumably had no living costs whatsoever, didn't eat etc and so after two years went from having a £12,000 student loan to having a £12,000 student loan and £15,000 cash.

Ok, doesn't sound like a multi-millionaire so far...........but wait!

He then spent 3 years flipping off-plan 'apartments' in Mcr and Leeds. Right, so that would net him how much in profit? Hmmmm........doesn't say does it.

So from 2005 to 2007 he then bought BTL houses. Doesn't say where, but let's assume similar areas. Right, well there wasn't much price appreciation during 2005-07 oop north. Asking prices maybe yes - selling prices, errrr, nope sorry. In fact, I'm looking at plenty of stuff which is still lower than asking prices were in '05 around here - in very good locations. Anyway, let's move on.....

So, 40 houses 'worth' £150,000 each avge. 'Worth' defined by who exactly? His valuations at the top of the market?

Where did the deposits come from for these 40 houses?

Which bankster provided the funding? I'd guess whichever it was they're either no longer trading or on govt. life support.

Sorry, nothing about this article makes any sort of financial sense. As for the carbon trading...............The only thing I'm suprised about is he hasn't mentioned gold! ;)

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  • 201 Brexit, House prices and Summer 2020

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      • up 5%



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