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guitarman001

Friend Still Into Property

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Mate of mine just got a civil engineering job - got a warning letter the other day though saying the company was facing troubled times since they go by a lot of public sector contracts. Doesn't put my friend off, though... his family told him that property is the soundest investment and he is following this advice - even after all my reasoned arguments. He's done a bloody degree involving some hard maths for Christ's sake..

His plan is to get a mortgage on a place, but to let it out to two other people so they can help pay his mortgage. I was telling him that a public sector index-linked pension of approx £20k was really good and he was aghast, saying that was such a low figure. I told him that we'd likely have to save up half a million to be able to afford that in retirement - he's such an idiot. His response was that the equity in his house would be his pension............ argh!!!!!!!!!!!

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Like you I believe he is making a mistake.....However so much in life is down to luck, that even if we are right, his life could be so successful in other respectss that the property is just an insignificant setback. On the other hand it could be the last straw that pushes him over the edge. Best to let people follow their own path, particularly the stubbon ones. Whatever happens he will not thank you for the advice, but if we are wrong and the irrational property market continues he sure as hell will blame you for costing him money.

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He's done a bloody degree involving some hard maths for Christ's sake..

civil engineering?hard maths? you pulling my leg? (just remember some guys who couldn't get their head around cosines a few years back, crazy people...)

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Mate of mine just got a civil engineering job - got a warning letter the other day though saying the company was facing troubled times since they go by a lot of public sector contracts. Doesn't put my friend off, though... his family told him that property is the soundest investment and he is following this advice - even after all my reasoned arguments. He's done a bloody degree involving some hard maths for Christ's sake..

His maths probably point to a yes depending on which part of the country he intends to buy in.

If he's in the north economics say yes, elsewhere it's a NO NO NO.

The only thing that will stop HPI is unemployment, folk will pretty much do anything to buy & keep a roof - it's really that simple !

Unemployment is coming, when the cuts bite & no government props are in place we all know what happens then.

Edited by concerned_money

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If the house is for him to live in, and if he's happy sharing his place with others for some time then it can be a great way to buy a house. Sure I think his timing is poor, but house buying comes down to what people want in their lives as well as good old-fashioned maths.

You've made your point, don't rub it in his face if he makes big losses in the short term.

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His maths probably point to a yes depending on which part of the country he intends to buy in.

If he's in the north economics say yes, elsewhere it's a NO NO NO.

The only thing that will stop HPI is unemployment, folk will pretty much do anything to buy & keep a roof - it's really that simple !

my god you crazy bull! am up north and I wouldne touch properdie up here with a bargepole - where are all the jobs gonna come from to replace the public sector? nah nah nah you crazy northern bull person!

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Lol - true - his maths skills aren't as honed as my electrical/maths skills... ;)

He is not buying it as a home. He is buying purely as an investment (ok he's going to live there but I'm telling you his mindset). I think he'd actually like to get into BTL if he could. He admits to not knowing much about markets, investment etc - crazy.

I agree - best to keep quiet. It's just so damn hard when he goes on about it so much. Also if he does end up making money, I will never hear the end of it... ever... lol.

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I think your all wrong.

You say this guy is buying it as an investment for his pension. How old is this guy? If he's under 30 then I reckon he couldnt go far wrong.

He buys a house. Rents it out for the lifetime of the mortgage. So someone else actually buys the house. Then he either sells the house in 35 years to live of the figure or he continues to rent and lives off the income.

If you had bought a house at any time in the last 35 years for the same purpose it would have been the most wise move you had ever made, yes?

There may be a slump in prices and god hope there is. But it will bounce back within the time scale.

Please point out what i'm missing if this is not the case.

I'm not trying to wind anyone up or be a troll. I need a HPC so I can buy a family home, I'm 30 and priced out. But if were talking pensions and long term gains surely property is where its at?

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Maybe you're right, I don't know. It's just the mantra that really gets to me, you know?

Besides - how can he honestly say he is going to rent rooms to other people for 25+ years....... no WAY is that going to happen, who can do that? What if he wants to start a family and have kids etc. Ridiculous notion IMO

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I think your all wrong.

You say this guy is buying it as an investment for his pension. How old is this guy? If he's under 30 then I reckon he couldnt go far wrong.

He buys a house. Rents it out for the lifetime of the mortgage. So someone else actually buys the house. Then he either sells the house in 35 years to live of the figure or he continues to rent and lives off the income.

If you had bought a house at any time in the last 35 years for the same purpose it would have been the most wise move you had ever made, yes?

There may be a slump in prices and god hope there is. But it will bounce back within the time scale.

Please point out what i'm missing if this is not the case.

I'm not trying to wind anyone up or be a troll. I need a HPC so I can buy a family home, I'm 30 and priced out. But if were talking pensions and long term gains surely property is where its at?

Possibly so, but his timing's not likely to be great, and the risk might be high - in the short-medium term he could be stuck with that place like an albatross round his neck, unable to sell and in NE.

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I think your all wrong.

You say this guy is buying it as an investment for his pension. How old is this guy? If he's under 30 then I reckon he couldnt go far wrong.

He buys a house. Rents it out for the lifetime of the mortgage. So someone else actually buys the house. Then he either sells the house in 35 years to live of the figure or he continues to rent and lives off the income.

If you had bought a house at any time in the last 35 years for the same purpose it would have been the most wise move you had ever made, yes?

There may be a slump in prices and god hope there is. But it will bounce back within the time scale.

Please point out what i'm missing if this is not the case.

I'm not trying to wind anyone up or be a troll. I need a HPC so I can buy a family home, I'm 30 and priced out. But if were talking pensions and long term gains surely property is where its at?

NO

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Besides - how can he honestly say he is going to rent rooms to other people for 25+ years....... no WAY is that going to happen, who can do that? What if he wants to start a family and have kids etc. Ridiculous notion IMO

Ahhh, Right ok, sorry I missunderstood. So he's actually going to be living there, and wants to rent out 2 rooms to finance him buying the property. Thats very different.

So can he easily afford it on his own with no tennats?

Is it in a location where he would be happy to live and prehaps raise a family for the next 15+ years?

If the answer is NO to any of those he is in my opinion putting himself in a risky position. As no, your totally correct, he will not be renting the rooms out to students and hot young polish girls when he's living there for the next 25 years. maybe the next 5 while he's relatively young and able to compromise and deal with living with students or whoever. But as we get older our tollerances for this kind of thing get shorter and shorter.

I presumed in my first post that he would be buying solely as a BTL and that he allready had a house and family elsewhere.

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. His response was that the equity in his house would be his pension............ argh!!!!!!!!!!!

Can you ask him where he'll live when he cashes in his house to fund his retirement at age 70? Does he want to abandon the house he lived his life in and wait to die in a rented flat?

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TylerDurden - the answer is no to those questions. He's living in cloud cuckooland.

JJJ - exactly. Just the sort of thing he doesn't think about.

You know what - I'm just going to encourage him; haven't been able to change his mind for years.

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TylerDurden - the answer is no to those questions. He's living in cloud cuckooland.

JJJ - exactly. Just the sort of thing he doesn't think about.

You know what - I'm just going to encourage him; haven't been able to change his mind for years.

I have found in this life that it is a mistake to fly from one extreme to the other. If you encourage him and it all goes pear-shaped, as I expect it will, then he will probably blame you. I would either say nothing or just something like 'It's your funeral'.

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You're probably right. I'll say next time I just don't want to hear about it - no doubt he will huff and say why not, start telling me about this great investment etc.

Hey this is a great part of the website - can't believe I've not been here more!

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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