Velgud Posted November 12, 2010 Share Posted November 12, 2010 Evening all, Throughout the week, I've been pondering on something and thought I'd throw it out there to all you lovely people who share many of my morals. I'm currently working on a pretty hot looking dot com startup and we were just chatting about what we'd do if it ever sold for a proper shedload of money. I'm not really into money so my response was to give it a go at playing Robin Hood My city has about 200k people. A city centre one bed flat is about £550pcm. My idea was that if you bought a load of rental properties just in the city centre and rented them out at a non profit rate, then through local press started telling people about your goal of destroying the city's buy to let empire (because it's abhorrently wrong) and ask for some people power, advising them to not rent from other landlords and wait until one of the non profit properties became available, then perhaps you could destroy the local BTL market? BTL landlords would lose tenants which would reduce their monthly income, while also seeing their property portfolio dropping in value. They'd be keen to sell but there would be far less buyers as the BTL buyers would drop out the market in fear of this new plot to downwards engineer the property prices. Every time a city centre rental property became available, we'd buy it and keep on doing so aggressively. On the way down, the BTL drop out numbers would grow and the property portfolio would continue getting cheaper to expand. In a city of 200k people, how many properties do you think would need to be bought to get the ball rolling? The property value and tenant rental savings would fall and rise respectively on a curve, but I was just wondering if there any smarties out there willing to figure it out? I guess it would depend on how much you could stretch the initial lump sum of money you started with, and how much you were prepared to leverage (deposit vs borrowing), but I think it's an interesting concept - hopefully good enough to get a little Friday night banter going Cheers Quote Link to comment Share on other sites More sharing options...
wherebee Posted November 12, 2010 Share Posted November 12, 2010 so you would sell the properties after the crash caused? -massive loss for you Quote Link to comment Share on other sites More sharing options...
Normski Posted November 12, 2010 Share Posted November 12, 2010 Can you please start with a 4 bed detached in the Cotswolds? Half an acre would be nice, thanks. Quote Link to comment Share on other sites More sharing options...
catmandu Posted November 12, 2010 Share Posted November 12, 2010 Isn't this the situation the Wilson's found themselves in? They bought up every house in a small area and (hopefully!) are seeing rents and values decreasing. With a bit of luck that'll turn out as a not-for-profit business too Quote Link to comment Share on other sites More sharing options...
Velgud Posted November 12, 2010 Author Share Posted November 12, 2010 so you would sell the properties after the crash caused? -massive loss for you No, they wouldn't be sold. Just always run at non profit. Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted November 12, 2010 Share Posted November 12, 2010 so you would sell the properties after the crash caused?-massive loss for you If you are buying with CASH with a VERY long term view, property is always a good investment. Borrowing to buy property is how you lose. On the other hand, the OP has redinfed the term "count you chickens" to a completely new level. Quote Link to comment Share on other sites More sharing options...
Velgud Posted November 12, 2010 Author Share Posted November 12, 2010 Isn't this the situation the Wilson's found themselves in? They bought up every house in a small area and (hopefully!) are seeing rents and values decreasing. With a bit of luck that'll turn out as a not-for-profit business too No, it's exactly the opposite to the Wilsons. Their goal was to raise the value of local properties but the goal in this scenario would be to drive them down. Moreover, the goal would simply be to destroy the local buy to let market. Quote Link to comment Share on other sites More sharing options...
Velgud Posted November 12, 2010 Author Share Posted November 12, 2010 If you are buying with CASH with a VERY long term view, property is always a good investment. Borrowing to buy property is how you lose. On the other hand, the OP has redinfed the term "count you chickens" to a completely new level. Again, you're missing the goal here. The goal is not to make a good long term investment - at least not with regards to the value of the property portfolio. The goal is to destroy the local buy to let empire and continually maintain lower rental prices in the city centre. Anyway, staying on topic here. How many properties do you think it would take? Quote Link to comment Share on other sites More sharing options...
otters Posted November 12, 2010 Share Posted November 12, 2010 A nice idea, but, unworkable I would think. In the said area there will be a finite amount of properties, just buying everything up will create a shortage, and fuel price rises. This will give people only one option, rent from you, or pay an inflated price for somewhere to live. Quote Link to comment Share on other sites More sharing options...
guitarman001 Posted November 12, 2010 Share Posted November 12, 2010 Not sure if it'd work - but I like the line of the idea....... Quote Link to comment Share on other sites More sharing options...
Ex house-hunter Posted November 12, 2010 Share Posted November 12, 2010 Evening all, Throughout the week, I've been pondering on something and thought I'd throw it out there to all you lovely people who share many of my morals. I'm currently working on a pretty hot looking dot com startup and we were just chatting about what we'd do if it ever sold for a proper shedload of money. I'm not really into money so my response was to give it a go at playing Robin Hood My opinion is you have little chance of selling your business for a shedload. I detest the BTL brigade and their clutching mentality too but your plan sounds commercially vindictive and sad for someone who's "not really into money". If you want to be Robin Hood, there might be better ways than destroying the BTL market - why not open a funded institution that teaches people something useful or offers other services for free. That's more altruistic and if the things you offer help people to learn something useful you will have made a constructive contribution. If you come back with a few million in a few years and need ideas, I can help you put something decent together... in the meantime stop being as miserable and mean as the BTL crowd Quote Link to comment Share on other sites More sharing options...
guitarman001 Posted November 12, 2010 Share Posted November 12, 2010 But sometimes you have to fight fire with fire. Educating people in the face of widespread delusion (with regard to the housing market for example) is a lost cause. Money wasted, IMO. Quote Link to comment Share on other sites More sharing options...
wallah Posted November 12, 2010 Share Posted November 12, 2010 I suggest giving every tenant that moves into one of your houses a copy of this: http://en.wikipedia.org/wiki/The_Landlord%27s_Game Quote Link to comment Share on other sites More sharing options...
Ex house-hunter Posted November 12, 2010 Share Posted November 12, 2010 But sometimes you have to fight fire with fire. Educating people in the face of widespread delusion (with regard to the housing market for example) is a lost cause. Money wasted, IMO. So trying to educate the deluded is a waste, but giving them cheaper accomodation is not? Think about it a bit longer term! Quote Link to comment Share on other sites More sharing options...
guitarman001 Posted November 12, 2010 Share Posted November 12, 2010 I get your point, I just don't have the same faith in people...... Quote Link to comment Share on other sites More sharing options...
Velgud Posted November 12, 2010 Author Share Posted November 12, 2010 (edited) My opinion is you have little chance of selling your business for a shedload. I detest the BTL brigade and their clutching mentality too but your plan sounds commercially vindictive and sad for someone who's "not really into money". If you want to be Robin Hood, there might be better ways than destroying the BTL market - why not open a funded institution that teaches people something useful or offers other services for free. That's more altruistic and if the things you offer help people to learn something useful you will have made a constructive contribution. If you come back with a few million in a few years and need ideas, I can help you put something decent together... in the meantime stop being as miserable and mean as the BTL crowd Now we're getting somewhere... The idea here would be to reduce the cost of living (i.e. rent) in a city and therefore make it a more attractive place to live for those wanting to attend such an institution - there is no point in having an institution in a city where people don't want to live. If the cost of living were lower, people would have more money to spend and would generally be happier - the city would be more friendly. Edited November 12, 2010 by Velgud Quote Link to comment Share on other sites More sharing options...
Velgud Posted November 12, 2010 Author Share Posted November 12, 2010 A nice idea, but, unworkable I would think. In the said area there will be a finite amount of properties, just buying everything up will create a shortage, and fuel price rises. This will give people only one option, rent from you, or pay an inflated price for somewhere to live. Or buy from me with a sell price ceiling clause Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted November 12, 2010 Share Posted November 12, 2010 If it was a film you could hire some heavies and make the current landlords an offer they couldn't refuse until they sold to FTBs at bargain prices. Quote Link to comment Share on other sites More sharing options...
Stars Posted November 12, 2010 Share Posted November 12, 2010 My opinion is you have little chance of selling your business for a shedload. I detest the BTL brigade and their clutching mentality too but your plan sounds commercially vindictive and sad for someone who's "not really into money". If you want to be Robin Hood, there might be better ways than destroying the BTL market - why not open a funded institution that teaches people something useful or offers other services for free. That's more altruistic and if the things you offer help people to learn something useful you will have made a constructive contribution. If you come back with a few million in a few years and need ideas, I can help you put something decent together... in the meantime stop being as miserable and mean as the BTL crowd You think cheap housing is vindictive? How odd Quote Link to comment Share on other sites More sharing options...
Self Employed Youth Posted November 12, 2010 Share Posted November 12, 2010 You need to build a lot of social housing very quickly... Maybe get the Chinese to help? http://www.housepricecrash.co.uk/forum/index.php?showtopic=154532 Quote Link to comment Share on other sites More sharing options...
tim123 Posted November 14, 2010 Share Posted November 14, 2010 Again, you're missing the goal here. The goal is not to make a good long term investment - at least not with regards to the value of the property portfolio. The goal is to destroy the local buy to let empire and continually maintain lower rental prices in the city centre. Anyway, staying on topic here. How many properties do you think it would take? About a third of the total rental market tim Quote Link to comment Share on other sites More sharing options...
SarahBell Posted November 14, 2010 Share Posted November 14, 2010 A nice idea, but, unworkable I would think. In the said area there will be a finite amount of properties, just buying everything up will create a shortage, and fuel price rises. This will give people only one option, rent from you, or pay an inflated price for somewhere to live. The important finite thing is the number of renters... Quote Link to comment Share on other sites More sharing options...
bb7t6 Posted November 14, 2010 Share Posted November 14, 2010 This idea sounds like the thin end of a communist wedge. I note with interest that it's morally ok for the OP to sell his business for a shed load of cash, but it's evil for anybody to try to make an income from renting out property. Quote Link to comment Share on other sites More sharing options...
Stars Posted November 14, 2010 Share Posted November 14, 2010 This idea sounds like the thin end of a communist wedge. I note with interest that it's morally ok for the OP to sell his business for a shed load of cash, but it's evil for anybody to try to make an income from renting out property. The special problem with property is the externalities of the land market Renting out a building and getting paid a market value for its use would be fair and fine, IF the externalities of the land market didn't mean that the owner not only got paid for the building they are providing, but also got paid for all the surround utility (roads, rail etc, etc) - which in reality the landlord is no more supplying to the tenant than the tenant is supplying to the landlord. It's a scam that they have managed to keep under wraps for about 300 years (and counting) Quote Link to comment Share on other sites More sharing options...
Laughing Gnome Posted November 14, 2010 Share Posted November 14, 2010 (edited) Why not use the money to seed a brown field new build for a new housing association. Write in some non profit covenants and allow the tenants to become members / stakeholders by buying the HA out for cost. The the finance could be secured based on the income stream of the rents. Then you have your money back. If the HA members / tenants have any commitment to a social agenda, they will expand the HA by building some more. If not, you still have your money and you can do it again if you have the energy. Edited November 14, 2010 by Laughing Gnome Quote Link to comment Share on other sites More sharing options...
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