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Harold Bishop

How To Value A Portfolio

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Don't shoot me down. This portfolio is for sale

http://www.rightmove.co.uk/property-for-sale/property-16399464.html

Any ideas as to what a sensible offer price would be for all 12 houses.

Anyone know the area ?

Sensible answers please

Scour the area to get an idea of rental prices for the properties, make an adjustment for voids, decide on the yield that you want / think is appropriate (3%, 5%, 7%, 10%, 12%) and work back from that.

Or - just ask the Wilsons... they know the area ;-)

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Scour the area to get an idea of rental prices for the properties, make an adjustment for voids, decide on the yield that you want / think is appropriate (3%, 5%, 7%, 10%, 12%) and work back from that.

Or, - just ask the Wilsons... they know the area ;-)

Ok, thanks. I've calculates 11/12 months rental per year ( one month void), 8% agents fee and 10% maintenance and upkeep. At at 6% yield it makes the portfolio around £2m at 4% yield the value is £3m.

Are these yields realistic ?

If you had to sell again you would need to make the buying price and cover the agents fee out of a falling asset value. Falling knife.

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Don't shoot me down. This portfolio is for sale

http://www.rightmove.co.uk/property-for-sale/property-16399464.html

Any ideas as to what a sensible offer price would be for all 12 houses.

Anyone know the area ?

Sensible answers please

More than you bought it for, if possible. Good luck.

Thanks for bringing all this additional supply to market by the way. Every little helps. :)

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Don't shoot me down. This portfolio is for sale

http://www.rightmove.co.uk/property-for-sale/property-16399464.html

Any ideas as to what a sensible offer price would be for all 12 houses.

Anyone know the area ?

Sensible answers please

I believe that prices in this region have been artificially propped up, and this prop will disappear when 700 or so properties are suddenly put onto the market.

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More than you bought it for, if possible. Good luck.

Thanks for bringing all this additional supply to market by the way. Every little helps. :)

Ha ! Its not mine. I'm on business in the Middle East and I've been asked about it by a local. Clearly, he doesn't know he is speaking to a HPC subscriber . Still, he'll get the alternative opinion.

The owner is the builder. Couldn't flog any, so, has rented out the lot.

FYI, I'm sitting in cash and some unmentionable shiny stuff..

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Ok, thanks. I've calculates 11/12 months rental per year ( one month void), 8% agents fee and 10% maintenance and upkeep. At at 6% yield it makes the portfolio around £2m at 4% yield the value is £3m.

Are these yields realistic ?

If you had to sell again you would need to make the buying price and cover the agents fee out of a falling asset value. Falling knife.

Knowing the area a little bit I was going to guess 200/275/330K per 2/3/4 bed house, so that's about 2.8 mil.

Oh look I've found this:

http://www.rightmove.co.uk/property-for-sale/property-27398389.html

You've got to be looking at at least 10-15% off for a "bulk" purchase so my 200K is right

tim

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I believe that prices in this region have been artificially propped up, and this prop will disappear when 700 or so properties are suddenly put onto the market.

It appears I have the wrong Ashford.

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Ha ! Its not mine. I'm on business in the Middle East and I've been asked about it by a local. Clearly, he doesn't know he is speaking to a HPC subscriber . Still, he'll get the alternative opinion.

The owner is the builder. Couldn't flog any, so, has rented out the lot.

FYI, I'm sitting in cash and some unmentionable shiny stuff..

Oh, you're actually one of the 'precioussssssss' good guys! Nice to meet you Harold :D

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Wrong Ashford!

I know, it's a damn shame. :(

12 properties... new-builds... town of Ashford...

...it could have been the start of something beautiful!

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Knowing the area a little bit I was going to guess 200/275/330K per 2/3/4 bed house, so that's about 2.8 mil.

Oh look I've found this:

http://www.rightmove.co.uk/property-for-sale/property-27398389.html

You've got to be looking at at least 10-15% off for a "bulk" purchase so my 200K is right

tim

Thanks Tim.

I reckon at £2m it would make a 6% yield. The vendor will apparently accept £3m, so, at £2m its a third off. One could look at it like 15% off for bulk purchase and 18% off for the impending crash. A few more voids and rent arrears would eat into a 6% yield pretty quickly.

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Thanks Tim.

I reckon at £2m it would make a 6% yield. The vendor will apparently accept £3m, so, at £2m its a third off. One could look at it like 15% off for bulk purchase and 18% off for the impending crash. A few more voids and rent arrears would eat into a 6% yield pretty quickly.

The "right" yield for something like this compared to global alternatives is probably the 30 year swap rate plus 500 basis points or 9.25%. That puts the value at about £1.3m.

An old maxim is to buy at a 10% yield and sell at a 5% yield. It looks like the vendor is willing to accept a 4% yield. It seems that the vendor is even more stupid than he is greedy.

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150 x monthly rent = 8%

simple calculation for an investor

You are about right on average.

Selling when the market is frothy at 5% (crudely 240x monthly rent or 1,040x weekly rent) and buying when it is dire at 10% (crudely 120x monthly rent or 520x weekly rent) is probably a better than average strategy.

Staying out of the market completely at multiples outside these two extremes is probably a wealth saving strategy.

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That puts the value at about £1.3m.

Around £108,500 per house then if ignoring the fact some are detached. I don't use fancy yield calculations because they seem to assume too many things which are subject to change. I'd say less but let the bidders with available money or finance decide. Unless the seller can hold out for years with selling them or is happy to rent them out themselves.

The developer's agent was applying from 2004 to get these houses to be built. Applications refused a few times until a Grant Conditional given in 2006.

Chantry Estates Feltham Hill Road and the top 3 [DOC] files. More info at Spelthorne Borough Council website.

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Around £108,500 per house then if ignoring the fact some are detached. I don't use fancy yield calculations because they seem to assume too many things which are subject to change. I'd say less but let the bidders with available money or finance decide. Unless the seller can hold out for years with selling them or is happy to rent them out themselves.

The developer's agent was applying from 2004 to get these houses to be built. Applications refused a few times until a Grant Conditional given in 2006.

Chantry Estates Feltham Hill Road and the top 3 [DOC] files. More info at Spelthorne Borough Council website.

Rents (in absolute terms) tend to be less unstable than prices. Rents are paid from income (directly or through taxpayers) while, at the margin, prices are paid with debt. The fact that yields have collapsed during the bubble means that they have not reacted nearly as dramatically as prices during the bubble.

Rental yields are a way to judge whether prices are reasonable or not. Currently, yields point to the fact that prices are too high by 25% to 75% depending on the area.

The buyer of last resort in any property market is the professional, yield driven investor. Things have a long way to go before they get interested in the UK market.

The longer the UK market remains irrational from a yield perspective, the more capital flows to other, rational markets which means that less capital will be available here when the turn happens which portends a larger undershoot.

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  • 284 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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