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Help Save My Dad

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Got home last night, learned that Dad's gonna "get a SIPP" - whatever that means - and become a property developer and landlord.

:o:o

The YOY figures are being teased above that delicate ZERO mark, repossession notices are on the up, and this is what he wants to do.

:blink:

I've just learned that he's paid £2.5K for an Inside Track seminar. Blurb arrived yesterday. Two-day thing.

From my memory of the letter:

- You will receive a seminar pack.

- We do not allow recording devices or cameras in the seminar.

- Please turn your mobile phones and pagers off.

- There is the opportunity to purchase property at the seminar. You will need ID.

F**k.

To me, this sounds dodgy.

He has a ~£600K house no mortgage, and I don't know what pension provision. Essentially retired already, (not been working for a couple of years), not drawing pension for 5 years.

Leaving aside the state of the market, if he's gonna do this, I want to see him seek professional advice from a pensions adviser who isn't affiliated to property. I'm really worried about the mis-selling potential if these things don't have to be regulated until April 2007.

Is there any way that anyone knows how to research the state of the rental market in an area (Manchester) independently? I really don't know where to start, I only have a hunch. ;)

As for Inside Track, I don't know what value they could add to the process. The fact that there is an opportunity to purchase property at the seminar sounds pretty f****ing dodgy. Let's say you wanted to become a BTLer? Would you just pay for a seminar, go along, and come back with a damn house??? I really don't like the sound of these guys and their style.

Can anyone help by supplying links to information on good SIPPs articles that point out the pros'n'cons more clearly, similar to our main thread. Other than on this web site, of course. If he sees the name of this web site, he won't touch it with a barge pole. Sorry chaps, I know.

:(

Just found a quote from Mr Time To Raise The Rents, which is totally spot-on:

Get the buyer to make an investment prior to the purchase ... that way the buyers ... are committed to the purchase on the day.

Edited by megaflop

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Tell your father about the article in the Observer last week about the apparent OFT investigation into Inside Track's purported activities. Read the article and form your own view (see link). Also check other property forums (such as FT or C4) for stories on them. One has to be careful what one says based on this sort of story or information - but would you touch them? The article relates to certain payment made by amateur investors.

http://66.102.9.104/search?q=cache:g-7xk9T...+property&hl=en

As for views on sipps itself try:

http://money.independent.co.uk/personal_fi...ticle316483.ece

quote: "There's also the danger of wholly investing your Sipp pension fund in a buy-to-let property only to find, years later, that a falling market means your nest egg is shrinking and that, with no buyers, you can't get access to your cash to buy an annuity or income for the rest of your life."

http://www.uknetguide.co.uk/Finance/Articl...r_disaster.html

http://observer.guardian.co.uk/cash/story/...1592935,00.html

The rule of thumb I have read is you should only be thinking of it if you have =>£500k in your pension fund already and only put part of it into property via sipps (ie remain diversified). Given the value of your dad's house I suspect he is not in this wealth bracket.

A pension fund investor would get shot if he invested retirees funds heavily into the property sector! It is like a car crash waiting to happen for those who don't understand the risk (or who should not be taking it).

Read here and on the web about falling rental yields - lots on Manchester.

I think Sipps has great things going for it - if you are truly wealthy. If you're going to do it better IMO to pay an accountant £2000 for independent (non-commission based - c.f. financial advisers) and intelligent advice on your future finances than someon who is irretrievably tied to/involved in the property market.

EDIT: There is obviously tons of stuff and references in the pinned SIPPS thread too!

Edited by Tempest

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Guest

Thanks for your replies. I'll see what I can do, but problem is Dad doesn't respect my opinion. Because I don't want to buy a house when they never go down. So the odds are stacked against me.

See, he's sat out this property boom watching Sarah Beeny etc on TV, and done nothing about it. So he's just missed out. A bit like me, just missing out. So, just missing out runs in the family, and who's gonna want to take advice from a guy who spends his time "just missing out"? :)

Edited by megaflop

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I assume he must already have one. I don't know the details of his pension. We've had a kind of family policy of never talking about money matters over the years. I haven't yet spoken to him in detail because he was out last night.

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Schemes - I know, I know.

I think he thinks he's getting a cheap house and a rental income. I'm just worried these buggers will get him to sign something. Even if he wanted to be a BTL there's no need to do it through these people's selling-at-the-seminar services, which IMO sounds really dodgy. Reminds me of time-share.

I don't know my parents financial situation in detail, because, as I said, we never discuss it. However, they have let slip that the bulk of their money is locked up in their current large detached house ~£600K.

Edited by megaflop

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He has a ~£600K house no mortgage, and I don't know what pension provision. Essentially retired already, (not been working for a couple of years), not drawing pension for 5 years.

Isn't the idea of a pension that you accumulate a pension pot during your working life for when you retire not that you reach retirement age and then think about your pension!!??

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mun - Short answer: Yes.

Like I said, I think he thinks he's getting a cheap house and a rental income.

He's mad about DIY and property programmes, and I think he's upset he missed out because he didn't flip a property. Thinks it's all still going on. I suspect he's read one article on SIPPs and misinterpreted it. I bet he doesn't even have one set up. I'll find out ASAP.

The alarming problem is (as I found out this morning) he's already paid Inside Track £2.5K for this seminar.

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The alarming problem is (as I found out this morning) he's already paid Inside Track £2.5K for this seminar.

It's a good job you haven't inherited your dad's financial sense

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It's a good job you haven't inherited your dad's financial sense

LOL

That remains to be seen. After all - I didn't buy an effing house 5 years ago. Which is why I'm here now, faced with ... wait for it ... the same selection of houses as before and 5 years of my life wasted!

:lol:

Gotta laugh.

:lol::lol:

And drink. Blair's Britain!

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learned that Dad's gonna "get a SIPP" - whatever that means - and become a property developer

Using a SIPP to develop property is specifically prohibited:

http://www.escape2balearics.co.uk/sipps.aspx

Are there negative aspects to SIPPS?

A SIPP is a pension, and so you cannot draw benefits under current rules until you are 50: it is not a liquid asset

Personal use could create an income tax liability – unless you pay a market rent to your SIPP

You are not allowed to ‘trade’ properties

Also, the 50% borrowing limit and the fact that the property in a SIPP is legally owned by the trustees, not your dad, will make any meaningful development problematic.

Essentially retired already, (not been working for a couple of years), not drawing pension for 5 years.

So if he's not working and not drawing a pension, what does he live on? :huh:

Seeing as the contribution limits for SIPPs will be 100% of taxable earnings in any one tax year, this will also present a problem for your dad to accumulate any significant funds inside the SIPP.

he's sat out this property boom watching Sarah Beeny etc on TV, and done nothing about it. So he's just missed out.

Or alternatively, he's ended up with a £600K house by sitting on his ar5e watching Sarah Beeny. Sounds like a case of "two wrongs don't make a right"; just because he didn't pile into property in 1996, doesn't mean he should pile into it now.

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LOL

That remains to be seen. After all - I didn't buy an effing house 5 years ago. Which is why I'm here now, faced with ... wait for it ... the same selection of houses as before and 5 years of my life wasted!

:lol:

Gotta laugh.

:lol::lol:

And drink. Blair's Britain!

Same here.

Nearly bought just out of uni 1998 in Bristol - 3 bed house £52K. Didn't know anything then about house prices, economics etc etc.

Didn't buy as work took me away, moved around a bit etc.

Same houses now around £170K

Now I've got £30K saved and at 1998 prices that would have left me with a £20K mortgage, now I'd need a £140K mortgage.

It's f*cking ridiculous but will change

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Guest

So if he's not working and not drawing a pension, what does he live on? :huh:

Mum still works, this does the daily stuff and bills. I have covered my costs living there. There has been no mortgage payable for many years.

Using a SIPP to develop property is specifically prohibited:

That's very interesting. I didn't know that fact.

Edited by megaflop

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Show him the Observer article at least...Would you put money in until an OFT investigation was complete?

He WILL be pressed to put down a deposit on the day of the seminar and the peer group pressure will be enormous. You have no idea how slick and persuasive these things can be. I can only imagine what it is like based on the Observer story (and they are contesting it apparently) but one starts to think of the old timeshare stories from the 80s/90s when you read about pressure being put on people in "seminars/sales" meetings and the audience was loaded with planted lackeys loudly signing up and making the whole thing look desirable and a no brainer to the punters.

I really feel sorry. I remember stories of people (largely in the US but some here) putting their retirement funds into dotcom shares towards the end - again when the real gains were done - ... wiped out. You can validly buy now on a very long term view but hardly during your retirement itself.

Again, Sipps has great attractions if you are (i) wealthy; (ii) WELL ADVISED

Yield is going to be paramount as one cannot take a BTL 20/25 yr view on capital growth at the age your father is likely to be - he is going to have to draw down on it eventually or somehow pay the bills? I would want a much bigger yield than is available in most places at the moment if I were to put a property in a Sipp. Btw, is the home mortgage paid off?

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Show him the Observer article at least...Would you put money in until an OFT investigation was complete?

Ok I will do. No I wouldn't touch these guys. I'll e-mail him the article link right now.

He WILL be pressed to put down a deposit on the day of the seminar and the peer group pressure will be enormous.

Oh Shit! Let me guess, Inside Track don't care about whether you're buying though a SIPP, just so long as you're buying at all?

You have no idea how slick and persuasive these things can be.

You're right, I don't.

Btw, is the home mortgage paid off?

£5.00/mth - they kept it on rather than paying out outright because that makes it easier to get approval for another mortgage. (Thinking about what I'm writing just now - this is probably a good measure of how much he really knows about it all!)

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Guest The_Oldie
He WILL be pressed to put down a deposit on the day of the seminar and the peer group pressure will be enormous. You have no idea how slick and persuasive these things can be.

Perhaps he could be advised to take a couple of hundred quid for petrol and incidentals and leave his cheque book and credit cards at home on that day.

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Guest

I forgot to mention -

This appeared the other day: PORTFOLIO MAGAZINE

http://www.portfolio-magazine.co.uk/

Portfolio magazine was launched in Spring 2005 by Instant Access Properties, the UK’s leading off-plan residential property company, in response to growing interest and activity among its clients.

Portfolio is the definitive publication of information, record and reference for the off-plan property investment community. Published quarterly, each issue carries a mix of news, features and case studies designed to keep readers abreast of changes and opportunities.

Portfolio will champion regulation and due diligence and use its pages to highlight the pitfalls and expose bad practice in the industry as well as playing an important role in enlightening and educating its readers about all aspects of residential property investment relating to self invested personal pensions (SIPPs).

I read the SIPPs article, and they were mainly slagging off the stock market for having performed badly since, say, 2002.

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Actually, your old man sounds pretty canny - but they said (say?) that about Keynes and he famously reinvested fully in the Dow before the 1929 crash because the attractive gains were too tempting...

Some organisations which essentially make their money selling property/off plan developments etc are using Sipps as a hook to persuade a legion of people to buy into the BTL/Landlord "dream". They are not pensions advisers or accountants and quite what the £2.5k buys is anyone's guess. Let me guess though - you get it back as a discount on property you buy.

Actually, I've just realised, if they are selling off plan that means no rental income for a couple of years... aagh. I hope he get som e"professional" advice on the pensions/accounting side.

Good luck.

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Actually, your old man sounds pretty canny

He knows his stuff about building and construction, but that doesn't mean knowing the rental market.

Actually, I've just realised, if they are selling off plan that means no rental income for a couple of years... aagh. I hope he get som e"professional" advice on the pensions/accounting side.

Good luck.

Off plan, no rent -> Absolutely. Sounds to me like they might be trying to shift the masses of shoeboxes that now adorn the centre of town.

Edited by megaflop

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Me convincing him not to could be hard. Judging by the web site the seminar will be on 4th Nov. I'll see what he says about the Observer article I e-mailed.

:unsure:

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If this was the usual "mate down the pub" I'd say leave him to it.

If it's your father, I say make every reasonable effort to dissuade him.

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  • 301 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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