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Interest Only V Repayment Mortgage - Fergus Proclaims

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I assume he's dating and signing his own posts as he expects them to be elevated to biblical status in the not too distant future. How long before even the BTL crowd stop tolerating his utter tw4tishness and openly call him for the c0ck he is?

Fully Detached, 24th July 2015

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He's not the only one glorying in 'the strategy' - guy just before him on the thread. Not sure if he's read up about the Budget tax-relief change yet.

This guy is pure inflation-HPI glory, from what I've read, over many years.

45 properties, £7m value, around MK. http://www.buytoletmk.com/

PropertyTribes interview with him

.

Jonathan Clarke Offline Mute
Milton Keynes Landlord
19-06-2015,09:09 AM

[...]Leverage to the max on interest only . Invest the leftovers if you don`t need the cashflow and get rich quicker. If at age 40 you still dont see the light sell half the portfolio to pay off the other half if you must

How rich do you want to be?

If you only want 20 million by 40 then take out repayment mortgages. If you want 30 million or so by 40 then take out interest only mortgages. Inflation will erode your debt further . House prices will rise over time. Compound interest on all of this is phenomenal over the long term

Look at the Maths first THEN ask yourself `Can I handle the perceived pressure of having big loans.`
Dont forget for some the end game and exit strategy is simply death. Its the parents generation for many that instilled the mantra that you must pay down a mortgage with their Shakesperian ``Neither a borrower nor a lender be`` outdated sentiment.

http://www.propertytribes.com/repayment-vs-interest-only-mortgages-t-14813.html#pid234092

2014

~ A 75% LTV on 1.5 mil is about 1.1 mil . It may seem a lot now but fast forward to 2050 it will be relatively small change. You just sell and pay it off pocketing the remaining 35 mil. Happy days. Let time and inflation erode your debt. Leverage. Jonathan Clarke

----------------------------------------------

2014

So we both agree that leveraging is ok
I`m glad you are coming round to my way of thinking
All we are discussing then is how much leveraging is appropriate
You said `Dont leverage `` though earlier
I`m confused - mixed messages

Whats a few BTL`s in your eyes - 3 / 5 / 9 / 15 ?
Whats your definition of a ``small handful``
Whats a minor issue .
What if they call the loans in when you have 5 BTL`s
Why is that somehow ok but not ok if you have 100
Its all about getting your leveraging structure right.

As I see it - Leverage is like a mountain.
People who buy cash stay at the bottom and admire the summit but only get to look up at it. Some will climb to the first base camp but climb no more.
Some will scale the whole mountain and borrow at 80% LTV to do so.
They then see the summit in all its glory for themselves
Yes it has its risks. But wholly acceptable proportionate risks
Yes its hard graft ( just like your success in your job)

But if you are prepared fully fit well trained you can do it

Leverage

Don`t stay at the bottom of the mountain
Climb it
Why ?
Well as George Mallory said in 1924

Because its there :-)
Jonathan Clarke

Loads more lol landlords re glory of leverage, multiple properties.

http://www.propertytribes.com/landlords-going-head-head-on-topic-leveraging-t-11309.html

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With the exception of Fergus all comments were pre budget. Do you think some one should tell Fergus that there was a budget? Maybe a bit about the implications for landlords?

Any body any idea on the impact for the Wilson properties yet?

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He's not the only one glorying in 'the strategy' - guy just before him on the thread. Not sure if he's read up about the Budget tax-relief change yet.

This guy is pure inflation-HPI glory, from what I've read, over many years.

45 properties, £7m value, around MK. http://www.buytoletmk.com/

PropertyTribes interview with him

.

Loads more lol landlords re glory of leverage, multiple properties.

http://www.propertytribes.com/landlords-going-head-head-on-topic-leveraging-t-11309.html

Interesting per the YouTube they both called their BTL ways an addiction.

"the state of being enslaved to a habit or practice or to something that is psychologically or physically habit-forming, as narcotics, to such an extent that its cessation causes severe trauma."

We should have sympathy.

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Interesting per the YouTube they both called their BTL ways an addiction.

"the state of being enslaved to a habit or practice or to something that is psychologically or physically habit-forming, as narcotics, to such an extent that its cessation causes severe trauma."

We should have sympathy.

I can't be sympathetic against any addict who steals opportunity directly from me (outbidding and expansion to multiple properties) with a BLISSED OUT forever HPI strategy. Paid for their Addition 1.0 years, and then their emergency treatment so they didn't die, and then witnessed Addiction 2.0 new expansion spree.

They need to die from their overdosing. If more people read the landlord forums there would be fewer general hpcer dancing-boy 'innocent' excuses imo (although not suggesting that of you).

Even in 2010 when HPCers hoping for the turn.. BTL BTL BTL.

http://www.housepricecrash.co.uk/forum/index.php?/topic/150983-sheeples-btl-addiction-cant-be-stopped/

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With the exception of Fergus all comments were pre budget. Do you think some one should tell Fergus that there was a budget? Maybe a bit about the implications for landlords?

Any body any idea on the impact for the Wilson properties yet?

Would be interesting for someone to make a guess.

So many of them believe it means higher rents for tenants. I don't believe Fergus believes what he says, but other landlords definitely do; forever HPI.

Fergus: “The reduction [in tax relief] is effectively an increase in my mortgage payment, but direct to Mr Taxman rather than the lender. It will put some intended buy-to-let investors off completely, but the large investor will take it in his stride and I suspect it will drive rents upwards to compensate.

“It will always be a case of supply and demand, and with an ever-increasing volume of tenants the rent will go up. There is only one answer to the country’s problem and that is to build more houses.

http://www.theguardian.com/money/2015/jul/11/buy-to-let-budget-tax-profits-mortgage

Why people think they can build homes faster than government encouraged property speculators can speculate on them is beyond me.

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He's not the only one glorying in 'the strategy' - guy just before him on the thread. Not sure if he's read up about the Budget tax-relief change yet.

This guy is pure inflation-HPI glory, from what I've read, over many years.

45 properties, £7m value, around MK. http://www.buytoletmk.com/

PropertyTribes interview with him

.

Loads more lol landlords re glory of leverage, multiple properties.

http://www.propertytribes.com/landlords-going-head-head-on-topic-leveraging-t-11309.html

This George Mallory? http://i.huffpost.com/gen/1162155/thumbs/o-GEORGE-MALLORY-facebook.jpg

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With the exception of Fergus all comments were pre budget. Do you think some one should tell Fergus that there was a budget? Maybe a bit about the implications for landlords?

Any body any idea on the impact for the Wilson properties yet?

:lol: Has the HPI King not come back with a response yet? Too funny. How many BTL`ers were sitting there thinking the budget would bring them even more perks :lol:

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Interesting how the rent farmers are unafraid to call it house price inflation and indentify it as a goal to be fostered continuously, whereas the conomists and central bankers refer to it as house price appreciation and dismiss it from their calculations completely.

Makes you wonder which is the bigger set of douchebags.

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I think that it is fairly obvious that the government want house prices to fall.

Unless they do, small enterprises will always struggle because renters/OO do not have enough spare money.

Osborne has plenty of strings and arrows.

Read this years newspapers to trace how sentiment against BTL has grown.

MPs constantly bombarded in their surgeries by parents and Grand parents worried about the children's future.

Parents with adult children, some married but unable to leave home.

Probably even some MPs in the same position.

Landlordism is the new evil and may become to be as reviled as racism.

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I think that it is fairly obvious that the government want house prices to fall.

Is it?

FLS still running and HTB in place until 2020. When George removes those two props ahead of their expected end dates, then I might start believing TPTB want HPC.

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With the exception of Fergus all comments were pre budget. Do you think some one should tell Fergus that there was a budget? Maybe a bit about the implications for landlords?

Any body any idea on the impact for the Wilson properties yet?

We don't have enough info to go on.

This is one of the Wilsons' properties up for sale at present: 30 Bishopswood, Kingsnorth, Ashford, TN23 3RD. It was purchased Oct 2002 for £122,500.

30BishopswoodTN233RD.jpg

http://www.rightmove.co.uk/property-for-sale/property-52697366.html

The property below is currently available to rent. As far as I can determine this is number 26, and if so then this is also owned by the Wilsons and was bought for £124,000 in June 2003. It appears to have been on the market since Dec 2014, during which time the asking rent has dropped from £800 p/m to £750.

26BishopswoodTN233RD.jpg

http://www.rightmove.co.uk/property-to-rent/property-47459209.html

In January last year the Guardian wrote that according to Fergus, the average LTV across his portfolio was 61% and the average interest rate he was paying was 2.25%.

So, assuming the LTV is now lower due to house prices rising, and with little else to work on, let's just use these figures: 240K value, 9K rent, 50% LTV mortgage (120K). We'll also assume that the property has non-interest expenses of £1,000.

The table below shows the cash flow position under current taxation rules and the budget proposals, assuming a marginal tax rate of 45%:

If these figures bear any relation to reality (and I'm not claiming they do) then the new taxation rules will be damaging to the bottom line, but not disastrous.

RentCalc.gif

You might want to check the current listings of ASM Residential, Maidstone.

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We don't have enough info to go on.

This is one of the Wilsons' properties up for sale at present: 30 Bishopswood, Kingsnorth, Ashford, TN23 3RD. It was purchased Oct 2002 for £122,500.

30BishopswoodTN233RD.jpg

http://www.rightmove.co.uk/property-for-sale/property-52697366.html

I've heard of optimistic pricing but that is ridiculous.

2 of my friends live in Park Farm, Ashford and both have bought houses in the last year.

One is a 3 bed detached house with a garage and they paid £240k and the other is a 4 bedroom house they paid £280k for.

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Asking price is double the bought price in 2002, but wages since 2002 have probably gone up 10% or so, with a confusing mix of part-time / zero hour / WTC variables to throw into the mix. There's your problem right there.

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I've heard of optimistic pricing but that is ridiculous.

2 of my friends live in Park Farm, Ashford and both have bought houses in the last year.

One is a 3 bed detached house with a garage and they paid £240k and the other is a 4 bedroom house they paid £280k for.

Maybe you'd like to look at these then, both owned by the Wilsons:

http://www.rightmove.co.uk/property-for-sale/property-52699433.html

http://www.rightmove.co.uk/property-for-sale/property-52698602.html

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I can't be sympathetic against any addict who steals opportunity directly from me (outbidding and expansion to multiple properties) with a BLISSED OUT forever HPI strategy. Paid for their Addition 1.0 years, and then their emergency treatment so they didn't die, and then witnessed Addiction 2.0 new expansion spree.

They need to die from their overdosing. If more people read the landlord forums there would be fewer general hpcer dancing-boy 'innocent' excuses imo (although not suggesting that of you).

Even in 2010 when HPCers hoping for the turn.. BTL BTL BTL.

http://www.housepricecrash.co.uk/forum/index.php?/topic/150983-sheeples-btl-addiction-cant-be-stopped/

My sympathy comment was pure sarcasm. Emoji usage is difficult on the mobile.

But joking aside, I do wonder if this cleptomatic accumulation of property by BTL landlords is some form of mental health illness / OCD! I have family members with the condition and it does manifest itself in strange ways!

We are all damaged in different ways.

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My sympathy comment was pure sarcasm. Emoji usage is difficult on the mobile.

But joking aside, I do wonder if this cleptomatic accumulation of property by BTL landlords is some form of mental health illness / OCD! I have family members with the condition and it does manifest itself in strange ways!

We are all damaged in different ways.

A fun idea, but I don't think there is really a need to medicalize the unhappy union of ignorance and stupidity, ;) .

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We don't have enough info to go on.

...

If these figures bear any relation to reality (and I'm not claiming they do) then the new taxation rules will be damaging to the bottom line, but not disastrous.

...

Interesting speculation, FT. I take the point that if the P&L side of things stays positive, then it may be too early to dance on the esteemed Mr Wilson's grave but it's still a decimation of his income, which is pretty disastrous, as these things are very likely going to happen, i.e. even if the risk free rate doesn't move up materially and stay up, I see plenty of reasons to believe that the mortgage rates offered to buy-to-let investors may be just about to rocket away from the zero bound.

Doubtless Fergus has determined that because he survived last time, he'll survive this time, but I suspect if we get a crash this year and he's not disposed of his portfolio, then he may find himself attempting to re-finance a 85%+ LTV portfolio just as banks are racing for the exit from the buy-to-let sector, and he'll be both stuck with his portfolio till 2020 and toast by 2020.

If he's a whit of sense he'll secretly be shitting bricks. Though his figure and colouring suggests a diet that may have made him costive, so perhaps that was happening anyway.

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My sympathy comment was pure sarcasm. Emoji usage is difficult on the mobile.

But joking aside, I do wonder if this cleptomatic accumulation of property by BTL landlords is some form of mental health illness / OCD! I have family members with the condition and it does manifest itself in strange ways!

We are all damaged in different ways.

This reminds me I need to reply to another thread about just this issue. thanks

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There is a place for IO. But it should be restricted to premium buyers with alternative investment plans. If (big if) you can invest the capital in a higher yielding asset than houses then it's the right product.

The Wilsons were just idiots who got lucky. Statistical anomolies.

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Interesting speculation, FT. I take the point that if the P&L side of things stays positive, then it may be too early to dance on the esteemed Mr Wilson's grave but it's still a decimation of his income, which is pretty disastrous, as these things are very likely going to happen, i.e. even if the risk free rate doesn't move up materially and stay up, I see plenty of reasons to believe that the mortgage rates offered to buy-to-let investors may be just about to rocket away from the zero bound.

Doubtless Fergus has determined that because he survived last time, he'll survive this time, but I suspect if we get a crash this year and he's not disposed of his portfolio, then he may find himself attempting to re-finance a 85%+ LTV portfolio just as banks are racing for the exit from the buy-to-let sector, and he'll be both stuck with his portfolio till 2020 and toast by 2020.

If he's a whit of sense he'll secretly be shitting bricks. Though his figure and colouring suggests a diet that may have made him costive, so perhaps that was happening anyway.

It's yet another lesson in managing liquidity risk, something I'm sure the Wilsons never considered during the boom years. You can be extremely wealthy on paper (just as London home owners supposedly now are and dotcom investors were in 1999) but if everyone heads to the exits at the same time then you can end up with no bid, particularly if you've taken a massive position and have effectively become the market.

And if you've been buying on margin and interest rates rise in tandem with a rules change? Well, just ask the Hunt brothers how that worked out (although you'll need a ouija board in Nelson's case).

Furthermore this is all happening under the gaze of an awful lot of people. We can monitor the Wilsons' listings, and when (if?) those properties that are currently SSTC turn up in the Land Reg database we're going to know how much discount from asking Fergus is prepared to stomach in order to offload, and that could be very enlightening. On the other hand he'll surely know this, so will he be trying to circumnavigate price discovery by (say) offering to pay the buyer's stamp duty and giving some form of cashback?

Whatever, I'm giving Fergus the benefit of the doubt at present. Despite everything that's happened, you really have got to be incredibly dumb to be in that position and not walk out of it with a big pot.

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Despite everything that's happened, you really have got to be incredibly dumb to be in that position and not walk out of it with a big pot.

Maybe. I'm inclined to take view that Osborne's nice little boom was Fergus's last shot at an out and he couldn't or wouldn't take it. I haven't looked at the detail, but I'd imagine his geographical concentration is what has sealed the deal. He can't sell out piece by piece without moving the market and destroying himself and he can't sell it all as a job lot because a more sophisticated investor would start bleeding from the eyes at the thought of the geographical concentration. All human life is precious and his cupidity and stupidity does not efface the fact that I share with him a common humanity, but as a betting man I'd say that his best hope for an easy out is a difficult bowel movement inducing a heart attack.

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Fergus may well be right about simply raising the rents on his empire as he likely has enough of the market in his area. Those paying for the rent themselves might simply downgrade to escape though. You also wonder how it'll affect housing benefit tenants - they aren't going to be able to find extra cash, and since benefit tracks size of rented property/need... If Fergus has a critical mass of HB tenants, it could look very dicey.

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