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On other thread a poster recently stated that when a investment "guru" gives you paid for advice "you become the product".

I am not stating this is the case here but a penny for your thoughts.

 

"Really? Hmmm what do you know about prime London property? There’s no demand. This has nothing to do with price. There is *no* demand for prime London property regardless of price. I could drop the price by £1m and still not have a buyer. It’s not the price at all."

Now I take as I find and found the following article

https://www.dailymail.co.uk/femail/article-4929420/Mum-went-stay-home-parent-120m-property-mogul.html

So for example the lovely flat which is referred to on twitter.

https://www.rightmove.co.uk/property-for-sale/property-52528557.html

and here is the ltd company associated

https://suite.endole.co.uk/insight/company/09935926-36c-harrington-gardens-ltd

now I understand companies house reports can be out of date but correct me if i am wrong

The property is for sale  at £4.99 million

The company has assets 4.11 million and liabilities of 3.4 million so equity of 700k so theoretically if it sold today 4.9 million (1.5 million) profit but "I could drop the price by £1m and still not have a buyer" would only leave 500k equity (if actually sold) for 40 shareholders of this one property company.

An additional issue in situation like this is 

Feb 2016 Sold£2,050,000  https://www.zoopla.co.uk/property/36c-harrington-gardens/london/sw7-4lt/31526459

So the 4.11 million is a value that has been applied after it has been purchased

Zoopla estimate today  £2,067,000 - £2,210,000 

The 40 shareholders are a mix of individuals and other property companies.

Now my point is not to disparage anyone it is to point out how crazy London property is with 40 shareholders buying one property with 80% LTV.

The endole links take you to other LTD companies in the name of the specific properties so you can see.

 

 

 

 

 

 

Edited by Fromage Frais

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16 minutes ago, Fromage Frais said:

"Really? Hmmm what do you know about prime London property? There’s no demand. This has nothing to do with price. There is *no* demand for prime London property regardless of price. I could drop the price by £1m and still not have a buyer. It’s not the price at all."

Utter horse$hit. Someone would buy it for the right price.

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8 minutes ago, Captain Kirk said:

Utter horse$hit. Someone would buy it for the right price.

As someone who looked at a lot of bankrupt hotels during the crisis i was shocked then when i saw  some offshore vehicle pay 5 million for a shitty old regional hotel during the boom.

I have however never seen anything like London residential.

  • buy at x
  • revalue and remortgage for y (the wilson model)

    Then on top
     
  • have xx shareholders of which are z companies
  • z companies are leveraged using the same formula etc etc etc

it's a black hole of debt and many are under right now and treading water.

 

 

Edited by Fromage Frais

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The question is, if they were to drop the price by 1.5 million and have no equity, but dispose of the liability, would that be possible ?

If not dare we suggest they are technically insolvent ?  And that is the real issue the world now.   Everyone has pumped so much wind up each others asses there are not enough believers with access to enough cash left to profit.

So there is not too many profit taking quick fixes now, if you haaaaaaang onto it for loooooooong enough and keep up those monthly repayment you'll be alright.  The problem is when that wasn't in the original profit making plan.  How many are going to take their BTL empire to their graves and IHT kick in and eat it.

Demand is always a function of the price (against the buyers perceived value).

Believe me the demand for 250k properties in London of this size, location and quality is VERY HIGH indeed.

 

 

Edited by Odin

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12 minutes ago, Odin said:

The question is, if they were to drop the price by 1.5 million and have no equity, but dispose of the liability, would that be possible ?

If not dare we suggest they are technically insolvent ?  And that is the real issue the world now.   Everyone has pumped so much wind up each others asses there are not enough believers with access to enough cash left to profit.

So there is not too many profit taking quick fixes now, if you haaaaaaang onto it for loooooooong enough and keep up those monthly repayment you'll be alright.  The problem is when that wasn't in the original profit making plan.  How many are going to take their BTL empire to their graves and IHT kick in and eat it.

Demand is always a function of the price (against the buyers perceived value).

Believe me the demand for 250k properties in London of this size, location and quality is VERY HIGH indeed.

 

 

The rental for this is 6-8k a month 6% would be sub 2 million possibly sub 1.5 if rents keep falling.

In that scenario the banks tank and then the guy who's job it is to give the money out gets changed to a man who gets the money in.

You breech that LTV covenant and you dead called in game over.  In London in scenarios where people have 3 million £ loans on 4 million £ houses that are worth 2 million the bank may be stroking the trigger.

This may explain the venting = stage 2/3

 

new-understanding-the-stages-of-grief-1.

Edited by Fromage Frais

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37 minutes ago, Fromage Frais said:

Now my point is not to disparage anyone it is to point out how crazy London property is with 40 shareholders buying one property with 80% LTV.

Nice research If the sole asset of the ltd company is the flat, and the value of the flat is currently somewhere between ~£2m and the unthinkable, and the liabilities of £3.4m represent the £2.05m purchase price plus redecoration (and range rover monthly payments), that leaves an LTV of >170% and an insolvent company.

I'm assuming all forty shareholders and the two directors have been persuaded any downside risk in the property is eliminated by their limited company structure, leaving the bank liable for the part over 100%. My initial reaction was doubt that the bank would assume the risk, but as long as it sold the mortgage on quickly someone else can deal with it.

The other property developer involved seems to have relevant experience:

Right to Buy fury over plan to build £5m home on site of ex-council house: Former EastEnders actor set to receive large pay off after selling property to developer

https://www.dailymail.co.uk/news/article-3281930/Ex-EastEnders-actor-receive-large-pay-property-sale.html

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1 hour ago, Captain Kirk said:

Utter horse$hit. Someone would buy it for the right price.

Of course if there really is no demand, that's another way of saying that the value is zero. That's some crash! 🙂

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Simply ask yourself one question: if they know so much why are they running a business advising you and not just getting on making money for themselves?

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On 08/11/2018 at 08:56, crouch said:

Simply ask yourself one question: if they know so much why are they running a business advising you and not just getting on making money for themselves?

Looks that way with investments that for all intents a purposes look like picking up £ in front a steamroller as they say.

I just do not get it 40 shareholders in a company that owns many houses (owned by subsidiary companies) I understand yes but 40 shareholders that own a company that only owns one flat.... I just do not get unless its to obfuscate the owners.

All the admin costs and fees etc etc on the way down administrators are going to have fun if things do not go up in London soon.

In this article https://www.estateagenttoday.co.uk/breaking-news/2018/11/london-house-marketed-for-25m--but-sells-for-only-15m

We have an example of LTV clause / Margin call type scenario

"the relatively good price was achieved because banks periodically review the value of properties on which they have written mortgages, and falling property prices can lead them to require lenders to post additional margin."

So it begins

Edited by Fromage Frais

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20 hours ago, Fromage Frais said:

Looks that way with investments that for all intents a purposes look like picking up £ in front a steamroller as they say.

I just do not get it 40 shareholders in a company that owns many houses (owned by subsidiary companies) I understand yes but 40 shareholders that own a company that only owns one flat.... I just do not get unless its to obfuscate the owners.

All the admin costs and fees etc etc on the way down administrators are going to have fun if things do not go up in London soon.

In this article https://www.estateagenttoday.co.uk/breaking-news/2018/11/london-house-marketed-for-25m--but-sells-for-only-15m

We have an example of LTV clause / Margin call type scenario

"the relatively good price was achieved because banks periodically review the value of properties on which they have written mortgages, and falling property prices can lead them to require lenders to post additional margin."

So it begins

Nice find. £19m paid and a £25m asking price seem daft now it sold for £15m. 

Soon £15m will seem daft....😉

I have seen massive falls in certain prices during relatively modest dips. Hidden in the ‘average’ stats and new builds etc etc. 

I looked at a house (purchased for £750k) and the building firm was bankrupt. GVA marketed for ‘any cash offers’. It was derelict following being stripped out but reality was £25k of work/stripping has already been done. 

I very nearly got it for £150k (all the cash I could muster) but a developer bought it for £200k...spent £200k and sold it in a better market for £1.2m, it’s worth about £750k imho. 

Funny old world when house prices used to be linked to salaries because salaries are what funded housing. Now it’s debt, inheritance, foreign, asset hiding.....so who knows what things are worth.

When interest rates get to 3% in 2021 then money will fund other places to go.....and this market won’t just crash.....it will plummet. And maybe a teacher and a nurse living together can buy a nice home in the London burbs. 

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  • 258 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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