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chiefofwales

Nearing the end of my sanity..

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1 minute ago, Captain Kirk said:

Who's we?

Him and his leveraged BTL buddies?

Good question....

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Owner occupiers are as much to blame as buy to let. The problem is when the one asset held by the majority of the population is bought with excessive debt, and for political reasons cannot be allowed to go down, even in the short to medium term. This sad fact is what has backed the BOE into a corner. 

When the industrial revolution started, the majority of the middle class rented, and relied on skills or entrepreneurial ability to make money. It was aristocrats who profited from renting out land and their personal contacts. We now have a cynical jaded economy where rent seeking and networking is seen as the only way of getting ahead. 

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On 11/01/2019 at 07:28, wsn03 said:

The boom is over, but the bust will be a slow and protracted stagnation, not a collapse. Too many props.

There's no time left for a 'slow and protracted stagnation'.

Assuming we avoid WWII, we're heading into the most rapid period of technological change in human history, and that's not going to allow anything to stagnate.

Here are just a few things we have to look forward to in the next twenty years or so:

  • The end of all but specialist retail.
  • Automation of the majority of unskilled and low-skilled jobs and many skilled jobs.
  • The resurgence of nationalism and the end of globalism. America can't keep paying for the rest of the world, and Americans don't want to.
  • Widespread genetic modification. 100-IQ British kids competing against 300-IQ engineered Chinese kids.
  • Ever-increasing use of local manufacturing technologies reducing trade. 3D metal printers are under $10k these days, and cheap plastic plastic can already make pretty much all your cheap plastic tat needs.
  • Sex-bots and artificial wombs. No need to chase women when you can just buy the girl of your dreams and use your DNA printer print out eggs from anyone whose DNA you can download or sequence when you decide to have kids.
  • Plus a decent chance of a new Little Ice Age and some chance of a magnetic pole reversal.

The world of 2039 will barely be recognizable to someone from 2019. That's not the kind of situation where things can slowly stagnate.

Edited by MarkG

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1 hour ago, Captain Kirk said:

Who's we?

I think him and his politician friends. I watched a program about black wednesday (it is here

), with how John Major and his government and the BoE handled falling out of the erm. One of the major things that cam out of the interview ws Norman Lemont (the then chancellor of the Exchequer) being really concerned about the effect interest rates going up would have on house prices. That was their main issue that mortgages might be to expensive and house prices would fall. Politicians always want rising prices and will run the economy to get it because to a great extent house prices are the uk economy.

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On 10/01/2019 at 19:23, longgone said:

i really try not to think too much about it now. 

I will be nice and not take the piss you didnt buy a house! Still stuck it all in Bitcoin and you will get a house mortgage free in a few years.

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1 hour ago, markyh said:

I will be nice and not take the piss you didnt buy a house! Still stuck it all in Bitcoin and you will get a house mortgage free in a few years.

bitcoin is over 

stop pushing it 

should have swapped it for an extension 

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Really sad to here these stories of loss. It's so f*cked up. You all should have been proved right but were screwed over. It does feel like the crash is right around the corner but it's felt like that for a while. Would recommend Glasgow for sure. Can get 5x what you would get in London and it's a better place to live IMHO. Close to some beautiful nature and scenery, lots of interesting things going on, nice buildings. Wouldn't worry about not being Scottish! Prices starting to shoot up now though

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On 10/01/2019 at 14:32, happyguy said:

Perhaps you need to think of a home as a long term home and not a financial investment.   If you buy and it falls who cares if you are not planning to move and you have a base for your family. 

 

 

This is the only reason you should ever buy a home! Home should NEVER be looked at as an investment, even serious BTL LLs known this!

 

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On 04/01/2019 at 18:09, chiefofwales said:

I've been a long time lurker and very rare poster. I have followed and studied this forum and lots of associated reading (Say Goodbye to all that buy to let to name one) for the last few years. It has been such a fantastic resource and breath of fresh air.

However, my HPC confidence  has come at a cost with my family and friends who think I am an absolute idiot. This is because for the last 5 years or so of my wife and I not buying a house, we've seen prices rise where even if there were a correction now we'd still be in worse off. The amount of times I have been told to buy now, what are you waiting for, rent is dead money etc is probably symptomatic of everyone else on here! But my belief is also being tested and I don't know how much longer we can all wait.

The point of my post is do people believe this is going to happen and within the next couple of years? We want to start a family and the thought of renting while raising a child is not something we want to do (given our current experiences to date). I am losing faith and this is the only place which seems sane.

Join the club! I know what it feels like to have all your close family think you are an idiot for not buying a house.

However, my investments (mainly equities) are now getting to the point where they almost pay for my rent, so was I such a fool? Note that Rich Dad Poor Dad says that homes are not an investment, not because they can't yield a positive return but because they have a negative effect on cashflow! How much extra cash have I been able to invest 'because' I have been renting for the past 8 years? Anyway, I am almost at the point where I don't care where house prices go. I may well rent until I die! After all, a house is just an asset that pays your rent for you...

Btw, the next time you are told that rent is dead money. Ask them what they understand as dead money? (this can lead to an interesting discussion, as people waste so much money on crap!) and how much of the rent you pay is dead money? IF your rent was only £50 per week is that dead money? £100, £200. Where is the line? People really don't see how much money owning a home costs! Renting can be better than owning a home even without a mortgage!

 

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On 11/01/2019 at 09:12, Habeas Domus said:

The only thing wrong with this analogy is you are assuming everyone will eventually need to buy at some point. I don't think thats necessarily true - it is when houses are a sensible multiple of salaries, but if the prices continue increasing into the stratosphere there does come a point where your money is better off sitting in the bank (or in an investment portfolio) and you use the interest/dividend payments to rent forever.

Indeed. Also, to the OP, ask your family and friends about rental yields! What return do they get from that big lump of equity that they call a home! :P

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4 hours ago, renting til I die said:

Btw, the next time you are told that rent is dead money. Ask them what they understand as dead money? (this can lead to an interesting discussion, as people waste so much money on crap!) and how much of the rent you pay is dead money? IF your rent was only £50 per week is that dead money? £100, £200. Where is the line? People really don't see how much money owning a home costs! Renting can be better than owning a home even without a mortgage!

 

Agree, but for me I would say the underlined can means you have to factor in the following

- What you want to do in life (NOT housing related)

- Your lifetime investment strategy

- How long you are going to stay in the area

- How much equity you have to put down

- Current house price multiples

- Interest rates

- General economy.

 

I am very lucky, I now have savings and a house with no mortgage.  This means I look at the "dead money" argument more as "cash flow". 

If I was forced to look at it financially, I suppose I'd look at home ownership as being one part of a varied portfolio of personal investments. It is the biggest investment I have and it is the only one which has a direct effect on my life - I live in this investment and don't have to pay rent.

Day to day, I no longer worry much about its potential financial loss in the future, I just get on with my life. Each month I can decide afresh what to do with the extra money I have available, simply because "life" costs less when you don't pay rent. I like to look at this as something that will continue for the many decades I have left on this planet.

After my demise, I'm sure we can all agree that the money will truely be as "dead" as my mortal remains, but until then, I will always look at renting as something that can only temporarily be of financial benefit.

I now look at this "dead money" thing as something you can only measure in hindsight, and I think that is why so many old people spout it. For some reason, nothing has happened to break that pattern (but of course, that pattern could be broken  with war / famine etc). For me, the "House" question is similar to the "Pension" question. It is only when you are near retirement that you realise the wisdom of proper pension planning, the foolishness of not doing so and the wisdom of having a house paid off as early as possible because you enjoyed the extra cash flow and tax free HPI. 

I too am a long time lurker, but my account was caught up and removed during the great purge 10 years ago along with all the others that didn't agree the crash would be severe. 

However, I still drop in on this site because I am forever grateful to the posters on here who foretold the credit crunch. Who knows, someone might give another heads up (but TBH, I don't think it will happen again). The biggest mistake this site made, was removing many of the other members who had real insight.

I always advocated that houses woudl never drop more than 30% and so I decided to downtrade in 2007 and eliminate the mortgage with a cheaper property (deleveraging). Did I make the correct decision? for me yes - but more for family contentment reasons - however the financial benefit was nice too (N.B. This was in the NW , but if I had been in London, the "correct" thing would have been to hold on and not deleverage)

This is not a brag - it is more about what others have also said.

For me, it is about how we all have to be careful that we measure the value of things and not their price, and this should be done whatever the age of the person

 

Edited by rockerboy

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4 hours ago, renting til I die said:

Join the club! I know what it feels like to have all your close family think you are an idiot for not buying a house.

However, my investments (mainly equities) are now getting to the point where they almost pay for my rent, so was I such a fool? Note that Rich Dad Poor Dad says that homes are not an investment, not because they can't yield a positive return but because they have a negative effect on cashflow! How much extra cash have I been able to invest 'because' I have been renting for the past 8 years? Anyway, I am almost at the point where I don't care where house prices go. I may well rent until I die! After all, a house is just an asset that pays your rent for you...

Btw, the next time you are told that rent is dead money. Ask them what they understand as dead money? (this can lead to an interesting discussion, as people waste so much money on crap!) and how much of the rent you pay is dead money? IF your rent was only £50 per week is that dead money? £100, £200. Where is the line? People really don't see how much money owning a home costs! Renting can be better than owning a home even without a mortgage!

 

It is difficult to do the maths in this and I would never listen to that old fraud Kiyosaki who is ultimately just another BTL peddler.

But thinking about how much better off I am financially from buying in 2005:

Asset  (house price growth): +£220,000

Interest paid vs rent (dead money cash flow): +£150,000

Home maintenance and insurance: -£30,000 (hard to calculate because some spend was more than maintenance eg new bathroom)

Opportunity cost of deposit and capital payments totalling  £140,000: given the tumultuous period, but let's say +£40,000.

So on the plus side I am up £370,000 and loss of perhaps  £70,000.

But given how much lower my mortgage vs rent is I have added financial benefits of extra pension contributions with the tax as well as the extra experiences and peace of mind from a more secure position. 

I admit that I am "lucky" - my increase in wealth is mainly down to government intervention - low interest rates and printed money and it may be a one off. But I am happy that that it is part of my life that I don't need to worry about too much. 

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1 hour ago, Ah-so said:

I admit that I am "lucky" - my increase in wealth is mainly down to government intervention - low interest rates and printed money and it may be a one off. But I am happy that that it is part of my life that I don't need to worry about too much. 

+1

In my case (NW) the figures are roughly

- Had house with substantial equity, but with after living there for 4 years, we had spent about £150K on "improving" it. The mortgage unexpectedly rose to £200K, so we downtraded to another house with no mortgage. In those four years, the house had gone up by £330K

- Both houses decreased in value, but I guess current house decreased about £75K less

- Cost of renting similar to what I have over 10 years, would have been spending about £150K (Note - one has to pay this after tax)

- Opportunity cost loss of investing  - lets say about £100K

 

In the end, I moved and my monthly income went "up" £1K (after tax) - With the increased spend available, I increased my pension to get the tax back and the pension pot increased far more over ten years (in a tax free wrapper) than I ever could have saved.

However, this is the rub, I still don't have enough pension to what I would have liked. You're always caught one way or another.....it seems to me that all this financial plannign stuff is all about being "caught as less as possible".

No matter how you look at it - For most people, buying a house is always the biggest investment one ever makes and whilst its wise to think about it in this way, you still have to live somewhere :(

The biggest thing I have learnt in all this - NEVER BUY A HOUSE THAT NEEDS SUBSTANTIAL MODERNISATION UNLESS YOU DO THE WORK YOURSELF -  in the rising market up to 2007, I would have made more money just buying and selling a more expensive house - all with a lot less stress of having builders in!

Its the system we are in - its not fair - and its a lot of luck.......I'm just glad I don't have to think too hard about "Pworoty" anymore and feel I had a lucky escape TBH. One could say its about buying property at the right time, but I would say its more about selling property at the right time.

Is it the right time to sell ATM? probably - but I don't want to think like that unless something really really big is going to happen.

 

Edited by rockerboy

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1 hour ago, Ah-so said:

It is difficult to do the maths in this and I would never listen to that old fraud Kiyosaki who is ultimately just another BTL peddler.

But thinking about how much better off I am financially from buying in 2005:

Asset  (house price growth): +£220,000

Interest paid vs rent (dead money cash flow): +£150,000

Home maintenance and insurance: -£30,000 (hard to calculate because some spend was more than maintenance eg new bathroom)

Opportunity cost of deposit and capital payments totalling  £140,000: given the tumultuous period, but let's say +£40,000.

So on the plus side I am up £370,000 and loss of perhaps  £70,000.

But given how much lower my mortgage vs rent is I have added financial benefits of extra pension contributions with the tax as well as the extra experiences and peace of mind from a more secure position. 

I admit that I am "lucky" - my increase in wealth is mainly down to government intervention - low interest rates and printed money and it may be a one off. But I am happy that that it is part of my life that I don't need to worry about too much. 

and if prices crash ?

 

 

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11 minutes ago, longgone said:

and if prices crash ?

 

 

and if we get hyperinflation of sterling? either could happen and both are ifs currently.

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14 hours ago, longgone said:

bitcoin is over 

stop pushing it 

should have swapped it for an extension 

Thank you, another one for my mega piss take quote bank in 5 years time like I do with the quotes from 2014 now.

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7 hours ago, renting til I die said:

 

This is the only reason you should ever buy a home! Home should NEVER be looked at as an investment, even serious BTL LLs known this!

 

A home should not be a speculative investment i.e buying hoping prices go up.  Nothing wrong with buying (as it used to be, not now) because over the long term it is cheaper than renting.

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17 minutes ago, Pebbles said:

and if we get hyperinflation of sterling? either could happen and both are ifs currently.

hyperinflation would wipe me out.  all thought i agree i have already lost prices will never drop to anything where i would consider good value. not in my area anyway. 

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17 hours ago, Pebbles said:

That was their main issue that mortgages might be to expensive and house prices would fall. Politicians always want rising prices and will run the economy to get it because to a great extent house prices are the uk economy.

I think you are right. But this will come at a price eventually because they won't be able to afford the bubble, just as Australia is learning now.

It is people's wages that pay for houses in the end. The idea that prices can increase beyond this indefinitely just flies in the face of all reason and logic.

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8 minutes ago, markyh said:

Thank you, another one for my mega piss take quote bank in 5 years time like I do with the quotes from 2014 now.

i see you are at the "convincing yourself stage" to cover up the feeling of shame and greed. 

 

investor-psychology-illustrated.gif

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On ‎04‎/‎01‎/‎2019 at 18:09, chiefofwales said:

I've been a long time lurker and very rare poster. I have followed and studied this forum and lots of associated reading (Say Goodbye to all that buy to let to name one) for the last few years. It has been such a fantastic resource and breath of fresh air.

However, my HPC confidence  has come at a cost with my family and friends who think I am an absolute idiot. This is because for the last 5 years or so of my wife and I not buying a house, we've seen prices rise where even if there were a correction now we'd still be in worse off. The amount of times I have been told to buy now, what are you waiting for, rent is dead money etc is probably symptomatic of everyone else on here! But my belief is also being tested and I don't know how much longer we can all wait.

The point of my post is do people believe this is going to happen and within the next couple of years? We want to start a family and the thought of renting while raising a child is not something we want to do (given our current experiences to date). I am losing faith and this is the only place which seems sane.

5 years was 2014, I assume you where not young not in a position to buy jobs wise in 2008/9?  Their was a 6 month 30%+ crash window from September 2008 to March 2009 when interest rates where highish, the credit crunch was in full effect, but loans where easily available to those more than qualified. There was also a mini 3 month crash after June 2016 Brexit vote, if you found the right house in the right area with a motivated buyer. We bought a 5 bed Terraced in SE in March 2009 (offered December 2008) for "230k that exact same style house on same estate bought in 2006 cost £330k , and sold it for £350k in 2016 (£375 offer excepted before Brexit, but we dropped to complete out chain). The house we bought was SSTC in April 2016 for £540k but that sale was pulled out of after Brexit result and we picked it up for £501k in August 2016, as due to Brexit no competition, desperate retired couple downsizers already deposited to a 2 bed newbuild with a pushy builder threatening to put it back on the market etc. 

And was this a good deal, yeas very much so as the house was only built in 2009 and sold for $450k then, so getting away with only paying £501k 7 years later,  just a £51k rise compared to the £120k rise of the house we sold. But then again our new house is in the same county buy 20 miles further North than the old house, and that 20 miles also saved £100k+ on similar sized houses in a Village.

I find you always need to be looking at the market making mental notes watching prices and several areas and just pounce when the deal is right.

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11 minutes ago, longgone said:

i see you are at the "convincing yourself stage" to cover up the feeling of shame and greed. 

 

investor-psychology-illustrated.gif

Except I bought a -30 and then again at stage 9, and we are now at stage 13! 

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18 minutes ago, markyh said:

Except I bought a -30 and then again at stage 9, and we are now at stage 13! 

 

we have already seen the past but no idea of the future.  fair play you are brave i would have run a long time ago if someone offered me 100k for nothing. 

you must be well healed to throw away 100k so easily. 

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