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I've been out and about....


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On 13/10/2020 at 14:59, FANG said:

I totally agree.

Where is the money coming from.  Foreign investors?I cannot see a substantial HPC unless new build supply, outstrips demand and I don't think that will happen anytime soon.

There isn't a supply problem for housing in the UK... what is happening is a BTL empire is out of control. They're cornering the market and the government are letting them...

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There isn't a supply problem for housing in the UK... what is happening is a BTL empire is out of control. They're cornering the market and the government are letting them...

The market is cornered by a few big suppliers and BTL'ers all fed by a banking system that puts peoples rent against them.

"Sorry you can't afford a £800pm mortage, but you afford £1000pm rental to BTL'er"

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You only have to look at the price of coffee to see that. 

Agree I do not get why anyone goes to a coffee shop and pay £2 plus for a cup of bleeding coffee 

 

If Wuhan flu isn't acceptable - Spanish flu certainly isn't. Or the Bat virus - its certainly driven many governments batty.

Ignore it some folk want to be offended by everything 

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The market is cornered by a few big suppliers and BTL'ers all fed by a banking system that puts peoples rent against them.

"Sorry you can't afford a £800pm mortage, but you afford £1000pm rental to BTL'er"

I think the BTL brigade are screwed if house prices fall, for the amateur it’s not worth it unless you include the capital increases 

Edited by satsuma
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I think the BTL brigade are screwed if house prices fall, for the amateur it’s not worth it unless you include the capital increases 

Not wishing to troll....you are right for those who are building little empires and borrowing deposits all built on growth. So I think it stops the 118’er model ie leveraged ‘portfolios’  

The issue though is interest rates are soooo low that those that can may borrow at 1.5% and try get yield back at 5% and therefore that ‘makes it worth it’. 

Dropping prices lock them in and rising rates (or non payment of rent) then screw them. In the immediate future non payment of rents is most likely. 

I suppose the extra stamp duty and dropping prices really means only the daft investor would buy now...but they may hold. Really we need higher rates and less daft props. Possibly low BTL rates will generally rise and banks lock in existing customers if there are less buyers?  😉

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Not wishing to troll....you are right for those who are building little empires and borrowing deposits all built on growth. So I think it stops the 118’er model ie leveraged ‘portfolios’  

The issue though is interest rates are soooo low that those that can may borrow at 1.5% and try get yield back at 5% and therefore that ‘makes it worth it’. 

Dropping prices lock them in and rising rates (or non payment of rent) then screw them. In the immediate future non payment of rents is most likely. 

I suppose the extra stamp duty and dropping prices really means only the daft investor would buy now...but they may hold. Really we need higher rates and less daft props. Possibly low BTL rates will generally rise and banks lock in existing customers if there are less buyers?  😉

Not at all, good points.  The reality is that the economists seem to be taking the helicopter money route, more money splashed about on loose terms of repayment.  So in reality prices may not drop and instead everything else goes up.  

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Agree I do not get why anyone goes to a coffee shop and pay £2 plus for a cup of bleeding coffee 

 

It gives those people something to do, life is too easy and everything else is now done for them and they have cash spare.

Note this is an explanation not a justification (I have no love for coffee shops but my wife drags me in from time to time (or did pre COVID) mainly to placate the kids with a cake when out and about)

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I do not get why anyone goes to a coffee shop and pay £2 plus for a cup of bleeding coffee 

No, what you mean is YOU wouldn't go into a coffee shop and pay £2 plus for a cup of coffee.

It just boils down to them getting £2+ worth of enjoyment out of something that you wouldn't.  It's not really that hard to understand that different people enjoy different things. 

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If I were moving out of London and wanted a relatively simple train journey back as required, Bath is where I would go. A beautiful city in many ways.

Me, I'll be moving to Scotland in the next five years. Just one recent holiday there convinced me.

You can buy a half decent house in Brittany for £60k. A decent one for £100k.  Dinan airport, St. Malo ferry to get back to UK.  Rent out your UK home.

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Agree I do not get why anyone goes to a coffee shop and pay £2 plus for a cup of bleeding coffee  

From an Australian website promoting the cafe business:

What’s in a cup of coffee?

Here is a quick cost and profit analysis

Coffee cost   $0.30 – $0.40

Milk   $0.20

Take-away cup and lid   $0.10 – $0.20

Labour   $0.20

Total   $0.80 – $1.00

Average Price of a Coffee $3.50 – $4.50

Net Profit ($2.50 – $3.50 per cup)

300% – 400%

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From an Australian website promoting the cafe business:

What’s in a cup of coffee?

Here is a quick cost and profit analysis

Coffee cost   $0.30 – $0.40

Milk   $0.20

Take-away cup and lid   $0.10 – $0.20

Labour   $0.20

Total   $0.80 – $1.00

Average Price of a Coffee $3.50 – $4.50

Net Profit ($2.50 – $3.50 per cup)

300% – 400%

Rent, Business rates, VAT... all seem to be missing. 

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From an Australian website promoting the cafe business:

What’s in a cup of coffee?

Here is a quick cost and profit analysis

Coffee cost   $0.30 – $0.40

Milk   $0.20

Take-away cup and lid   $0.10 – $0.20

Labour   $0.20

Total   $0.80 – $1.00

Average Price of a Coffee $3.50 – $4.50

Net Profit ($2.50 – $3.50 per cup)

300% – 400%

Minimum wage in Australia is $19.84 per hour. Unless they are having one person take the order, make the coffee, and ring them up at the register every 36 seconds, that labour cost is severely underestimated.

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What do you think the labour cost should be? 

All in all probably over $1 a cup. All the time to prepare to take the order, prepare the coffee, work the register. Plus time to clean tables and the machines, stock management. 100 other things that I can't think of as I have never worked in a coffee shop.

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Oh, ok. Thanks for your response. 

If whatever reason you want to know the actual figures, Costa makes a profit margin of ~10% with all its economy's of scale, pre-covid. Post covid will be strongly loss making.

Independent shops without that scale will be 3-5% margin if you are lucky, pre covid. 

 

Its not 300%.

Coffee is overpriced if you think it is. The reason coffee shops charge £3 a coffee is not because they are all raking it in, thats the price point that covers their costs. Yes weatherspoons can sell for less but it has other income streams.

 

 

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Oh, ok. Thanks for your response. 

By observation it'll cost more than 20 cents a cup. It takes far longer than 36 seconds to get a cup of coffee.

I have worked in other service industries, and can apply some of that experience and knowledge to coffee shops.

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From an Australian website promoting the cafe business:

What’s in a cup of coffee?

Here is a quick cost and profit analysis

Coffee cost   $0.30 – $0.40

Milk   $0.20

Take-away cup and lid   $0.10 – $0.20

Labour   $0.20

Total   $0.80 – $1.00

Average Price of a Coffee $3.50 – $4.50

Net Profit ($2.50 – $3.50 per cup)

300% – 400%

What about commercial rent? Isn't that the biggie?

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Coffee is overpriced if you think it is. The reason coffee shops charge £3 a coffee is not because they are all raking it in, thats the price point that covers their costs. Yes weatherspoons can sell for less but it has other income streams.

 

 

Yes, I do think it’s overpriced. For the same price as 1 coffee in Costa/Nero/Pret/Starbucks, I can buy a jar of instant coffee that will yield somewhere around 100 cups of coffee. The coffee from said chains is, in my opinion, not 100X better than the instant coffee. Therefore, I don’t see the coffee from the chains as being good value. 

Edited by ForGreatLager...
Beans/instant mix up!
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