munimula Posted February 9, 2006 Share Posted February 9, 2006 (edited) 3-bed bungalow bought just outside Padstow, Cornwall in mid 2003 Bought for £280k and just revalued at £450-£475K An outstanding increase of 67% in the last 2.5 years (OK I appreciate this is asking price and not definitely what they could get) My parents are asset rich, cash poor and I've suggested they sell, move further up country to be nearer family and use left over cash to buy something to let out for extra income. However as a permanent property bear for several years now I'm losing my way and hearing lots about rebound in property market I'm less sure. Is this the time for them to get out and cash in? How can I persuade them? I should add that my dad earns just £14K as that's all local wages give him! It's funny that they have this huge asset but struggle to get by because of low wages. Edited February 9, 2006 by munimula Quote Link to comment Share on other sites More sharing options...
Realistbear Posted February 9, 2006 Share Posted February 9, 2006 3-bed bungalow bought just outside Padstow, Cornwall in mid 2003 Bought for £280k and just revalued at £450-£475K An outstanding increase of 67% in the last 2.5 years (OK I appreciate this is asking price and not definitely what they could get) My parents are asset rich, cash poor and I've suggested they sell, move further up country to be nearer family and use left over cash to buy something to let out for extra income. However as a permanent property bear for several years now I'm losing my way and hearing lots about rebound in property market I'm less sure. Is this the time for them to get out and cash in? How can I persuade them? If there is no compelling reason to remain in Padstow I would advise them to take their profits and STR for awhile. That much money should be safely invested at around 5% which should pay their rent allowing them to live well. I have read that prices in the W Country have not been doing so well recently and that trend is unlikely to change for several years. An overpriced market is unlikely to "rebound". In any event it has only dropped a little so far so there is nothing to rebound from. Most crashes go in one direction--down. Quote Link to comment Share on other sites More sharing options...
Given Up Posted February 9, 2006 Share Posted February 9, 2006 What do THEY want to do? It makes sense to have your parents nearer to you as they get older. Would they be able to buy something similar near you and release some equity? If yes, then why not? Quote Link to comment Share on other sites More sharing options...
Badger Posted February 9, 2006 Share Posted February 9, 2006 Sell it for £150k to help out the locals. Quote Link to comment Share on other sites More sharing options...
munimula Posted February 9, 2006 Author Share Posted February 9, 2006 If there is no compelling reason to remain in Padstow I would advise them to take their profits and STR for awhile. That much money should be safely invested at around 5% which should pay their rent allowing them to live well. I have read that prices in the W Country have not been doing so well recently and that trend is unlikely to change for several years. An overpriced market is unlikely to "rebound". In any event it has only dropped a little so far so there is nothing to rebound from. Most crashes go in one direction--down. Well the view and position is stunning, view of the Camel estuary. But they really do struggle with money and as I've said to them that's crazy when they could cash in. With the extra money I told them they can go and see plenty of nice views at the weekend. I was trully gobsmacked by this valuation and if it was me I would cash in now. I would love for them to sell and STR and then for prices to come down and finally...finally be proved right Quote Link to comment Share on other sites More sharing options...
beenhearingthisforyears Posted February 9, 2006 Share Posted February 9, 2006 (edited) 3-bed bungalow bought just outside Padstow, Cornwall in mid 2003 Bought for £280k and just revalued at £450-£475K An outstanding increase of 67% in the last 2.5 years (OK I appreciate this is asking price and not definitely what they could get) My parents are asset rich, cash poor and I've suggested they sell, move further up country to be nearer family and use left over cash to buy something to let out for extra income. However as a permanent property bear for several years now I'm losing my way and hearing lots about rebound in property market I'm less sure. Is this the time for them to get out and cash in? How can I persuade them? Just make sure they get to enjoy their money/life, and feel no pressure from you/family etc......do they really need the hassle of tenants etc...? (sorry not sure of their age.) Would they really want to rent at this stage in their lives?? my father dropped dead of sudden heart attack @ 56....... he had planned to retire early at 60, downsize and parents take some long holidays.......he worked everyday from 6am...... so just wish he had been given the opportunity.... anyway good luck to your parents, and sorry not really appropriate comments for this forum but your post just kinda struck me....... Edited February 9, 2006 by beenhearingthisforyears Quote Link to comment Share on other sites More sharing options...
munimula Posted February 9, 2006 Author Share Posted February 9, 2006 What do THEY want to do? It makes sense to have your parents nearer to you as they get older. Would they be able to buy something similar near you and release some equity? If yes, then why not? I like your user name - sums up my position. I've totally given up thinking about buying property Mum would leave but they aren't sure where to move to. They always wanted to move to cornwall but the reality is that it's a long way from everywhere else and down a 3 mile lane everything involves the car. They would probably move to Taunton area but not sure where around there. The house they sold in Wellington went for £235K now if prices are similar to mid 2003 there then they could buy and have £150K left over to buy a place to let out. Is this the best idea for their money and future security/income? What else could they do? I am concerned for them as they have no pension provisions at all and I think they should use this opportunity to somehow sort out their finances for the future. Sell it for £150k to help out the locals. What locals? Quote Link to comment Share on other sites More sharing options...
munro Posted February 9, 2006 Share Posted February 9, 2006 Sell. They are sitting ducks. Sooner or later the govt, whichever party happens to be in power, are going to have to do something about redressing the generational balance. Note that the NIESR are now proposing a 1% wealth tax, phased in over several years and with council tax reduced/phased out as a quid pro quo. Lots of economists are pointing out how HPI misallocates resources and damages the economy. If this does happen, and if things continue as they are it will become easier to sell such a tax - just think of politicians tugging at the heart-strings over those 98,000 children sleeping in kitchens, hallways, etc - then people like your parents will absolutely get it in the neck. How would your parents cope with a 1% wealth tax, on a £475k house? And your point about wages reinforces this. They're living in an asset that they can't sensibly afford, and it has only got to where it is on the back of an anomalous set of circumstances. In the end it's down to them, but that money in the bank will secure all your futures, whereas that house might turn out to be the most colossal millstone. Do you feel lucky?! But you shouldn't pay too much attention to me as this is a sore point in my own family...so no doubt I'm biased. Quote Link to comment Share on other sites More sharing options...
munimula Posted February 9, 2006 Author Share Posted February 9, 2006 Just make sure they get to enjoy their money/life, and feel no pressure from you/family etc......do they really need the hassle of tenants etc...? (sorry not sure of their age.) Would they really want to rent at this stage in their lives?? my father dropped dead of sudden heart attack @ 56....... he had planned to retire early at 60, downsize and parents take some long holidays.......he worked everyday from 6am...... so just wish he had been given the opportunity.... anyway good luck to your parents, and sorry not really appropriate comments for this forum but your post just kinda struck me....... A uni mate of mine lost his dad when he was just out of uni. Given him a very different view of life, he's now 28 and just spent a year in OZ and only worked 1.5 months in that time! My dad is 54, not healthy and a big smoker. It's something to think about.... Quote Link to comment Share on other sites More sharing options...
Mushroom Posted February 9, 2006 Share Posted February 9, 2006 (edited) Their pension provision is ? Advice here may be of some use but there are so many factors to consider. Their ages, do they want to leave friends and local groups if involved, their health situation, their emotional attachment to the property and the area. Thinking ahead, healthcare for the elderly in the area, good or bad. Social services in popular retirement areas are likely to get stretched in the future. Whatever you do, do not try to "make" them do anything. It does, on the face of it, seem to be a good time for them to perhaps obtain a better income, although I wonder if they would want the potential problems of a property bought for letting. All imo. Edited February 9, 2006 by Mushroom Quote Link to comment Share on other sites More sharing options...
Sisyphus Posted February 9, 2006 Share Posted February 9, 2006 My parents are asset rich, cash poor and I've suggested they sell, move further up country to be nearer family and use left over cash to buy something to let out for extra income. Property is not the only investment that yields income. There are many funds that specialise in low risk dividend paying assets. Any good financial advisor would be able to suggest a few. Probably a lot less hassle than a buy to let in an uncertain market. Quote Link to comment Share on other sites More sharing options...
abroad Posted February 9, 2006 Share Posted February 9, 2006 3-bed bungalow bought just outside Padstow, Cornwall in mid 2003 Bought for £280k and just revalued at £450-£475K An outstanding increase of 67% in the last 2.5 years (OK I appreciate this is asking price and not definitely what they could get) My parents are asset rich, cash poor and I've suggested they sell, move further up country to be nearer family and use left over cash to buy something to let out for extra income. However as a permanent property bear for several years now I'm losing my way and hearing lots about rebound in property market I'm less sure. Is this the time for them to get out and cash in? How can I persuade them? I should add that my dad earns just £14K as that's all local wages give him! It's funny that they have this huge asset but struggle to get by because of low wages. Not sure of your position of if you have siblings. Have you considered discussing transfering the ownership to yourself/overall family and agreeing a lifetime rental agreement for them and you/your family provide them with a monthly guaranteed index linked income with the pay off of a share of X% of the house when they die. Then no middle man taking a cut and it stays in the family. Their situation improves financially, they'll feel good about providing for their family and you're being forced to save and are doing something for your parents. I know its a little off the wall and less conventional, however its fixes the issue. Quote Link to comment Share on other sites More sharing options...
DonnieDarker Posted February 9, 2006 Share Posted February 9, 2006 As far as I can have worked out the only way you can realise your profit in a market like ours (ie. one that is as its peak and looking likley to fall or stagnate) is to either STR or downgrade in property size. Do they need a 3 bedroom house. Wouldnt a 2 bed or 1 bed do? Bag the profits and invest those in a market that is going to do better than property. Convincing parents to downgrade is incredibly hard though. My father's idea of downgrading was for him and his partner to move from a 6 bedroom, 3 reception room house to a 5 bedroom 3 reception room country property. There's two of them FFS! Quote Link to comment Share on other sites More sharing options...
Guest horace Posted February 9, 2006 Share Posted February 9, 2006 They purchased their property for £280,000 and their `wages` are £14,000. An explanation is needed I think. horace. Quote Link to comment Share on other sites More sharing options...
munimula Posted February 9, 2006 Author Share Posted February 9, 2006 They purchased their property for £280,000 and their `wages` are £14,000. An explanation is needed I think. horace. Cash buyers of course. Our main family house was bought for £23K in 1981, probably had a £15K mortgage. In 2001 they sold this and bought a £130K 4-bed new build. Sold 2003 for £235K In 2003 bought current property for £280K. Valued today at £450K Totally ridiculous I don't think they need to downsize, the property is only a smallish 3-bed bungalow. They would benefit from area-downsizing i.e. moving to a cheaper area and thus releasing some equity which they could use to secure their finances. Stupid being hard up but sitting on £450K. Only problem is my dad who doesn't think prices will come down and actually believes that he could pull this off again! As far as I can have worked out the only way you can realise your profit in a market like ours (ie. one that is as its peak and looking likley to fall or stagnate) is to either STR or downgrade in property size. I'm recommending that they initially STR with a view to moving to a cheaper area. They are currently living in v.expensive area. Quote Link to comment Share on other sites More sharing options...
DonnieDarker Posted February 9, 2006 Share Posted February 9, 2006 I'm recommending that they initially STR with a view to moving to a cheaper area. They are currently living in v.expensive area. Good luck! Convincing someone to STR will be nigh impossible I think. I wouldnt want to do it...downgrading to a cheaper area could be an option then. Tell them to buy shares in ABP with their profits (JOKE). Quote Link to comment Share on other sites More sharing options...
vwphil Posted February 9, 2006 Share Posted February 9, 2006 Be quick propertys at this value atre sitting around for months and months in north cornwall and watch the valuation the local EA are known for being optomistic estuary estates and cole rayment and white being prime examples Quote Link to comment Share on other sites More sharing options...
Realistbear Posted February 9, 2006 Share Posted February 9, 2006 "only a smallish 3-bed bungalow" for 450k? I might get a couple of opinions first as it would be sad to see them dissappointed. Quote Link to comment Share on other sites More sharing options...
frugalista Posted February 9, 2006 Share Posted February 9, 2006 Cash buyers of course. Our main family house was bought for £23K in 1981, probably had a £15K mortgage. In 2001 they sold this and bought a £130K 4-bed new build. Sold 2003 for £235K In 2003 bought current property for £280K. Valued today at £450K Totally ridiculous I don't think they need to downsize, the property is only a smallish 3-bed bungalow. They would benefit from area-downsizing i.e. moving to a cheaper area and thus releasing some equity which they could use to secure their finances. Stupid being hard up but sitting on £450K. Only problem is my dad who doesn't think prices will come down and actually believes that he could pull this off again! I'm recommending that they initially STR with a view to moving to a cheaper area. They are currently living in v.expensive area. Your parents situation is very typical. I suspect your dad's attitude is typical too. Do you think they can really get £450k for the place? Unless their pension provision is already very good, they should strongly consider selling up. If they don't fancy the idea of renting (it is not for everyone), then they should just buy something smaller and cheaper, e.g. around the 200k mark. A retirement in a £200k property with £250k+ invested is a lot better than what most people will get. A few years from now the property price might well have held up, but they might be too old to consider moving, so the opportunity will have gone. frugalista Quote Link to comment Share on other sites More sharing options...
Fanny Magnet Posted February 9, 2006 Share Posted February 9, 2006 Our main family house was bought for £23K in 1981, probably had a £15K mortgage. In 2001 they sold this and bought a £130K 4-bed new build. Sold 2003 for £235K In 2003 bought current property for £280K. Valued today at £450K Thank God they bought when they did and not rented, otherwise it would have been Not bought for £23K in 1981 Not bought a £130K 4-bed new build Not sold 2003 for £235K Not bought current property for £280K Not valued today at £450K 25 years later total equity = zero. Let this be a lesson to you all, listen to your parents. Quote Link to comment Share on other sites More sharing options...
munimula Posted February 9, 2006 Author Share Posted February 9, 2006 Be quick propertys at this value atre sitting around for months and months in north cornwall and watch the valuation the local EA are known for being optomistic estuary estates and cole rayment and white being prime examples Be interested to get any anecdotal evidence you have on the area Stratton and Creber valued it. Cole Rayment and White are notorious for being too optimistic, apparently Stratton and Creber aren't. Property is between Wadebridge and Padstow, overlooks the Camel Estuary, 15 mins walk along Camel trail to Padstow "only a smallish 3-bed bungalow" for 450k? I might get a couple of opinions first as it would be sad to see them dissappointed. My dad is a prat, he can already be quoted as saying 'we should put it on for £500K' I'd actually be quietly smug if they don't get any interest and can't sell as it will back up my view of the market although it does seem that for the moment at least there is a bit of positivity in the market and I think they should catch this wave - might be the last Thank God they bought when they did and not rented, otherwise it would have been Not bought for £23K in 1981 Not bought a £130K 4-bed new build Not sold 2003 for £235K Not bought current property for £280K Not valued today at £450K 25 years later total equity = zero. Let this be a lesson to you all, listen to your parents. Yawn Quote Link to comment Share on other sites More sharing options...
Realistbear Posted February 9, 2006 Share Posted February 9, 2006 Be interested to get any anecdotal evidence you have on the area Stratton and Creber valued it. Cole Rayment and White are notorious for being too optimistic, apparently Stratton and Creber aren't. Property is between Wadebridge and Padstow, overlooks the Camel Estuary, 15 mins walk along Camel trail to Padstow My dad is a prat, he can already be quoted as saying 'we should put it on for £500K' I'd actually be quietly smug if they don't get any interest and can't sell as it will back up my view of the market although it does seem that for the moment at least there is a bit of positivity in the market and I think they should catch this wave - might be the last Yawn 500k may not be off the wall--a 1 bed in Padstow is on for 650k: http://www.findaproperty.com/agent.aspx?ag...prop&pid=322029 4 bed semi for 575k: http://www.findaproperty.com/agent.aspx?ag...prop&pid=222667 Makes Chelsea sound cheap by comparison? Quote Link to comment Share on other sites More sharing options...
Mushroom Posted February 9, 2006 Share Posted February 9, 2006 500k may not be off the wall--a 1 bed in Padstow is on for 650k: http://www.findaproperty.com/agent.aspx?ag...prop&pid=322029 4 bed semi for 575k: http://www.findaproperty.com/agent.aspx?ag...prop&pid=222667 Makes Chelsea sound cheap by comparison? Is that the Rick Factor at work? Quote Link to comment Share on other sites More sharing options...
frugalista Posted February 9, 2006 Share Posted February 9, 2006 Thank God they bought when they did and not rented, otherwise it would have been Not bought for £23K in 1981 Not bought a £130K 4-bed new build Not sold 2003 for £235K Not bought current property for £280K Not valued today at £450K 25 years later total equity = zero. Let this be a lesson to you all, listen to your parents. Your lesson only works if the next 25 years are exactly like the last 25 years. frugalista Quote Link to comment Share on other sites More sharing options...
Realistbear Posted February 9, 2006 Share Posted February 9, 2006 Is that the Rick Factor at work? Yes--probably. Liz Hurley bought a house in one of the Cotswold villages and prices shot off about 20% in response. The Celeb factor has to be taken seriously. Quote Link to comment Share on other sites More sharing options...
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