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Flat Bear

The Story Of A Property Tycoon

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A fictitious tale? About a Property Tycoon

You buy your first property for your family. After saving for several years you’ve saved £15,000 for the deposit you buy your house for £100,000. You are quite happy and its your house.


D = Debt (remember all debt is real)

RP = Real Price (the price you actually paid for property)

RE = Real Equity (difference between RP and D)

MP = Made up price or Muppet price (Price plucked out of the air for property)

ME = Muppet Equity (difference between MP and D)

One day you have a chat with a con man property expert who says you can become a millionaire in property, wasn’t buying your own home the best thing you’ve ever done? You agree.

You could buy houses with BTL mortgages putting down 15% of the purchase price and as prices rise (gloss over fact they may not) you could release the equity and buy more it was soooo simple. Very soon you could have £5,000,000 in a property portfolio, and the good thing was there was never a better time to buy than now. Now was apparently always the best time to buy.

You believe it all (ok ok but you do believe it)

The banks wouldn’t lend you large amounts of money if it wasn’t a great investment would they?

He re-values your house on the back of a cigarette packet at £150,000

You’ve already made money and you hav’nt started

To date


85,000 100,000 15,000 150,000 65,000

So you start

£65,000 Equity release. Allow for 5% purchase costs.

You buy 3 properties at average £120,000 and borrow £378,000



463,000 460,000 3,000 510,000 47,000

You have trouble renting at profitable level. You are advised to get an IO mortgage. (you’ve got more important things to do with your money than pay off loans) because it is the capital gains that really make the difference (silly boy/girl) and as long as the rents cover the mortgage or just under as you can make the balance from your salary (remember its an investment). You see the light.

6 months pass

You see very little cash and are struggling day to day, you again see your con man property expert.

You ask how you can get more rent, as you need more returns on your money, but the sods wont pay more and you’ve changed agents several times and you’ve cut down on all the fancy things like boiler checks and working appliances to cut costs.

He gives some really useful advice such as de -cluttering, holding on to tenants deposits as its yours really etc etc.

But suddenly realises “Do you know how much money you’ve made in the last 6 months?” You say nooooo….

He says “well…. House similar to yours sold for £189k um… yours is better its got a door…. Yes you’d get £200k if a penny. You’ve made £300,000 in less than a year!!! WOW”

He doesn’t go into detail and you just like those figures.

OK time to get richer!

You’ve another £300,000 extra equity in your BTLs and your own house has gone up another 120,000 that’s £420,000 doing nothing just sitting as equity in your properties it’s a crime.

You purchase another 20 houses at an average price of £150,000


3,683,000 3460,000 (223,000) 3,930,000 247,000

Nearly a millionaire wow

And you have an extra £59,000 extra WOW happy holidays, (and happy new car, kitchen, and blow up dolly you’ve always wanted)

You come back from your extended well deserved holiday and back to your day job. (you had heeded some good advice about not giving up your day job. What could they mean?)

The agencies are having some incy wincy problems in letting most of your properties, they just cant let them at your prices as the market has moved. You want to know where its been moved to, and who took it.

You have to lower your rents, and you get resentful about tenants and treat them with distain. But you’ve still got some cash left and prices of property can only go up so your OK. All big business men have these trials along the way.

You get assured by your property expert that alls OK, who goes on to tell you as a side comment your properties have gone up 8% maybe a bit more, and he wasn’t going to bother you until they had go up 20%. WOW

You go home and make some quick calculations (those in bold)


3,683,000 3460,000 (223,000) 4,300,000 617,000

Even nearer a millionaire wow

One day you think you’ll just surf that net to see what other property guru’s are saying (there must be a few intelligent people like yourself about). Because the idiots down the pub are fed up with hearing about your empire even when you buy all the drinks) and you come across HPC ? House Price Crash ? What ? must be a historical event. Ha Ha.

You find the site is made up of a bunch of losers. You’ve made a million in a year and they worry about buying a house Ha! You feel you must tell them to get on the ladder before its too late and explain you didn’t get where you were today by not buying houses or taking on loans. They would need to understand its not the price but the affordability, and those that couldn’t get a mortgage or didn’t want to could rent…….emmm and they would need to know that rents must rise to keep your business going (it just has to happen its common sense) and they could marvel at your business skills……Yes you’ll register.

One day you decide to stop arguing black is white & versa visa, and check out your own portfolio as there was a lot of talk about rate rises (lol) and falling property prices (yea and London may be the capital of England…….s**t it is)

You’ve withdrawn a little equity to help finance your new lifestyle and subsidise those low life tenants whose rents don’t cover the mortgage.


3,783,000 3460,000 (323,000) 5,000,000 1217,000

You’ve made the mill. 2nd one easier

What if?

Scenario A. You can get muppet prices………capital gains 40% !!! not worth it (good excuse I may use it)

Scenario B. Prices have fallen since I bought my properties by 8% (those land registry people do like to lay it on LOL)


3,683,000 3460,000 (223,000) 2,999,000 (684,000) Must get this calculator fixed


You lose some sleep. You must get reassurance from your property expert or those other clever property guru’s on line….anyone will do you ask the dog.

What do you mean read the small print? Investments can go down as well as up? But property isn’t like a normal investment is it.? Its as safe as houses, why do you think they say that? People need somewhere to live and it will be in my tenements at higher rents if I have to drag them in myself. Cruel b*****d tenants. Its time to raise those rents and these sods need to know it.

It takes a long long time, and a lot of soul searching to admit you even could be wrong, especially when there are others supporting what you want to hear. If the papers and the TV says it, then it must be true. (we all think this to some extent)

What does deluded mean?

Property, they say, is very illiquid, but when larger quantities get repossessed and enter the market to sell at any price property suddenly becomes a lot runnier.

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I do. Somebody close to me, unfortunately. He bought not only a property, but a not-very-nice one, for £120K (asking price) in August 2005. I went blue in the face telling him not to. The flat opposite his sold last week for £87K. It had been on the market since before his, and was exactly the same size.

Requiem aeternam to his financial future...

Meanwhile, in the same town, Reading, you can rent a slightly bigger place, in a better area than his for £450 pcm. He is paying an IO mortgage and the monthly payment is £660.

And the place I saw to rent is only 500m from where he works. The place he rents off the bank, sorry, bought, is a 30-minute bus-ride from his work.

Final anecdote: we occasionally bump into the EA who conned him and, almost a year later, the EA remembers his name! You bet he does. My mate must be a legend around the local EAs. Shows how little business they've done since then...

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Someone I know had a lovely 4 bed home almost paid for, but made the big mistake in withdrawing most of the equity, converting to IO and buying two BTL's on IO. To cover her costs has had to move out of her home into one of her BTL's and is talking of renting out that 2nd bedroom also.

Why don't you sell them now before you lose too much? I ask her. I can't until the end of the year, why I ask? because the fixed rate ends then and there will be to much of a penalty, also try selling a property as a family home with tenents in...not that easy.

The moral of the story is you may have 3 properties, but you were far better off with only the 1.

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  • 336 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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