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B2l 'a Guaranteed Route To Wealth'

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

why did you sell up? what was your ield on each property? debt to equity ratio?

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why did you sell up? what was your ield on each property? debt to equity ratio?

Yield was c6% accross them. Debt was c65%.

I couldnt see the point of it anymore.

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

Remember they have to pay 40% CGT on those gains, so no where near a million !

I think banks do invest in property, but the problem with it is that it is such a long term investment. If the market runs in cycles this current one hasn't really started on the downward slope yet after 10 years. If you were to invest now you might not see the return you talk about for 20+ years. In the mean time your 150k in deposit money could have done better elsewhere.

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

Not a bad move, probably a prudent move.

It amazing me how naive the decision making process of all these new BTL'rs must be (presumably anyway).

I think that an investment has 4 risk factors (if memory serves me):

1. Interest Rate Risk

2. Inflation Risk

3. Shortfall Risk

4. Market Risk

How many BTL'rs sit down and evaluate their investment in 'a couple of properties' with regard to any of these risks and actually evaluate what they are doing?? Instead of any evaluation all they seem to have is 'property always goes up in value' or 'it will be my pension'. Nice!

Scarey to even think about it.

AFP

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that's right DB - at the risk of sounding like a snob - look at the calibre of the people getting into BTL these days.

They tend to be at the bottom end of the "financially sophisticated" spectrum, if you catch my drift.

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

No, and you know it! You got out at near enough the market peak, IMHO.

Anyone buying into property right now will have to ride out the next 'trough' before seeing capital gain. Why don't they wait and buy during the trough, then? Because they've witnessed a 10 year bull-run in property and think it's going to go on forever. They are desperate for a piece of the action but have missed the boat.

The clever money got out of property over the last 2 years...

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that's right DB - at the risk of sounding like a snob - look at the calibre of the people getting into BTL these days.

They tend to be at the bottom end of the "financially sophisticated" spectrum, if you catch my drift.

Are you saying that they are thick - possibly even Daily Express readers?

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

Could of kept 1 or 2 i dont think you will miss much i believe 1-2% increase a year if intrest rates rise this winter prices may drop 1%. I think this trend may continue for a few years

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Yield was c6% accross them. Debt was c65%.

I couldnt see the point of it anymore.

Anyone with some sense knows that BTL is now madness, but it's still being driven by sentiment, which takes a long time to turn around.

I really think you did the right thing, not so sure about Morocco, but that EU country is a definite winner.

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

No, it's just the classic bandwagon scenario, we're still getting idiots jumping on at the top believing in the fools gold, they'll be the ones jumping as it speeds down the hill or crashing at the bottom, ahhhh thats a shame :wacko:

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Remember they have to pay 40% CGT on those gains, so no where near a million !

More than 10 years = 0% cgt due to taper relief. The longer they keep the property the higher the tax relief.

40% only applies to the first 3 years and then reduces by 5% until full relief after 10 years.

Not sure if this is the case for muliple assets.

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Nowadays I keep hearing this from newbi LLs:

"House prices over the long run always go up, so if I invest £15000 I can leveredge into a property worth £100000, this property will at some point be worth £200000 (10 years is typically quoted) so my £15000 has made me £85000. If I do this 10 times I will make a profit of approaching £1m"

They argue that the beauty of property is the easy leveredging aspect.

Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Ive noticed of late a new breed of ultra young person getting into B2L some with several properties already.

Did I make a bad move selling up? :(

Look into the banks hedge funds.. they sold up to....

;) nope, you called peak.

Its like anything.. buy low sell high..

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For those that dont know Im an ex B2L LL who sold his modest portfolio (sound posh eh) in 2004/05.

Did I make a bad move selling up? :(

What's the Duke of Westminster doing with his portfolio?

If you're doing the same as him then you're doing the right thing.

HTH :P

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Time and again I keep reading and hearing this but surely if it was this easy every institutional investor and Bank would be heavily into this themselves?

Abbey National pension fund sold off virtually all of it's property (corporate property I think) investments last year.

Barclays is selling most branches to investors with a guaranteed rental return (sale and lease back). Source: http://www.ixisaew.com/files/109.pdf

"
Barclays PLC is selling and leasing back around 150 branches and offices in the United Kingdom through auctions and private sales. Barclays will then take leases of around 15 years on the properties. "It's a good way for us to manage our business and it seemed a good time to sell because there is a lot of interest in U.K. property" because of higher property values, says Barclays spokesman Michael O'Toole. He declines to say how much the bank hopes to raise from the sale.
"

The big boys are queitly getting out, this info wasn't in the main stream media was it!!!

Edit:

It was mentioned in Money Week: http://www.moneyweek.com/file/13079/index.php

Edited by Jason

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I think that an investment has 4 risk factors (if memory serves me):

1. Interest Rate Risk

2. Inflation Risk

3. Shortfall Risk

4. Market Risk

To which I would add:

Opportunity Cost

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  • 301 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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