Remember 1992 – 1995

[Guest Yeahbutnocrash]

What I would urge on readers of this thread is how quickly events can turn and bite you.

In the last crash I remember a collegue who had acquired a substantial BTL portfolio by the early 1990s, but with sizeable gearing. Property sentiment had meanwhile turned on a dime and he was also hit with rising IRs and a series of voids which impacted his cashflow mercilessly. His bank panicked and within a very short time all the loans were called in.

I met this bewildered guy later that year and he ruefully said 'We celebrated the New Year in with a toast to my millionaire status; by August I was bankrupt'.

Will it be different this time? Yes, it will be infinitely worse.

Poor guy - he should have played it safer in terms of gearing as he'd be rich now if he could have ridden that out!

Note 2 of the key facts: High IR's and the banks panicking - However, now they have a better understanding of BTL

[Guest barebear]

Just like to say what an informative and well written recollection of events that was Serpico.How the mighty can fall,how everything can turn on a sixpence and how the cream always rises back to the top after being shaken up.

Your a good example of all three mate , well done!!....fascinating.

[PropertyGuru]

You are absolutely correct.

People like Property Guru have already stated they already have their millions stashed carefully away out of the game and just waiting to hoover up properties when a drop occurs with the long term in mind. They wont have the balls to wait too long before crashing back in. I think the will slow a crash.

You sir, are an idiot.

I have already explained in great detail why this 'hope' is foundless.

I suggest you search the forum to find out why you have the reasoning power of a teenager on smack.

Here's a clue. People like me didn't get rich by panicking

Fool.

Edited October 14, 2006 by PropertyGuru

[Guest Yeahbutnocrash]

You sir, are an idiot.

I have already explained in great detail why this 'hope' is foundless.

I suggest you search the forum to find out why you have the reasoning power of a teenager on smack.

Here's a clue. People like me didn't get rich by panicking

Fool.

I for one stand partly corrected in your case when I implied 'possibly' out of guesswork

Presumably 'you didn't get where you are today by not knowing a peak or a trough when you saw one'

If there are falls it'll be about timing when to purchase and that may be a little tricky for some - many people may jump in as soon as prices are affordable for them (unless falls are acompanied by severe economic factors which delay property from being affordable even at lower prices)

Also although I suggested there may be huge pent up demand by people who'd like to get into BTL ultimately the amount of potential BTL would of course be limited by the potential demand for rented property

Edited October 14, 2006 by Yeahbutnocrash

[crashmonitor]

[quote name='Yeahbutnocrash' date='Oct 14 2006, 05:52 PM' post='467645

If there are falls it'll be about timing when to purchase and that may be a little tricky for some - many people may jump in as soon as prices are affordable for them (unless falls are acompanied by severe economic factors which delay property from being affordable even at lower prices)

Where prices have fallen we are living in the trough now and it is difficult to stop yourself jumping in.Viewed a house at the weekend 3 bed detached in good area.Property was stamped at 192k in Dec03.Vendor has put in luxury bathroom,free standing bath,shower cubicle,luxury tiling etc.Similar story for the kitchen.Entire house redecorated by professionals.New central heating system.List of burnt money actually goes on and on,nothing done DIY.Perhaps 30K spent(you can easily spend just that on a bathroom)

The price?200K.Gettable at 185K,perhaps.I don't remember 37K losses in the 89 to 96 years.Not in the East Midlands anyway where it was flat.

[crashmonitor]

I should also make the point that how much of the increases lately are illusory.Enworb,Europa and Co may be smugly thinking they are tracking the indicies.They aren't.This only measures sold houses.Sold houses are generally as above readies burnt as if there is no tomorrow.Ordinary houses don't sell there is too much on the market,trading is too thin.

[Guest Charlie The Tramp]

Just browsing this older thread and wondering what has happened to serpico. All his posts were first class and his experiences were always worth reading.

From post #26

This is one of my favourite posts from Serpico from another thread.

I was in the motor trade in a fairly big way back in the early 80s crash. Vauxhall Motors Ellesmere Port ceased production of the Astra and shut down because of the glut of unsold cars, thousands out of work.

We were doing okay but not good at the time but I was carrying around around half a £million a lot of money in those days in liabilities secured by two showrooms/workshops both with flats above plus a personal guarantee on my £200K house which had an £8K mortgage on it. Same as everyone else in the trade funding was by stocking loans and bank overdraft.

The first serious indication of serious trouble was from the girl who collected our weekly advert for the Chester Chronicle who told me that one of Chester's oldest and biggest dealers had closed, this was just before the new Aug 1st rush. Their bank had pulled the rug on the grounds that they had not SOLD 100 new cars, or however many,% and were not depositing the full funds from the sales but were taking 90% P/exs that they were not prepared to finance.

We hung on for a couple more years because we were in the strong position of owning and not having any debt on or leased business premises. I eventually pulled the rug myself and got out by the skin of my teeth. The house went for £110k in 1984 (net house prices, sold in 2002 £659K and again in 2004 for £795) the smaller business property sold fairly quickly for a reasonable price, but the really nice big place with two large flats above, prime site in a prosperous area lay empty for four years. Valued by Natwest for security at £225K eventually sold for £40K. Shit happens even to the smart ass f*****s at the banks?

The house had a second charge after the £8 with a stocking loan finance company, they played straight with me. I had given them millions of £s of business over the years, the house sale left them with a very small shortfall but they still gave me a cheque for £20k back for playing straight with them.

I was one of the lucky ones I had Natwest stitched tight with their only security against the business premises that they had expertly valued, they had there a**e smacked to some tune, doubt if they lost though, they had been stitching us on a day to day compounding interest of 19% and overcharges for years. After closing the business and getting the brain straight, takes a while after seeing 25 years of hard graft down the drain, I worked out they had shafted us for over £185K in wrong interest and overcharges. Trouble was I had not got the funds to employ a forensic accountant and the briefs to fight them.

Hardest thing was throwing 27 bloody good loyal staff, none of whom had been with me less than 12 years on the scrapheap. One who had been with me over 20 years committed suicide two years later by jumping off a fire escape with a noose around his neck. Never new until years after when a traffic patrol recognised me, pulled me over and told me that the guy had turned to drink because he could not get another job in his 50s and was living in a shithole flat after leaving the nice flat he had over my business.

When the motor trade is struggling that's an apocolypse warning. the banks get nasty on the retail trade as a whole and jobs go down like a row of dominoes. Good customer of mine sat in my office in tears, owned a big if not the biggest department store in Liverpool 650 staff, told me his bank had called in his £6million o/d, 1982, with six weeks to pay. Tsunami 650 more down the dole office.

We ain't seen nothing yet, it took five years from the start of that recession to take me out and I got out clean debt free with a few bob, I know for a fact that over 6,000 in the same trade as me went bust committed suicide or just closed down, if the average employees were 25 each that's 150.000 jobs gone.

And that ***** Blair looks like being in for another full term, OH SHIT!!!!!!!!!!

[Saving For a Space Ship]

excellent thread! i noticed on that list

5179/2006 The Move Channel.TV Plc

?

Thanks for that Charlie, I notice from Shedfishes' observation that I was correct in regard to The Move Channel.TV Plc going under in my comments on RB's earlier thread today quoting www.TheMoveChannel.com

I also noticed that the ironically named firm 'Savings Bar None Plc' (whoever they are) had gone under

Bankrupt Bulgarian Ea 'Ideal Home Limited' is also on that list, perhaps the East Euro countries Ea's like dropping the 'S' on our British institutions names as the Romanians have a firm called 'Harrod' http://www.harrod.ro/

Just browsing this older thread and wondering what has happened to serpico. All his posts were first class and his experiences were always worth reading.

From post #26

and yes, Serpico is missed.

Edited December 19, 2006 by Saving For a Space Ship

[Dosser]

and yes, Serpico is missed.

Wonder if Serpico and PG frequent ladies of the night in Ipswich?

Did someone say 'banned'?

Joking apart I enjoyed both users posts and genuinely felt educated by Serpico's experiences - what struck me was his level of decency, hope he's O.K

D

[DaggaDagga]

Wonder if Serpico and PG frequent ladies of the night in Ipswich?

Sorry, but this "joke" crosses a few too many lines for my liking.

[Guest]

What struck me was his level of humility in trading - the realisation that nobody was required to buy whatever he happened to be selling, and how he felt that the young generation might not realise that this was the case!

This got me thinking about the whole VI thing. It's an entire organisation dedicated to try and obfuscate a market FACT.

[DaggaDagga]

This is the first ever thread I've read on here that you could call a Bull-converter. It's all too easy to forget the misery that this country endured in the past.

I too remember the redundancy figures every night n the news.

[Guest Charlie The Tramp]

What struck me was his level of humility in trading - the realisation that nobody was required to buy whatever he happened to be selling, and how he felt that the young generation might not realise that this was the case!

It was probably the first time that Lenders discovered panic and as I said when the lenders panic all hell is let loose. I also saw many decent traders get screwed at that time. It was the beginning when people in business realised the only chance to survive was to look after number one and we now see the results today in our so called society. These VIs make con men look decent people. So what if someone is foolish to take on the loan I am offering them, not my problem if they are enslaved in debt I need the commission and am an expert in convincing them they are making the right decision albeit it they are financially naive.

[GCS15]

. Hence the disaster to people`s lives when a bank panics.

When Napoleans forces were defeated at Waterloo the French tried to escape over a small bridge. They were so panic stricken that they took to each other with their sabers in order to get through. The water under the bridge was knee deep

The point I'm trying to make is that during a panic the last thing to expect is for people / organizations to be rational.

[ChinaReader]

Just browsing this older thread and wondering what has happened to serpico. All his posts were first class and his experiences were always worth reading.

Thanks for dusting it off Charlie - I enjoyed reading it through (especially the posts from serpico - it felt a bit like Revelations from Granddad, which are worth a lot more than the gossip columns that fill the papers!).

It has almost got me panic saving though! At present I float cheerily in and out of my student interest-free overdraft (I graduated three years ago - no idea why they haven't cancelled the facility yet), treating it as free money to make sure cards are paid off on time, and it's handy having a 1k float of someone else's money to work with. But now I'm thinking "what if the crash is tomorrow, what if the bank demands the money now, what if I float into debt by a few hundred and then they come knocking"?

Then I take a deep breath and realise that it's ok, and that the general principal of paying off cards, never (ever) taking higher purchase, and cancelling credit cards as quickly as I open new ones (usually for a free case of wine!), are the really important things, and that probably the 47 pence I'm overdrawn this month won't allow Barclays to auction the shirt off my back!

So, save save save, and when the tough times come, it won't be so hard to take the belt in a notch.

(PS I'm not sure I'm adding much to the discussion on this one, just wanted to say thanks and get a word in before the thread continues to grow faster than I'm reading it! )

[Hino98]

Poor guy - he should have played it safer in terms of gearing as he'd be rich now if he could have ridden that out!

Note 2 of the key facts: High IR's and the banks panicking - However, now they have a better understanding of BTL

Too right mate

They now understand that when a prospective client comes to them with a "business' proposition, that involves the bank being asked to subsidise a ( real term ), negative yield property, who's real value is decreasing by the day. Then the bank is very likely, to tell the said 'chancer' to go feck himself

[Guest Charlie The Tramp]

So, save save save, and when the tough times come, it won't be so hard to take the belt in a notch.

Yes, I have on many occasions in the past resorted to this prior to the downturns, and after each recovery I was much more financially secure. Mind you if the majority joined in we would most certainly be well and truly in the s**t.

[ChrisM]

The point I'm trying to make is that during a panic the last thing to expect is for people / organizations to be rational.

I don't think any of the cycle is 'rational', it's all sentiment and mania. It's also why it's impossible to predict beyond trying to find the most apparently stupidiest outcome, and guessing that'll be the way the herd goes.

[eyec]

Up until the BTL mob steamed in, you could buy a terraced house in certain pubs in Burnley for around about the £50 mark.

Ah, the good old days.....

I remember seeing houses in Burnley on the interweb, rakes of terraces at 2k a go. Now I got on the interweb in 97, so I reckon it must have been around 97/98.

[Quokka]

Just browsing this older thread and wondering what has happened to serpico. All his posts were first class and his experiences were always worth reading.

I wondered about this myself, after reading this originally.

He's getting on a bit, and may be in ill health or worse.

As a moderator do you contact posters?

Do we ever know if they've drooped off the perch?

[Garry AKA Pod]

That was a cracking story Serpico. Sounds like you have lived an amazing life. I salute you and look forward to your future posts.

[Johnney]

Serpico

Your posts are by far the best I have had the fortune to read ion this site.

You sound like one of those people I love meeting in the pub, that ooze knowledge and wisdom without even knowing they are doing it.

Thank you

You have been a tonic this evening, I hadn't been on the web site for a month, as it was getting me down and work as been too busy.

As you can tell, I am somewhat your junior.

Thanks again, and please continue your fascinating posts

[abaxas]

I remember seeing houses in Burnley on the interweb, rakes of terraces at 2k a go. Now I got on the interweb in 97, so I reckon it must have been around 97/98.

It was a mad time eh..

I'm from Newcastle and most of the crappy west end (Benwell, Elswick etc) had no value in the 90's. People couldnt even give them away.

[ChinaReader]

So, save save save, and when the tough times come, it won't be so hard to take the belt in a notch.

Yes, I have on many occasions in the past resorted to this prior to the downturns, and after each recovery I was much more financially secure. Mind you if the majority joined in we would most certainly be well and truly in the s**t.

I think we can trust in the consistency of the spending habits of the masses, at least for a little while!

If there was a simultaneous awakening to the concept of save-not-spend, it would destroy the high-street shops and shake the economy - but it's pretty predictable that the change will be because people can't spend (maxed-out debts, if such a thing still exists), rather than because they realise it's best not to. I think the secret is safe with us Charlie - and the ten thousand other people who read this site...

[Son of Taeper]

I wonder what on earth you are talking about.

My point was really 'be careful what you wish for'. By hoping and praying for high interest rates to trigger a crash everyone here seems to assume that they will be interested bystanders - watching contentedly as house prices plummet - deciding when and if to buy a property at a bargain price.

The reality, as so well described by Serpico, is very different.

You would be very lucky to be immune

if a recession comes like the one in the early 90s. Even for people who stay in work - pay rises are out of the question, pay cuts are quite common ('if you don't like it, there are plenty queuing up who do') and the general feeling of job insecurity permeates everything. You daren't take a holiday in case you come back to redundancy.

If you haven't lived through this sort of experience you will have no idea how it 'gets you' in ways you can't even imagine. None are immune.

I'm a little confused.

First you say 'You would be very lucky to be immune' and then you say 'None are immune'

Oh well, I was very lucky then. Very very lucky. Apart from the hpc (which did affect me), I had never had more money. In fact, I was earning twice what I earn now. I recall going into work one day with a £50. pound note stuffed in my pocket because I couldn't find any other money in the house. Half way through the day, I realised I had lost it. I checked around my desk twice and then thought to myself 'oh well'.

So my point is, yes, it can affect you, but many will be immune.

Don't overstretch on essential borrowing, cut back on the luxury goods before it starts to bite and get a recession proof job

Edited December 21, 2006 by Son of Taeper