The Wilsons thread ---merged

[A_Landlord]

If you were the average BTL schlub and you heard this pair were desperate to unload their entire portfolio in the next year, what would you do?

The 'average BTL schlub' on HPC have a lot better business sense with smaller more targetted portfolios and medium to low LTV. You should ask this question on MSE where there appears to be a lot of BTLers with little business sense. If they are in the Kent area they will be crapping themselves at the prospect of a HPC while they are highly leveraged with an interest rate hike likely after the election.

What would I do? I am looking to buy more properties when the crash finally happens .... so I would wait for prices to drop while paying down my current mortgages.

[eric pebble]

Greedy sh*ts.

[eric pebble]

A grim pair.

[Laura]

I think the bank is going to buy them. It seems the only solution - for the bank to save face, avert insolvency, and keep prices inflated.

& guess who funds (some of) the banks?

A pity about UK law. In some countries the tax-payer could end up owning the Wilsons

What would we do with such an 'asset'?

[eric pebble]

lets flood them with false offers of interest

YES!! Offer them 25% of asking price, daily.

[Venger]

But if you calculate the percentage "increase" like this then no-one can loose in the property market - if you bought a house for £200K then you only need to sell for £100K to make a 50% profit

Wouldn't that be something like a 650% loss according to Fergus maths?

Its precise proportions are a matter of debate; the forthcoming 2004 Sunday Times Rich List is likely to put their value at £75m, but the Wilsons, who include the estimated intellectual property value of their buying system in their sums, calculate themselves to be worth 10 times that much.

Invest it in a house of £100k, which goes on to make £200k. Most people would say you have made 100% profit, but you haven’t. You have actually made over 650% profit on the original £15k. Then remortgage and start again.â€

Interview with Rosie Millard. Sunday Times 2004.

[R K]

793rd on the 2008 Rich List.

7,930,000 th on the 2011 Rich List.

[Mikhail Liebenstein]

Im kinda inbetween, they may:

- be under pressure on their cashflow or loan covenants from their banks

- realise that the chance of future price inflation in minimal and the risk of price falls is bigger

- one of them might be sick (they look pretty close to death) or they could just want to retire

If its the middle or last one and they can't sell at a profit, they will probably choose to ride it out for a while

If its the former and they have to sell, its probable they and their senior bank will get screwed

Russian billionaires are quite thin on the ground at the moment

The irony of the Times article on the Wilsons is that they seem to put an average price of £100k on their 700 properties.

Sorry, but with sitting tenants etc. they are selling a business, not property and cash flow is King -they won't get the sort of prices you might for a one off sale of a quality property via an estate agent.

My view is that they need to revise their portfolio valuation down from £70m to about £45m for this to make sense, of course they may be limited by debt - though they have held a lot of the properties for a long time, so who knows.

Anyway, here is a selection of houses from Ashford, as you can see for £115k you can buy a 4 bed and flats go down as low at £50k. So whilst I don't know the exact make up of their portfolio, the chances are the average value is more like £65k rather than £100k. Any buyer should be asking for at least a 35% discount, which is completely in line with the market falls for flats and small houses.

BTW here are some properties from the Ashford area:

4 Beds for £115k, not your typical buy to let.

http://www.rightmove.co.uk/property-for-sa...7%26index%3D400

http://www.rightmove.co.uk/property-for-sa...7%26index%3D400

3 beds for under £100k

http://www.rightmove.co.uk/property-for-sa...7%26index%3D430

2 bed for under £95k

http://www.rightmove.co.uk/property-for-sa...7%26index%3D440

I bed for under £90k

http://www.rightmove.co.uk/property-for-sa...7%26index%3D440

1 Bed flat for £60k

http://www.rightmove.co.uk/property-for-sa...7%26index%3D460

1 bed flat for under £50k

http://www.rightmove.co.uk/property-for-sa...7%26index%3D460

Edited September 3, 2009 by mikelivingstone

[SarahBell]

793rd on the 2008 Rich List.

7,930,000 th on the 2011 Rich List.

This rich list calculation needs looking at.

The value of an asset is surely (value of asset - debt relating to asset)

[R K]

This rich list calculation needs looking at.

The value of an asset is surely (value of asset - debt relating to asset)

When you strip out the 'old' money that has been there for years, I've noticed there is quite a heavy weighting towards pwoperdee.

I would have thought their only sensible exit would be to a long-term SIV or Hedge type fund for the yield. They're not going to sell 700 tenanted houses piecemeal are they. Said hedge fund will probably then end up selling it on in due course to a pension company here or overseas.

[Charlie Don't Surf]

I like that bit about only selling to BTL investors. Given how slowly houses are selling at the moment they might not want to be so choosy

[Dorkins]

Is there going to be any equity at all in the Wilsons' house of cards? I am inclined to agree with previous posters who think the lenders have crunched the numbers and realised they, not the Wilsons, are at risk of losing tens of millions and want the whole thing shut down before the real HPC starts. Will the Wilsons be able to con stupid buyers into taking the negative equity off their hands? Given that most of these buyers will be buying with mortgages from banks, will the banks be dumb enough to let them? (Though at least this way they would get some nice deposit cash to soothe the wounds and could spread the risk around. Expect looser lending at Ashford branches of the banks and building societies which the Wilsons owe?) Stay tuned, the market will reveal all...

[Neverland]

Is there going to be any equity at all in the Wilsons' house of cards? I am inclined to agree with previous posters who think the lenders have crunched the numbers and realised they, not the Wilsons, are at risk of losing tens of millions and want the whole thing shut down before the real HPC starts. Will the Wilsons be able to con stupid buyers into taking the negative equity off their hands? Given that most of these buyers will be buying with mortgages from banks, will the banks be dumb enough to let them? (Though at least this way they would get some nice deposit cash to soothe the wounds and could spread the risk around. Expect looser lending at Ashford branches of the banks and building societies which the Wilsons owe?) Stay tuned, the market will reveal all...

A thin sliver of equity on 700 houses is still a lot of money - £5k per house = £3.5m

But if the banks are forcing them to sell and the field of buyers is limited they could well end up with nothing and the banks will take a loss

Time wil tell...

[eric pebble]

Expect looser lending at Ashford branches of the banks and building societies which the Wilsons owe?) Stay tuned, the market will reveal all...

Wot - A return to

LIAR LOANS?

Surely not....

[Reck B]

Would you buy a house in an area you knew was about to be swamped with 700 other, similar houses?

[normdiploom]

My landlord just told me last week (3 weeks after my wife gave birth!) that he was selling up now that the market has 'picked up'. So we now have to find a new house with a 3 week old baby to look after. The tenancy laws in this country are beyond vile. I've rung the letting agents in my area about a few properties and almost without fail they have all been removed from the letting market to be put up for sale. This is happening on a huge scale, at least in my area (in the south east). Every idiot landlord and their dog got a fright with the falling prices and now they are all collectively being 'clever' and taking the equity now prices are rising. There will be entire streets up for sale soon - and they all missed the spring bounce. Huge numbers of houses all being released to the market at the same time and just at the end of summer when buying season is ending. It's going to be a bloodbath this winter.

Unfortunately for me, it means there are no bloody houses to rent!

Oh you have my sympathy - the tenancy laws are a disgrace.

We were given notice out of the blue by amateur landlady 2 years ago, after 4 years tenancy, with 3 young kids and another on the way. Managed to find another place to rent, but it wasn't available until 5 weeks after the date she wanted us out so that she could sell. We wrote to her, explaining that we had signed a tenancy agreement for new place, just needed a few weeks' grace especially with a baby due any day, and that we would pay full rent in meantime and happily show people around. The bitch took us to court to have us evicted, had to go to court on day that baby was due (we were told that if I went into labour hubby would have to go to court even if it meant missing the birth). Judge was unsympathetic towards us but took the pragmatic view that the bailiffs' backlog was so long that we would be out before they could be brought into play. We had to pay the court costs of course.

Moved to new house when baby was 3 days old, left old house in immaculate condition, the builders moved in next morning with skip. My husband went back next day to collect our cutlery (a Viners set, a wedding present from my grandparents) which we had left behind in the rush. He was told with a big grin that he was welcome to search through the skip - he did, but needless to say it wasn't there. Soon after we got a letter demanding costs for cleaners, a new oven, etc. etc.

We were good tenants, looked after house, paid rent on time every time - and yet this amateur landlady with sh*t for brains had all the power and was able to treat us like cattle. Great system!

Sorry - went on a bit more than I meant to there - what I meant to say was congratulations on the birth of your baby, try to enjoy it as much as you can - and hope the rest sorts itself out! We're in SE too, and the rental situation is difficult, with landlords able to be very picky re kids etc. Not fair at all.

[Flat Bear]

A thin sliver of equity on 700 houses is still a lot of money - £5k per house = £3.5m

But if the banks are forcing them to sell and the field of buyers is limited they could well end up with nothing and the banks will take a loss

Time wil tell...

And a thin sliver of negative equity on 700 houses is still a lot of money - £5k per house = (£3.5m)

Thats numberwang I mean leverage for you.

Remember according to the press they have already offloaded around 200 properties and have made a profit? £1m in july 2009, what was their maths on this?

It would be interesting to see which properties they had sold, for what price and what they paid.

A possible silver lining for them in that they probably will have very little capital gains to pay.

[lulu]

Unfortunately for me, it means there are no bloody houses to rent!

That that is exactly why something should have been done to either restrict who bought BTL properties or the laws regarding rentals should have been updated.

It is also why so many people prefer to buy than rent and therefore be at the whim of some moron who can sell from under you.

Good luck with finding somewhere else, do you have family close by who you could stay with on a temporary basis?

[normdiploom]

not sure where in south east you are, but do PM me and I will help if I can! Shelter are also very godd, and helped us an awful lot, do talk to them if you haven't already.

[Neverland]

And a thin sliver of negative equity on 700 houses is still a lot of money - £5k per house = (£3.5m)

Thats numberwang I mean leverage for you.

Remember according to the press they have already offloaded around 200 properties and have made a profit? £1m in july 2009, what was their maths on this?

It would be interesting to see which properties they had sold, for what price and what they paid.

A possible silver lining for them in that they probably will have very little capital gains to pay.

Yes, but you would assume that they would be using a holding company with no upstream guarantees to limit their personal liability - unless less they are totally deranged

If only competently advised they would also have been taking out substantial salaries, dividends, advisory fees or whatever for a decade

Unfortunately, its rare that the big time chancers get their comeuppance

The most likely future for the Wilsons is a very comfortable but obscure retirement

[Dorkins]

A thin sliver of negative equity on 700 houses is still a lot of money - £5k per house = £3.5m

Fixed that for you.

I would be surprised if they are able to pay off their mortgages at the end of all this. By adopting such an aggressive exponential approach to portfolio growth (buy house on IO mortgage with 10% deposit, wait 1 year for valuation to rise 10% due to HPI, MEW and use 10% as deposit on next house with IO mortgage, repeat 1 year later with 2 houses etc etc) they must be much more exposed at the 2007 end of the boom than the 1998 end. Gradual wage/CPI inflation and austere living for years might be enough to save your average 2007 buyer from realising a nominal loss (instead they realise the loss bit by bit over years every time they pay their mortgage), but falling rents and/or rising interest rates might make it impossible to keep cashflow positive on a big BTL portfolio given that they don't have a huge wage income which can cover the difference. The portfolio is going to be bankrupt sooner or later.

[Executive Sadman]

This is like a dream come true. How long till we see Judith selling herself on a maidstone street corner, or fergal becoming a career benefit fraudster?

[Neverland]

Fixed that for you.

I would be surprised if they are able to pay off their mortgages at the end of all this. By adopting such an aggressive exponential approach to portfolio growth (buy house on IO mortgage with 10% deposit, wait 1 year for valuation to rise 10% due to HPI, MEW and use 10% as deposit on next house with IO mortgage, repeat 1 year later with 2 houses etc etc) they must be much more exposed at the 2007 end of the boom than the 1998 end. Gradual wage/CPI inflation and austere living for years might be enough to save your average 2007 buyer from realising a nominal loss (instead they realise the loss bit by bit over years every time they pay their mortgage), but falling rents and/or rising interest rates might make it impossible to keep cashflow positive on a big BTL portfolio given that they don't have a huge wage income which can cover the difference. The portfolio is going to be bankrupt sooner or later.

If you use a limited liability company to hold the properties and do not give guarantees on your other assets, this is not your problem

This is standard practice in the commercial property industry

[MrPeregrination]

not sure where in south east you are, but do PM me and I will help if I can! Shelter are also very godd, and helped us an awful lot, do talk to them if you haven't already.

Thank you normdiploom. I'll give shelter a call. I'll be OK tho. I'm well versed in moving with very little notice and I've travelled the world with just my wits to keep me alive so I'm sure I'll find a place to live. Just a right pain.

I emailed my MP the other week about the terrible tenancy laws and basically pleaded with him to look into it (we were being threatened with eviction by the agents if I didn't pay them a renewal fee - they caved). The response was basically - "Hey - you should be happy, you only need to give 2 months notice". I couldn't believe what I was reading.

In the end, people in this country get the laws they deserve. That's a harsh call I know but the fact is if tenants started standing up for their rights and insisting on change things would change. People in england seem to just accept the fact they are going to get kicked in the head by people higher up the pecking order. That doesn't happen in other countries which is why they have better tenancy laws. I'm constantly fighting to be treated with some basic repsect and it makes my life more difficult than it needs to be. To be honest, I have now given up. I'm the only one fighting so why bother? I'll just move up my plans to emmigrate instead. Sorry, now I'm ranting (and insulting the english whilst I'm at it. Never a way to make friends

[Warwick-Watcher]

Fixed that for you.

I would be surprised if they are able to pay off their mortgages at the end of all this. By adopting such an aggressive exponential approach to portfolio growth (buy house on IO mortgage with 10% deposit, wait 1 year for valuation to rise 10% due to HPI, MEW and use 10% as deposit on next house with IO mortgage, repeat 1 year later with 2 houses etc etc) they must be much more exposed at the 2007 end of the boom than the 1998 end. Gradual wage/CPI inflation and austere living for years might be enough to save your average 2007 buyer from realising a nominal loss (instead they realise the loss bit by bit over years every time they pay their mortgage), but falling rents and/or rising interest rates might make it impossible to keep cashflow positive on a big BTL portfolio given that they don't have a huge wage income which can cover the difference. The portfolio is going to be bankrupt sooner or later.

Did their purchases mount up like a pyramid? If they bought most of their houses in the last 3-4 years then they are Donald Ducked as they'll have less equity on the later, more expensive purchases.