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The Great House Price Crash 2005?


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I do hope they don't take the flawed (but widely held) misconception that falling house prices are 'the nation's worst possible nightmare'. If the whole programme on faulty notions such as this, then I have my doubts as to whether it is worth watching.

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Yes, it could be worth watching -

I am actually appearing on the program, I am a BTL investor since 1993 with 16 properties and I made a LOSS last year of £13k

Ouch! Good of you to be so open, many people enter denial at this stage and refuse to discuss, tell us more.

Is the 13K a paper loss i.e. percieved drop in value actual loss on a sale or rental shortfalls. I guess the years '93-'03 where good years for you, how has it started unraveling? Whats your strategy going forwards?

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Certainly not even contemplated selling up.

It is a real loss in the sense that my outgoings were £13k more than my rental income, however much of the loss was on maintenance, including new double glazing and kitchens (which are now tax deductable if REPLACING one already there). So, yes it was s real loss.

Many of my properties were bought just before the price explosion, so I am not really bothered too much.

I have a computer rentals company (run under the same company as the properties), and that is currently subsidising the properties.

It looks like I might also have made a loss this year as well !

I am more interested in capital appreciation, I acknowledge that this may slow down for a few years but I am here for the long term.

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Certainly not even contemplated selling up.

It is a real loss in the sense that my outgoings were £13k more than my rental income, however much of the loss was on maintenance, including new double glazing and kitchens (which are now tax deductable if REPLACING one already there). So, yes it was s real loss.

Many of my properties were bought just before the price explosion, so I am not really bothered too much.

I have a computer rentals company (run under the same company as the properties), and that is currently subsidising the properties.

It looks like I might also have made a loss this year as well !

I am more interested in capital appreciation, I acknowledge that this may slow down for a few years but I am here for the long term.

Do you expect property prices to fall? If so by how much and when in the future do you expect it to pick up again?

Surely, if you were able to liquidize these assets now you would be able to invest the proceeds into safer investments whil you wait for the market to bottom out?

Welcome to the forum.

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I dont expect property prices of 1 and 2 beds to fall below 10%, but this is 'normal negotiating' margin anyway.

3 beds I think will stagnate

4 beds and above will drop, they are already dropping.

To liquidate your assets now is sheer folly, you wouldn't save hardly anything - selling fees, survey fees then buying and morgaging fees would take a good chunk. Also, many investors (like myself) are locked in for 2 or 3 years and exit fees would be crippling.

What would you do with the money if you did free it up - stock market ?, building society. All a bit hit and miss

Nope, I will stick to what I know - the UK needs at least 250,000 new homes and thats now, it doesn't include the yearly increase.

Little extra land is being freed up for building.

I am now investing in Spain.

I have no idea when the property prices will pick up again, but one thing for certain is that they will - be it 2 years, 5 years or 10 years, I intend to be there.

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I am now investing in Spain.

I have no idea when the property prices will pick up again, but one thing for certain is that they will - be it 2 years, 5 years or 10 years, I intend to be there.

Spain: Do you really think that's wise? I've got some old dot.com shares that might interest you :unsure:

Sure they pick up....I reckon it will be 5 years + though :blink:

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I have bought 2 properties 'off plan' in Spain, building has just started.

The development is in 3 phases (all sold), I bought in the 1st phase, and have made a 'paper' gain of about 17k euros per property.

I will keep one property for myself so when I get sick of the UK (wont be long now) I have the option of living there for 3-6 months a year. The other property I may rent or sell, depends on the market at the time the property is completed.

I also invested in dot.com shares and sold long before the bubble burst (I am in IT), I didn't make anywhere near as much as I could have, but I certainly didn't lose anything.

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I dont expect property prices of 1 and 2 beds to fall below 10%, but this is 'normal negotiating' margin anyway.

Lower cost properties (especially if they are in undesirable areas) always take the biggest hammering in a crash situation.

To liquidate your assets now is sheer folly, you wouldn't save hardly anything - selling fees, survey fees then buying and morgaging fees would take a good chunk. Also, many investors (like myself) are locked in for 2 or 3 years and exit fees would be crippling.

What would you do with the money if you did free it up - stock market ?, building society. All a bit hit and miss

If it were not for the fact that you are locked in to loans and assuming you could offload your props at the peak price you would be crazy not to, I dont know how much equity you have got but sticking it in a BS for 3 years at 5% has got to be a no brainer in todays market.

I would hate to be 'locked in' during the next 2-3 years, especially if tennants start to go to cheaper landlords who are trying desperately (as you) to hold on to their properties.

Nope, I will stick to what I know - the UK needs at least 250,000 new homes and thats now, it doesn't include the yearly increase.

250,000 affordable homes

Little extra land is being freed up for building.

Agreed

I am now investing in Spain.

Good luck!!!!!

I have no idea when the property prices will pick up again, but one thing for certain is that they will - be it 2 years, 5 years or 10 years, I intend to be there.

You are assuming that the same model will operate in the future as now, perhaps perhaps not. One thing is sure alot of BTL people are going to lose their shirts in the next couple of years IMO

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I will agree that 'quite a few' BTL investors will certainly lose a considerable amount of money over the next few years.

My advantage is that I can afford to subsidise my property interests through the profits of my computer rentals business (it will also reduce my tax).

As I also have a permanent job (working for a Credit referencing agency) I dont

actually need any of the profits from the property/computer business to pay my own mortgage.

Sounds crazy, no ... I have a LONG term plan (aka 10+ years) and it involves passing the properties to the kids.

Yes, I am in a pretty unusual position, but it was not done by accident. I got my fingers burnt in 1992 when the computer industry went through a slump, I was on Income Support and all the ancillary benefits.

I have managed to go from practically nowt to a portfolio of 16 properties since 1993.

I vowed never to get burnt again, hence my double pronged attack at income - computers AND property.

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I do hope they don't take the flawed (but widely held) misconception that falling house prices are 'the nation's worst possible nightmare'. If the whole programme on faulty notions such as this, then I have my doubts as to whether it is worth watching.

I am of the same opinion, and as much as I sympathise with recent FTB's, I believe I have had the good sense to hold on until the market appears stable.

As far as I am concerned, this would not be a nightmare at all, but a "dream come true"

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I have managed to go from practically nowt to a portfolio of 16 properties since 1993.

Welcome to the forum Derek and for being so open with your responses.

Without wishing to pry, are you prepared to reveal what the debt/equity ratio is on your 16 properties? And when did you start acquiring these properties and when did you buy the last one in your portfolio?

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I dont know how much equity you have got but sticking it in a BS for 3 years at 5% has got to be a no brainer in todays market.

5% ? take your 40% tax off and you're left with 3%, take off infllation, and you're left with erm, erm let me see......hold on here, there must be something left,.......ah there it is.....0.03%!

a real return of freak all mate!

Of course being a scum bag, as you so eloquently call 'us' I learned from a young age to gear my yields (and hence return)

40%+ returns on my money invested (sometimes far higher) with no capital growth calculated within the equation.

As you quite rightly say putting your money in the bank is is a no brainer ;-)

KOTC.

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RedBaron, yeh no secret - it will probably be all revealed in the TV program anyway

For 13 properties in the LTD company, I have loans of £886,000 and the value of the portfolio is £1,420,000 (this is not top dollar valuation, but valued so the properties would sell within 6 weeks)

property 1 bought in 1993 for £38k, now valued at £110k

property 2 bought in 1996 for £37k, now valued at £110k

property 3 bought in 1997 for £38k, now valued at £95k

property 4 bought in 1998 for £39k, now valued at £110k

property 5 bought in 2001 for £68k, now valued at £130k

property 6 bought in 2001 for £57k, now valued at £115k

property 7 bought in 2002 for £59k, now valued at £95k

property 8 bought in 2002 for £60k, now valued at £95k

property 9 bought in 2002 for £84k, now valued at £120k

property 10 bought in 2002 for £81k, now valued at £105k

property 11 bought in 2003 for £83k, now valued at £120k

property 12 bought in 2003 for £84k, now valued at £105k

property 13 bought in 2003 for £78k, now valued at £95k

I also have 3 properties bought outside the LTD company

outstanding loans of £234,000, value of properties is £350,000

property 1 bought in 2003 for £100k, now valued at £130k

property 2 bought in 2003 for £104, now valued at £125k

property 3 bought in 2004 for £85k, now valued at £95k

so total outstanding loans for both portfolios is £1,120,000 against a portfolio value of £1,770,000

that means my loan is 63.2%

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RedBaron, yeh no secret - it will probably be all revealed in the TV program anyway

For 13 properties in the LTD company, I have loans of £886,000 and the value of the portfolio is £1,420,000 (this is not top dollar valuation, but valued so the properties would sell within 6 weeks)

property 1 bought in 1993 for £38k, now valued at £110k

property 2 bought in 1996 for £37k, now valued at £110k

property 3 bought in 1997 for £38k, now valued at £95k

property 4 bought in 1998 for £39k, now valued at £110k

property 5 bought in 2001 for £68k, now valued at £130k

property 6 bought in 2001 for £57k, now valued at £115k

property 7 bought in 2002 for £59k, now valued at £95k

property 8 bought in 2002 for £60k, now valued at £95k

property 9 bought in 2002 for £84k, now valued at £120k

property 10 bought in 2002 for £81k, now valued at £105k

property 11 bought in 2003 for £83k, now valued at £120k

property 12 bought in 2003 for £84k, now valued at £105k

property 13 bought in 2003 for £78k, now valued at £95k

I also have 3 properties bought outside the LTD company

outstanding loans of £234,000, value of properties is £350,000

property 1 bought in 2003 for £100k, now valued at £130k

property 2 bought in 2003 for £104, now valued at £125k

property 3 bought in 2004 for £85k, now valued at £95k

so total outstanding loans for both portfolios is £1,120,000 against a portfolio value of £1,770,000

that means my loan is 63.2%

Derek

Thank you, you are the first BTL person on here (to my knowledge) who has backed up his claims. There are quite a few fantasy landlords on here.

Can I ask why the big gap between 93 and 96. Come 2001 it appears that you really went for it, did you ever think that the rising market might not carry on.

Are you loans fixed rate?

Is it common for people to wrap BTL properties within a LTD company? resumerably you pay corporation tax on the profits, pay yourslef the minimum wages and take the rest in dividends? Can you get taper relief on CGT on these props - (probably not?)

Those are fairly cheap properties, by todays standards, where abouts are they situated?

Do you feel guilty for depriving being part of the BTL phenomonon that has helped prevent FTBs from getting on the ladder - I think I know the answer to that one already , after a previosuly crap time.

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5% ? take your 40% tax off and you're left with 3%, take off infllation, and you're left with erm, erm let me see......hold on here, there must be something left,.......ah there it is.....0.03%!

    

           a real return of freak all mate!

    Of course being a scum bag, as you so eloquently call 'us' I learned from a young age to gear my yields (and hence return)

     40%+ returns on my money invested (sometimes far higher) with no capital growth calculated within the equation.

As you quite rightly say putting your money in the bank is is a no brainer ;-)

KOTC.

My point was that given that there were no exit costs, I am sure even the most ardent Bull would consider investing in a safe investemtn for a few years, while the market sorts itself out.

Gearing works both ways as you are about to find out?

Why dont you have the courage that Derek has and back up your claims, what have you got to hide? A vist from the tax man perhaps?, clearly Derek is the real thing and even though I disagree with BTL his honesty deserves my respect.

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Crazy - thanks , no I am no fantasy landlord, I am probably typical - asset rich and cash poor !!

I didn't get into BTL by design, but by circumstances.

As the TV program may reveal, the first property in 1993 was bought for my mum (who died shortly after moving in), so I decided to rent it out.

I was working in Germany at the time (1992-1998) for IBM (freelance computer programmer), so it was impracticable to buy a property and manage it (management companies only seem to have sprung up in the past 5 years or so).

I was paid in Deutchmarks, so after the UK was forced out of the ERM - I got an immediate 34% pay rise over night.

By 1996, I had realised that my PENSION was going to be worthless, and it was useless to save for a pension by usuall means. So I decided to buy another property, and it started to snowball from there.

When the prices started to take off I tried to buy as many as I could afford, realising that there would come a point where rents did not support the financing of another property (like now).

I must say that a number of properties were bought BMV because they were 'in a state', you just have to see through the dirt and disrepair. Most of these plasterboard palaces cost less than £6k to repaint and 'tickle up.

So thats how I got to where I am today.

The properties look cheap by todays standards, and are probably worth £5-£10k a property MORE than stated. BUT I always factor in a 'quick sale discount' so I work on a 'bottom book' value. I call this the 'negotiating margin'.

Many landlords wish to show their portfolio value as 'top book' (IE if you put it on the market it might realise this value withing 6 months !) in order to get loans - I prefer the safety factor.

ALL properties are within 3-4 minutes of where I live (Oakwood Derby). ALL my maintenance guys live on the same estate. My tenants have the phone numbers of my maintenance guys and contact them direct.

I manage half of the properties myself, the rest are through a management company.

I have a few HB tenants - they are good solid people and will never move, they look after the properties well and pay on time - solid gold.

My company is a trading company (I also have computer rentals in it), so I am led to believe I get taper relief.

FTBs and investors are all part of the same market, market forces dictate who can afford to buy what.

I was bought up on a council estate and becuase of the great computer slump of 1992 I was at out of work on income support - and paying a mortgage for a new property I had bough 3 month earlier. It was not nice!!

Then I got the job in Germany.

I still have a full time job as a computer programmer becuase property investing is my 'hobby', I get much more satisfaction from the computer work.

Being a landlord is full of REAL risks (in my case interest rate rises and maintenance costs) and I am entitled to a good return.

Ask any of my tenants what they think of me as a landlord, you might be suprised by the response.

I have now bought 2 properties 'off plan' in Spain becuase I want a holiday home, the other one is to rent or to sell (haven't made up my mind yet).

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My point was that given that there were no exit costs, I am sure even the most ardent Bull would consider investing in a safe investemtn for a few years, while the market sorts itself out.

Safe? are you for real? since when has a zero real return been 'safe'?

Do some homework sunshine, I think your money illusion needs curing.

Gearing works both ways as you are about to find out?

If you read my above quote I did say my 40%+ return was excluding capital growth, so if you do the math (that is if you can manage to leave your name calling, insinuations and prejudices aside for a few seconds) that also means excluding capital loss.

So if I lose a few quid on paper why on earth would I want to give up my 40% + return? So I can cash my equity and get a return of zero like you?

No thanks.

Besides even someone of your low intellect will know that property always comes good over the long term.

Why dont you have the courage that Derek has and back up your claims, what have you got to hide? A vist from the tax man perhaps?, clearly Derek is the real thing and even though I disagree with BTL his honesty deserves my respect.

What claims? I've never made any personal claims on the site.The reason being is if I did I would be classed as either a BS'er or a bragger. Yes you have respect for Derek, but Dereks made a loss, I very much doubt you'd be so pleased with his disclosure if he showed a hefty profit? if you can't work out how to earn 40%+ returns by your age, that's your problem and not mine. I'm not here selling anything, so why would I want to help out a bitter prejudiced name calling anonymous thing like yourself? Why would I ever feel the need to 'impress' or have the 'respect' of an acrid unpleasant person who thinks I'm scum?

Besides it would take hours to list all my properties! ;-)

KOTC.

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........ (that is if you can manage to leave your name calling, insinuations and prejudices aside for a few seconds) .....someone of your low intellect ....... acrid unpleasant person...... Besides it would take  hours to list all my properties! ;-)

KOTC.

When you sign off can you use your full title: KOTC (aka BBB, Yieldman). :blink:

Nice one Derek for being so open, these are valued bull contributions to the site. Good luck with any success you may get. Some of those post '01 props might get a bit tight in a downturn but looks like you'll survive a rough patch....not sure on those Spanish props though, if one is for yourself fair do's but trying to rent/sell the other may present a challenge. Good luck

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Derek ,,welcome its nice to have someone who is open about there portfolio and willing to give there opinion, have you read KOTC claim of 40% return,,? Any thoughts as to how he maybe achieving such results in this climate?

Him being so secretive and all,

Personnaly dont see it ,"excluding capital appreciation, depreciation" surely he must have bought when properties were 2 and 6 pence each.to make the differential between mortgage payments and rental returns.

Any thoughts from anyone?

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  • 439 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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