Buy-to-let Investors Fear They May Be Left Homeless

[OLDFTB]

Buy-to-let investors who fear they may be left homeless

Just months ago, Miller and Morris believed they had buy-to-let portfolios valued in millions - Miller's came with a £7.5m tag. Morris had contracted to buy flats developers valued at £3m.

Now Miller owes a variety of lenders some £3.5m, while Morris is living on benefits, fearing the repossession knock on his own front door. Miller accepts he has no excuses. "I was a director of a company selling new-build flats to investors that we found through newspaper adverts.

"Between May 2006 and November 2006, I believed what we told them, and I bought 31 new two-bedroom flats, which, I was told, were worth £7.5m - 10 in Cardiff, eight in Manchester, six in Burslem, Staffordshire with the other seven spread around England."

http://www.guardian.co.uk/money/2008/mar/2...investmentfunds

[Scarecrow]

The two men are not after sympathy

Just as well really. Pure greed, through and through.

[Ash4781]

It's that rent problem again -rents not what the investors expected.

Edited March 22, 2008 by Ash4781

[southsea13]

It's that rent problem again -rents not what the investors expected.

[thecrashingisles]

Miller accepts he has no excuses. "I was a director of a company selling new-build flats to investors that we found through newspaper adverts.

"Between May 2006 and November 2006, I believed what we told them, and I bought 31 new two-bedroom flats, which, I was told, were worth £7.5m - 10 in Cardiff, eight in Manchester, six in Burslem, Staffordshire with the other seven spread around England."

At least he ate his own dog-food.

[tuggybear]

From the Guardian

Just months ago, Miller and Morris believed they had buy-to-let portfolios valued in millions - Miller's came with a £7.5m tag. Morris had contracted to buy flats developers valued at £3m.

Now Miller owes a variety of lenders some £3.5m, while Morris is living on benefits, fearing the repossession knock on his own front door. Miller accepts he has no excuses. "I was a director of a company selling new-build flats to investors that we found through newspaper adverts

Read on : http://www.guardian.co.uk/money/2008/mar/2...investmentfunds

[Ash4781]

To expand.

BTL-the rent will be set by local supply, and demand of rental properties but how does a investor know what the rent he'll get ? (Guess you'd have to poll the tenants, and landlords)

It's very important to get the market rent price right if capital gains disappear!

It's not a Treasury Bill

I wonder how many BTL's have factored in a non-market rent price into their calculations.

'He told me I could rent it for 850pcm'

'I checked Rightmove for rents'

'I reckon I can get 800pcm for it'

Edited March 22, 2008 by Ash4781

[Leonard Hatred]

Buy-to-let Investors Fear They May Be Left Homeless

Rather like the poor sods that they've priced out of the market.

six in Burslem, Staffordshire

Sounds so much nicer than "Burslem, Stoke-on-Trent", doesn't it?

[BandWagon]

The two men are not after sympathy. While both say they were deceived by developers, lenders, lawyers and, above all, valuers, they accept that ultimately they have only themselves to blame.

Just months ago, Miller and Morris believed they had buy-to-let portfolios valued in millions - Miller's came with a £7.5m tag. Morris had contracted to buy flats developers valued at £3m.

I used to think these people promoting BTL were just dishonest, consciously aware that they were selling junk in a speculative bubble.

Now I'm starting to think they were just incredibly naive and stupid, and believed all their own bullsh!t.

Edited March 22, 2008 by BandWagon

[Not Long Now]

"In all, I owed GMAC £6.4m. My monthly interest was £29,252 but all I ever cleared a month after costs was around £15,000. What we had expected was that interest would be covered by the rent - while the capital values would produce profits when we sold."

Oh dear oh dear oh dear.

He is in big trouble, but not as much as GMAC - the tip of the iceberg I think. Perhaps this HPC will be a bigger / sharper correction than I first thought.

[Nicolaj]

Sadly thousands are at the bottom of this legal, grandest of pyramid scams.

Will those at the top of this heap ever be brought to justice? I doubt it

and what names are at the top of this scam?

[EmpiricalBear]

Sadly thousands are at the bottom of this legal, grandest of pyramid scams.

Will those at the top of this heap ever be brought to justice? I doubt it

and what names are at the top of this scam?

There is no sadly about this. No one is forced to invest in property at the point of a gun. They were all sane enough to put signature to paper.

Now they should try working for a living for a bit.

Don't waste tears on those who don't deserve it and would certainly not be shedding tears for anyone else. Think how these greedies would be behaving if they had made money. They would be crowing about how rich they were without working for it. And looking down on people who don't speculate and try to take more than their fair share of the nations wealth.

[R K]

This whole thing stinks like 3 day old fish.

To get finance for any other business, you would need to put up a well researched, documented business plan demonstrating the market, the revenues, the costs, break even and profit points and so on. Down to the spend on stationery and telephones.

Lenders here were giving away up to 100% loans with no proof of revenues, ability to repay, proven business experience etc when they KNEW that the market was overstretched, builders were giving cashback discounts and projected rentals were not achievable in practice.

I couldn't care less about a couple of chancers going tits up, but what angers me greatly is that the financial regulators knew this was happening, distorting the market and suckering in people with no experience of anything. You can only conclude that the whole newbuild flat market was intended to provide a boost to the building sector and thus "economy", increase council tax revenues, and add additional "beds" to city centres. I have no other explanation for it. All these schemes got passed, banks lent stupid amount, FSA turned a blind eye (a la NRK), Stalin took the stamp duty. It was fraud, pure and simple.

[Not Long Now]

There is no sadly about this. No one is forced to invest in property at the point of a gun. They were all sane enough to put signature to paper.

Now they should try working for a living for a bit.

Don't waste tears on those who don't deserve it and would certainly not be shedding tears for anyone else. Think how these greedies would be behaving if they had made money. They would be crowing about how rich they were without working for it. And looking down on people who don't speculate and try to take more than their fair share of the nations wealth.

Completely agree. This idea that its always everyone elses fault makes me sick. I pray that we don't see they likes of him on "Tonight With Trevor McDonald" at any point soon, bemoaning how hard done by he has been.

The gap of around 15% was a 'gifted deposit'. The value was pushed up artificially so I could get an 85% mortgage on the £209,800. The reality was that I got 100% of what I actually spent - around £177,000. The gifted deposit scheme meant I did not need to put down a penny of my own money."

...oh, sorry. Is he admitting defrauding his mortgage provider? Tut tut.

[@contradevian]

This whole thing stinks like 3 day old fish.

To get finance for any other business, you would need to put up a well researched, documented business plan demonstrating the market, the revenues, the costs, break even and profit points and so on. Down to the spend on stationery and telephones.

Good post Red Kharma and I agree. I've been through this myself and the most a bank will put in for productive enterprises is 50:50. Why should the bank have more risk than the Directors?

BTL should have insisted on 50% deposits.

Edited to add. The 50:50 rule didn't apply to Private Equity either which is another nightmare about to unravel.

Edited March 22, 2008 by rover2000

[CviewUK]

a qualified solicitor who specialised in property work

This must be a wind up.

[Nicolaj]

There is no sadly about this. No one is forced to invest in property at the point of a gun. They were all sane enough to put signature to paper.

Now they should try working for a living for a bit.

Don't waste tears on those who don't deserve it and would certainly not be shedding tears for anyone else. Think how these greedies would be behaving if they had made money. They would be crowing about how rich they were without working for it. And looking down on people who don't speculate and try to take more than their fair share of the nations wealth.

See what your saying and do agree, those at the top are not crying any tears, though I can't help feel sorry.. each story, why they brought into this scam will be different but all will have greed at the center.

Innocent parties always become dragged into it one way or another and this is going to have a knock on effect on all of us at the end of the day.

[laurejon]

Everything is life is a gamble, there are no certainties, you pays your money and takes your chance.

[GCS15]

There is no sadly about this. No one is forced to invest in property at the point of a gun. They were all sane enough to put signature to paper.

Now they should try working for a living for a bit.

Don't waste tears on those who don't deserve it and would certainly not be shedding tears for anyone else. Think how these greedies would be behaving if they had made money. They would be crowing about how rich they were without working for it. And looking down on people who don't speculate and try to take more than their fair share of the nations wealth.

HERE HERE

[Bloo Loo]

Completely agree. This idea that its always everyone elses fault makes me sick. I pray that we don't see they likes of him on "Tonight With Trevor McDonald" at any point soon, bemoaning how hard done by he has been.

...oh, sorry. Is he admitting defrauding his mortgage provider? Tut tut.

yes, I noticed that.

so included in the fraud as participants:

1. the developer, inflating the price with a gifted deposit

2. The surveyor, for gold plating item 1

3. the lawyer, for not checking and advising the marks

4. the borrowers ( The marks)

5. The broker filling out the forms and applying to the lender, (he would have done a few apps and known that rents werent up to the promises)

6. The Lending department of the financial institution for not checking basic facts of the applications.

7. The Financial Institution for not providing adequate supervision of its departments in order to keep make a profit and bonuses.

8. The Financial institution for being involved and complicit in the creation of SIV's, a vehicle DESIGNED to circumvent regulation for lending and reduce risk to very low levels (HA HA)

[Not Long Now]

yes, I noticed that.

so included in the fraud as participants:

1. the developer, inflating the price with a gifted deposit

2. The surveyor, for gold plating item 1

3. the lawyer, for not checking and advising the marks

4. the borrowers ( The marks)

5. The broker filling out the forms and applying to the lender, (he would have done a few apps and known that rents werent up to the promises)

6. The Lending department of the financial institution for not checking basic facts of the applications.

7. The Financial Institution for not providing adequate supervision of its departments in order to keep make a profit and bonuses.

8. The Financial institution for being involved and complicit in the creation of SIV's, a vehicle DESIGNED to circumvent regulation for lending and reduce risk to very low levels (HA HA)

Well explained. Particularly point 8...

The reason it has gone on for so long is because of the finacial institution in question being hugely complicit.

When this thing settles down, I think there is a good chance of seeing a huge amount of attempted litigation between the various parties. I doubt any of them will get very far (on this side of the Atlantic at least), as each cog is equally culpable in keeping this HPI farce alive.

[ScaredEitherWay]

As was said above, I too thought that the people convincing others to buy, buy, buy KNEW what they were doing - and I am gobsmacked that he admitted he believed his own hype.

Unbelievable.

Now, yes, a fool and his money are soon parted, but normally because your mate's dad gave you a bit of a bum steer, or people deliberately set out to get their grubby mitts on your money. So the concept that the person doing the convincing was as clueless as the other lambs to slaughter staggers me.

I bet he spent more time fiddling with Excel data into pretty charts showing him how soon he'd be a billionaire than he did reading about and understanding the market he was operating in.

*rolls eyes*

This carnival will roll on for YEARS more than any other crashes/downturns etc. This one will create a raft of new legislation when the sheeple are up in arms.

Basic IQ tests before you can write out a cheque for more than £4 would be a good idea IMHO.

[Ah-so]

The common thread is greed, from the buyer, to the mortgage broker, the solicitor, to the banker. All were driven by it and profited by it.

Greed is one of the 7 deadly sins. For good reason - greed is not good, it is self-destructive. Greed is not wanting to get rich, but wanting to get rich by providing nothing in return. Any plan to get-rich-quick is driven by greed and is ultimately doomed to failure. Those who were misled, were happy to be because they thought that they would get something for nothing. I have no sympathy with any of them.

[marmite]

The common thread is greed, from the buyer, to the mortgage broker, the solicitor, to the banker. All were driven by it and profited by it.

Greed is one of the 7 deadly sins. For good reason - greed is not good, it is self-destructive. Greed is not wanting to get rich, but wanting to get rich by providing nothing in return. Any plan to get-rich-quick is driven by greed and is ultimately doomed to failure. Those who were misled, were happy to be because they thought that they would get something for nothing. I have no sympathy with any of them.

Completely agree

[Bloo Loo]

As was said above, I too thought that the people convincing others to buy, buy, buy KNEW what they were doing - and I am gobsmacked that he admitted he believed his own hype.

Unbelievable.

Now, yes, a fool and his money are soon parted, but normally because your mate's dad gave you a bit of a bum steer, or people deliberately set out to get their grubby mitts on your money. So the concept that the person doing the convincing was as clueless as the other lambs to slaughter staggers me.

I bet he spent more time fiddling with Excel data into pretty charts showing him how soon he'd be a billionaire than he did reading about and understanding the market he was operating in.

*rolls eyes*

This carnival will roll on for YEARS more than any other crashes/downturns etc. This one will create a raft of new legislation when the sheeple are up in arms.

Basic IQ tests before you can write out a cheque for more than £4 would be a good idea IMHO.

Trouble is, the fool was not parted from HIS money. It was the poor schmucks persuaded to buy the CDOs who are losing money. Now the loss is bouncing back up the line, to the monolines, to the SIVS, the banks supporting the SIVs, now the market the original developer was earning his living from.

All the money made is disappearing down an invisible toilet.

We know that is happening because of the current credit crunch.

Everyone involved was a fraudster. Now no-one trusts. Now the banks are insolvent.