Rock-n-Roll Posted June 19, 2009 Share Posted June 19, 2009 (edited) hello everyone im completely new to any kind of forum like this but I am working a long and boring night shift and have found many of the comments extremely interesting and have been very precise on the predictions (which when i look back a lot have been very very scary true). myself and my husband as first time buyers bought a 3 bed terrace approx three and a half years ago (£105k) as young (22 and 24) first time buyers!!! we have just got an offer accepted on our dream home in our dream location (a little cottage in need of a lot of work in the countryside).. am i mental to have two mortgages in this climate.. i was hoping to get my first home sold and break even ... at this point i don't care i don't want to take the risk of having two houses... my husband says no way we should rent our first house out and not sell untill we do make a profit???????? this is all confusing when EA's tell you 'green shoots' and the Belfast Tele is saying ' it's all over, house prices on rise' when should i sell???? its ok paying two mortgages now.. we have good jobs and interest rates are low... but they wont be forever!! will i really have to wait to 2012 or beyond to see a turn around???? hi sneeze dreams are great where would we be without a dream or 2? buttttttttttttt you need to have a handle on costs! 2 morgages unless two very secure jobs = mental semi if it is going to be let will have to be changed from residential to BTL morgage sugest your hubby starts digging to see how much more that will cost and even do you have enough eqity in it to qualify for a BTL morgage at the moment? cottage requiring lots of work how bad is it ? is it morgagable in its present conditition? do you know how much the work will cost ? if you have just a figure in your head forget it will probably cost an aweful lot more been ther got the tshirt old houses =moneypit! rock on! Edited June 19, 2009 by Rock-n-Roll Quote Link to comment Share on other sites More sharing options...
Ride_on Posted June 19, 2009 Share Posted June 19, 2009 I would recommend two mortgages, if it is going to be a struggle to maintain, especially if one is in negative equity. Presume you left out a crucial 'NOT' there VT? Quote Link to comment Share on other sites More sharing options...
Ride_on Posted June 19, 2009 Share Posted June 19, 2009 hello everyone myself and my husband as first time buyers bought a 3 bed terrace approx three and a half years ago (£105k) as young (22 and 24) first time buyers!!! we have just got an offer accepted on our dream home in our dream location (a little cottage in need of a lot of work in the countryside).. am i mental to have two mortgages in this climate.. i was hoping to get my first home sold and break even ... at this point i don't care i don't want to take the risk of having two houses... my husband says no way we should rent our first house out and not sell untill we do make a profit???????? this is all confusing when EA's tell you 'green shoots' and the Belfast Tele is saying ' it's all over, house prices on rise' when should i sell???? its ok paying two mortgages now.. we have good jobs and interest rates are low... but they wont be forever!! will i really have to wait to 2012 or beyond to see a turn around???? By my calculations that makes your current house about the same price as you bought it (early 2006?), it will only go down now further now, many houses are on sale at early 2005 value (RV or DCV). When we talk about a turn around or recovery we mean from the point of the bottom when prices start rising consistently, we havn't gotten there yet and it will some time to get back to 2006 prices, so you will be talking maybe 6 years before you can sell at a 'profit', depending on how long it takes to get there and how long settles there for, meanwhile you are paying interest, and rent will probably not cover the mortgage+rates. If you sell now you might breakeven, any longer and you will just be chasing the market down. If you want to move and are not in Neg equity, then sell first then buy. Nothing wrong with renting, many of us here are doing it while prices are dropping every month 2 or 3 times our monthly rents. The longer you rent until the bottom the more you will save. It doesn't matter how many mortgages you have, the question is how much are you stretching yourself. It is likely you will be negative equity soon and trapped, you won't be able to borrow more to improve the country house and won't be able to sell the old house. The big thing here is that this is your home not an investment, don't try to make money from it and don't overly stretch yourself on a mortgage. Being a LL is difficult (lots of new costs and regulations) and being an investor/developer even more difficult. Everyone falls in love with property and will do whatever it takes to get it, this is why someone declares bankruptcy every 4.35 mins in the UK. If you only bought you house 3.5 years ago and you want to move now, it would probably have been less risky and cheaper renting, once you consider all the costs. Quote Link to comment Share on other sites More sharing options...
VedantaTrader Posted June 19, 2009 Author Share Posted June 19, 2009 Presume you left out a crucial 'NOT' there VT? Yeah dude thanks for that... Quote Link to comment Share on other sites More sharing options...
woohoo2 Posted June 20, 2009 Share Posted June 20, 2009 hello everyone this is all confusing when EA's tell you 'green shoots' and the Belfast Tele is saying ' it's all over, house prices on rise' when should i sell???? its ok paying two mortgages now.. we have good jobs and interest rates are low... but they wont be forever!! will i really have to wait to 2012 or beyond to see a turn around???? Hi Sneeze, Let's look a bit more closely at the Bel Tel figures before you go believing anything they write. Their story that you refer to said that there estate agents are selling 10.4 houses per month each on average. Presumably they mean this is UK wide, but it was presented as still not quite enough because during the boom it was more than double that. It was also presented in a way to imply that it applied here. So does it, and if 10.4 houses means some sort of stabilisation then should we think that things are stabilising? Well then all we need to do is look at the website owned by Belfast Telegraph, Property News. On that there are 476 Northern Ireland agents listing 25,756 houses for sale. This figure has increased from 25,000 in the past few months so no indication yet of stabilisation there from this very high number for sale. At the height of the boom there were less than 5,000 for sale. When this number starts to fall rapidly we should maybe start to talk about when prices will stabilise, although it is not necessarily even a conclusion that prices will fall while the number for sale is falling - there will be a lag and downward pressure on prices, even after houses have started to sell, until the number for sale reaches an equilibrium level. What that equilibrium level is is open for debate. My guess is somewhere between 10,000 and 20,000 properties. Digging a bit deeper with the benefit of treesdontgrowtothesky.com, the net number of properties per week going sold (estimate from number going sale agreed minus number of sale agreeds falling through) is 160. That means that about 700 properties per month are selling on Property News from 476 agents which works out at 1.47 houses per estate agent per month. Now 1.47 is a smaller number than 10.4, and it is derived from the Belfast Telegraph's own data from a website that they own. Which do you believe, their story or their published data? Quote Link to comment Share on other sites More sharing options...
VedantaTrader Posted June 22, 2009 Author Share Posted June 22, 2009 Also interest rates and bond prices move inversely. So when the FED, and other central banks cut interest rates, the prices went up. If in the future interest rates move up, then bond prices will fall as they have been and the yields will move higher...These are used to set mortgage rates, with mortgage rates set a few basis points higher than the government yield, potentially locking the mortgage financing and refinacing market...There isevidence of this already happening. mortgage rates Nationwide Quote Link to comment Share on other sites More sharing options...
sneeze Posted June 24, 2009 Share Posted June 24, 2009 hello again, great advice from you all thank you sooooo much. to answer a few questions, our mortgage with two houses would be approx 3.8 times our joint income. this is just the total mortgage and not counting rental income which can almost cover our first mortgage(at todays interest rates). we were hoping now to sell out first house next year as financially we could afford to break even or even make a loss, but that is only if prices remain the same as now or a little less (5%)????? we have captial to do the work needed on the house we plan to buy so i was hoping if we get 'stuck' in a couple of years it will have hopefully increased in value as the house at present is not even liveable now, its a unique house in a great location and would you believe it there were three other people (whom i know in person) who wanted the house. i ended up in a bidding war with one of them (i still purchased below well below the asking price. 30k below) i completely agree with your theory of 2011/2012 to maybe see the real bottom of the market and i know all too well how owners are reluctant to drop prices, some house asking prices i see are crazy --- i saw on Proeprtynews two houses for sale in the same development ---a 2 bed terrace for £120k and next door theres a three bed end terrace asking price £95k i wonder though if building new houses stays at a lower rate than previously and if so many people bought houses in 2006/07 and they clearly cant sell to make up to a 100k loss, then could this ever drive the market up again with all the supply/demand economic theories???? Quote Link to comment Share on other sites More sharing options...
redprince Posted June 24, 2009 Share Posted June 24, 2009 hello again, great advice from you all thank you sooooo much. to answer a few questions, our mortgage with two houses would be approx 3.8 times our joint income. this is just the total mortgage and not counting rental income which can almost cover our first mortgage(at todays interest rates). we were hoping now to sell out first house next year as financially we could afford to break even or even make a loss, but that is only if prices remain the same as now or a little less (5%)????? we have captial to do the work needed on the house we plan to buy so i was hoping if we get 'stuck' in a couple of years it will have hopefully increased in value as the house at present is not even liveable now, its a unique house in a great location and would you believe it there were three other people (whom i know in person) who wanted the house. i ended up in a bidding war with one of them (i still purchased below well below the asking price. 30k below) i completely agree with your theory of 2011/2012 to maybe see the real bottom of the market and i know all too well how owners are reluctant to drop prices, some house asking prices i see are crazy --- i saw on Proeprtynews two houses for sale in the same development ---a 2 bed terrace for £120k and next door theres a three bed end terrace asking price £95k i wonder though if building new houses stays at a lower rate than previously and if so many people bought houses in 2006/07 and they clearly cant sell to make up to a 100k loss, then could this ever drive the market up again with all the supply/demand economic theories???? Sneeze- i dont think so.The market will find the true value of property over time.Why?It got distorted based on herd mentality which was funded by financial instiutions providing "artificial" buying power ie lax lending.Now some institutions are so desperate to get rid of clients they are wiping out part of their mortgage just to get rid of them ie wont remortgage them.High level of deposit now required proves my point.Its about who has the cash these days.That`s why when the smoke clears house prices will be imho 55% less than they were at peak of 2007.Dont be fooled by short term blips nb nothing ever moves in a straight line.Just focus on long term trend and dont believe the hype.Big drop to come yet.Remember the next incumbents at Westminster will be cutting public spend in a way never seen in our lifetimes.Recovery?My a**e!! Quote Link to comment Share on other sites More sharing options...
Ride_on Posted June 25, 2009 Share Posted June 25, 2009 hello again, great advice from you all thank you sooooo much. to answer a few questions, our mortgage with two houses would be approx 3.8 times our joint income. this is just the total mortgage and not counting rental income which can almost cover our first mortgage(at todays interest rates). snip i wonder though if building new houses stays at a lower rate than previously and if so many people bought houses in 2006/07 and they clearly cant sell to make up to a 100k loss, then could this ever drive the market up again with all the supply/demand economic theories???? 3.8x joint income is pretty high, but there have been higher, 3x main income much less risky you have some margin if things go wrong. But renting could compliment your income. another list of facts about being a LL. -You need to pay 1 months rent to the EA + VAT to get a tenant (the EA will normally take the deposit and part of the first months rent to cover this, so you have to come up with this this when the tenant leaves). Free ads might work, but not in my experience. -You may also need to keep the deposit in a secure fund (in case you go bankrupt), but its not clear if this is the law here. -You need to get an EPC (£75) -If the property was built before 1945 you need a fitness survey (£50) -If you have gas you need a safety cert <1 year old. -You may need an electrical safety certificate -You will be responsible for the rates (even when it is empty unless you remove all the furniture) -You will be responsible for the up keep of the property -You need LL insurance -10% of tenants are B*8stards and will steal your stuff when they leave (washing machines, cookers etc), I've had this happen to one friend. -You need to pay income tax on the rent as if it just adding to your salary, you need to keep accounts of all your expenses related to the renting business -You will need to start doing self assessment tax returns, which on the surface is simple, but there are a billion rules and a billion ways of interpreting each one. Even finance ministers use tax accountants. -You may in future need to become a licenced LL -The rent market is also dropping in value, with so many unable to sell, and renting out instead -The bottom end of the rental market here is overvalued because of DHSS subsidies, that could easily change. Rents are also sensitive to other economic pressures, if other costs go up rents have to come down. -Unforeseen problems, heating/plumbing/roofing etc, tenants not paying, legal costs, too much supply making long void periods of no rent. Make sure you take all that into account and do your sums. On your theory about the amount of new houses coming on the market, 1. There are 2x the usual number of empty houses in NI at the moment (60,000), and the number is increasing. It is the same in the mainland, only the numbers are bigger of course. 2. Not being able to afford to sell will not stop houses coming onto the market, we are expecting a fire sale after the interest rates go back up and they become totally unaffordable for those who could get onto good fixed rate deals when they were going. For the rest things will just get difficult as energy and food starts to take off. Imports are also getting more expensive and should be around 35% more expensive now. 3. There are people who do not need to sell, but there are always people who need to sell, and now prices are unaffordable for me for what I want. If you think the house you can afford now is good, wait until you see what you can 'afford' in a few years with the same money. Really you should not be bidding against anyone in this market, there are plenty of houses to go around. 4. There maybe pent up demand as you say (there always is), but there is also a bucket load of pent up supply in the form of over burdened borrowers, developers waiting for finance to continue with plots they have bought, empty houses and people not selling because they are putting it off. At the end of the day the average house cannot be afforded by the average house hold, therefore there is not enough money in the country to keep the market going at all levels. What you find is that most people are buying a much smaller place or lesser area than they would have otherwise bought say 10 years ago, and that the average FTB is now nearly in their 30s, when early 20s was the norm in the past. Until people in their early 20s can buy in at the bottom end again, there is no market except for a few buyers who see 'bargains' today and have savings. BTLs took the place of FTBs while prices where rising and banks forgot that prices can go down, that is unlikely to happen again, we now need FTBs to afford again, and using that criteria I calculate that house have to drop by 75% or more of their value in 2007. Quite simply house prices on long term average has to follow wages, and if you look at the quarterly reports from UUJ you can see how these have departed massively since the ceasefire, and many other graphs posted on here. This has to be corrected for, not just 'returned-to' but the integrated value. Quote Link to comment Share on other sites More sharing options...
pharm Posted June 25, 2009 Share Posted June 25, 2009 Crude oil futures Bear in mind that the crude oil future market is being hugely influenced by speculative flows into the USO oil ETF (and other commondity ETFs that buy oil futures). The real physical traders are front running the rollover of the ETF futures (it *has* to roll them over, as it can hardly take physical delivery of all that oil!). IOW, the futures market is being gamed: don't expect it to accurately reflect traders real predictions of where future oil prices are going to be. Quote Link to comment Share on other sites More sharing options...
VedantaTrader Posted June 25, 2009 Author Share Posted June 25, 2009 Bear in mind that the crude oil future market is being hugely influenced by speculative flows into the USO oil ETF (and other commondity ETFs that buy oil futures). The real physical traders are front running the rollover of the ETF futures (it *has* to roll them over, as it can hardly take physical delivery of all that oil!).IOW, the futures market is being gamed: don't expect it to accurately reflect traders real predictions of where future oil prices are going to be. Ultimately price action is the real guide to where prices are headed, and if this fits in with the fundamentals then I m happy enough to go with it. However, with high volatility it is best to be nimble, to trade in and out, and ask the questions do the fundamentals lead the price or does the price lead the fundamentals. Again, of course any market is influenced by speculative flows, speculators are one of the most important parts of any market. How else can price discovery be "discovered"? Speculators are the what engine oil is too a the performance of an engine. It would cease without it. And markets and price would become more volatile without speculators, supply problems and price spikes would be more pronounced. For example if the commercial participants who take physical delivery of oil want to hedge costs, which in turn keeps prices down and being passed onto the consumer, then another counterparty is needed to take the other side of this trade. That group is usually a group called large traders or speculators. Again, one must ask, why is speculative money flowing towards oil now? As noted already money will flow where the fundamentals are favourable, and that would be oil and commodities in general. Why is speculative money not now going into real estate? Every imbalance in commodities or an market is corrected by higher prices, as producers can then increase production with increased profits to bring more supply onto the market. Low prices and no money flowing into this area will only lead to more supply problems and larger price spikes down the road. There are many cases of this in history where speculation was banned and prices actually increased and volatility became higher after the ban. After the short selling ban on banks last September, bank shares actaully collasped at a faster pace than before. I prefer to look at the average price or a quarterly average of the price over a number of years. Take a look at this chart... A longterm chart of oil shows the average line drawn in to roughly track the average quarterly price. The average price has been going up. As can be seen the price moved above and below the average, but in the end the average price moved up over a number of years. Oil was only at 147.55 USD for perhaps one tick, or one second. It was at 147 USD for only one day. It was not fixed at these prices. So looking at the standard deviation above and below the line will show lots of different prices, smoothed by the average. The average only briefly go up to 130 USD. Perhaps we can then take an average of the average for extra smoothing to give us a better idea of true longterm supply/demand fundamentals. It is like wheat briefly went up to over 1200. However, the price was very volatile over a four year period. Yet bread did not go up to £4 one day and then back down to £1 three weeks later, before moving up to £1.50 after that. In would say it is important to look at the average price these were produced at. And if a company like Kellogs want to hedge these costs in the futures market so as to keep prices down on the supermarket shelves then speculators will take the other side if this hedge, the under writer if you like. So to blame speculators as it popular in the MSM is mis-guided, and politically expedient for the politicians to use as a scapegoat. The commit of traders report according to my reading of it, and the run up in 2008 into the summer to 147 USD actually showed the speculators were net short from around 100USD...it was the commercials who were net long, such as, Hedge long Over the last nine months, the value of Southwest's fuel hedging contracts -- the difference between the hedged rate and current market prices -- has risen about 50 percent to $1.5 billion as of the end of September.For the fourth quarter, the leading U.S. low-cost carrier has hedged 90 percent of its expected fuel needs at an average crude price of just $51 a barrel -- a big advantage in an industry in which fuel vies with labor as the largest expense More...hedging planned and in progress Virgin Hedge over One Billion Pounds in run up to 147 USD Oil. In the end, I think we need to be careful, sometimes it is better the devil you know, as other unsuccessful attempts going back to the 1860's in Germany to ban speculating in Onion Futures caused higher prices. All, I know is that the demand increased for oil in the last 10 years, and supply flattened out, as the supply and demand lines met and became closer and crossed back and forward, prices became more volatile, which is what one would expect to happen when supply and demand lines become tight. In a leveraged market for sure there will be spikes up and down, but as noted the averages are moving up slowly overtime which would be conducive to the fundamentals also. If speculators are to blame for high prices, then we must also blame them for falling prices( and disinflation in commodities) between the period 1982 to 2000. Quote Link to comment Share on other sites More sharing options...
Sherlocks smarter brother Posted July 15, 2009 Share Posted July 15, 2009 (edited) BB I've explained about my own personal portfolio. It would be very hard for me to loose money.Example. I build 16 houses on a site and retained 1. Site cost � 36,000 Build cost � 75,000 ( approx) using my own workforce. Cost � 111k This is new 4 bed, 2 bath, with 2 receptions and massive kitchen. Detached on corner site. Was valued 6 months ago at �320k. If I was mental enough to sell now for give away price of � 220k even I know I've made a substancial profit, and doubled my investment. Should I have sold for � 375 at height of the boom?, probably, but what to hell I built & sold 28 houses in the boom and flipped about 12 sites. This is a long termer. I have no gearing on this property at all. As I've explained before I am not a part time DIY armchair investor. I'm the real deal developer/investor. MISS JONES Hi There Erm? suppose Im the new kid on the block! Gotta real fright when I read some of the stuff on here as I didn't realize it was mostly written minimum 6 months ago. For a moment I thought OMG they have fallen again!! - Shall I top myself? From your prediction of the beginning of a recovery in the 3rd quarter of 2009 - I was wondering do you still maintain that view and if you feel inclined to expand upon it in retro so to speak. Would most appreciate it. MOD EDIT - ADVERTISING WEBSITE REMOVED AS PER FORUM RULES Edited July 15, 2009 by doccyboy Quote Link to comment Share on other sites More sharing options...
Belfast Boy Posted July 1, 2010 Share Posted July 1, 2010 Vedanta trader did a six months update which I have just merged into this thread so if you read back a few pages you will see the update. I hope VT comes back and gives us another update soon. Looks like things are on the edge again. Nobody explains it better than VT. Quote Link to comment Share on other sites More sharing options...
paul65 Posted July 1, 2010 Share Posted July 1, 2010 (edited) I hope VT comes back and gives us another update soon. Looks like things are on the edge again. Nobody explains it better than VT. I agree I hope VT comes back and enlightens us with his analysis. Nobody does it better. I did drop him a PM a couple of weeks ago to say hi but I've not heard anything back at all. Has anyone else on the forum been in contact with him? I really hope he is ok wherever he happens to be. It really would be great to hear from him again. Edited July 1, 2010 by paul65 Quote Link to comment Share on other sites More sharing options...
headmelter Posted April 18, 2015 Share Posted April 18, 2015 A tentative recovery seems to have begun...Time will tell if it is sustained. Quote Link to comment Share on other sites More sharing options...
BelfastVI Posted April 20, 2015 Share Posted April 20, 2015 A tentative recovery seems to have begun...Time will tell if it is sustained. Going by the NIRPPI it begun Q2 2013 and has increased 15% in the almost 2 years since. Quote Link to comment Share on other sites More sharing options...
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