Saturday, February 16, 2008

Poor little BTL investor

Safe as houses? I lost £350,000

Self-employed vet Tamsin Barks knew her life needed new direction. A mailshot from Inside Track said she "could give up work and be a property millionaire." She now has a £1.1m portfolio of 7 BTL properties, but has made a loss after costs of £350,000. "My monthly rental income falls £1500 short of the cost of borrowing the money, and that's before essential expenses. I am running out of money - I'm worried I could lose my home and have to live in a small flat or even a caravan." "I was told I could make money within two years by a process called 'flipping'. I would buy off the architect's drawing [off-plan] by paying a deposit, then sell the property at a substantial profit to another investor just before the keys were due to be handed over. I was told the sky was the limit"

Posted by little professor @ 01:58 AM (3425 views)
Please complete the required fields.



38 thoughts on “Poor little BTL investor

  • “I’m worried I could lose my home and have to live in a small flat”

    Yeah, welcome to the real world. Many of us live in small flats. Get used to it!

    (sympathy somewhat lacking at 2:30am after a few drinks)

    Reply
    Please complete the required fields.



  • “I would buy off the architect’s drawing [off-plan] by paying a deposit, then sell the property at a substantial profit to another investor just before the keys were due to be handed over.”

    In other words, she was going to make money without working for it. It’s called gambling. She bet too much and is about to lose much or all of it. Next time you get a mailshot like that, don’t give up your job.

    Reply
    Please complete the required fields.



  • Dumfoundedteardrop says:

    Perhaps safe as houses should have kept tract on the property flippers in the good old USA of late!I have my bed under a tree here in Melbourne and loving it. With the rats , possums and all, plus tears streaming all the way down my face to the bank.So the flippers think that they are all going to become very wealthy on the backs of the savers of this world.Evan money has its price I am afraid. Money for free cannot last forever as so many are starting to find out!

    Reply
    Please complete the required fields.



  • Dumfoundedteardrop says:

    Perhaps safe as houses should have kept tract on the property flippers in the good old USA of late!I have my bed under a tree here in Melbourne and loving it. With the rats , possums and all, plus tears streaming all the way down my face to the bank.So the flippers think that they are all going to become very wealthy on the backs of the savers of this world.Evan money has its price I am afraid. Money for free cannot last forever as so many are starting to find out!

    Reply
    Please complete the required fields.



  • The sooner people grow up and take responsibility for their own actions, the better. Do people really still think these “schemes” make money with no risk??

    Reply
    Please complete the required fields.



  • Smart enough to get qualified as a vet – yet dumb enough to fall for a get-rich-quick scheme…

    Not, I think, an isolated case – around 50,000 BTLers have portfolios of between 5 and 10 properties..

    Reply
    Please complete the required fields.



  • You boyz 2am!! you love the game!!! Ok well this is my view (bit of a sermon after a few months on this site):

    1. If you decide to speculate in anything you should be aware of the risks. The bigger the speculation the bigger the risk.
    2. There is no god given right for people to make money from their “investments”.
    3. If you dont make money – or lose money mitigate the loss.
    4. If you are going to speculate DO YOUR homework. I find this astounding. Personally i spent about a year paper trading before trading for my own account for real. I then put small sums on the line so no “errors” would hurt. Then you need discipline. People in BTL, for the most part, dont have a clue about economic cycles and the fact that we have hit a top in the cycle, they just look at projections based on past performance.Somone did that to me once on the Nikkei 225 in 1989 – showing it had gone up 30% or somthing that year. Thanks but no thanks i said. And we all know what happened after that (well if you are reading this and you dont then i really give up!). They then literally mortgage their lives and wonder why they havent become multi-millionaires by the weekend!
    5. I have nothing against Joe (or Josephine) Public, but the remarkable comments of bulls on this site indicate they do no research. I would recommend manias by Charles Mackay and anything you can get your hands on by Fred H. I have said before J Public is almost most bullish at the top and bearish at the bottom.
    6. Generally the idea is to buy low and sell high. Or take out the middle. So in the last cycle you buy in 96 and sell in 2005. Yes you may have missed the top and not got in at the bottom but really how much money do you want?? Don’t over-egg the bull run, because if there is a blow off top then when that fails there is generally a stampede for the exit. Thats not so bad in most tradable stuff except anything to do with physical property because of the liquidity of it.
    7. Be prepared to be told you are stupid for missing out on a blow off and BITE YOUR TONGUE when people tell you how much money they are making (no need to bite it on here!).
    8. It may very well “all end in tears”

    8. Thats the advice if you want to speculate – i.e. play the cycle. If you just want a place to live then just try to get on the “ladder” after the end of a bull move. Now thats difficult because the cycle is so long – ok so then dont get sucked in at the top! Difficult i realise.
    9. Buying a property is one of if not the biggest commitment of your life – TREAT IT THAT WAY!!
    10. Just because someone has made a ton of money in a bull move that doesnt mean they know more than someone that hasnt. Only trust people’s opinions if they make money in a bull and bear period. Its a bit like one of those property shows – Sarah Beeny advises people what to do to be a developer. People ignore her and add things that dont make the property more saleable given the time and effort they take to add. They then sell the house and say “shes wrong – look how much money we made!!” – she counters with “if you had bought a shell at the same time – done nothing and sold it you would have made the same % gain”. She is really NOT stupid.
    11. Listen to and respect both the views of and old people themselves. Be intrigued by their stories of the “old days”. Perhaps the youth have the edge relative to dot coms etc, but relative to housing forget the property developer millionaire types.

    End of sermon!!

    Reply
    Please complete the required fields.



  • forgot a couple!!!

    12 (sorry i had two 8s) : Dont believe the government over the business and property cycles – the property cycle ISNT a myth and if governments could have done something about it they would have done.
    13. If something goes right i wont be asking you for a handout so if something goes wrong please take your medicine and dont ask me for one!!

    Reply
    Please complete the required fields.



  • Here! Here! Techieman………………amen to that

    Reply
    Please complete the required fields.



  • “I thought it was too good to be true. And I wish I had stuck to my instincts. But I was on my own…. and greed got the better of me”

    Perhaps it’s time to sell, … oh but your £1.1m portfolio is only worth about 900k – and falling.

    Reply
    Please complete the required fields.



  • ”I was told….” Then she should ask the person who told her ”have you taken your own advice and recently done with your own hard-earned what you’re telling me to do? If so, show me the evidence.” In investment the bigger the return the bigger the risk unless you’ve worked hard to find an edge that beats the market. If someone else tells you he has a big-return, low-risk investment for you tell him to **** off.

    Reply
    Please complete the required fields.



  • Nice one techieman – I like it.

    @drewster
    I’ve just finished work (yes, at 8am!) and haven’t had an alcoholic drink but I’m not feeling any sympathy either. Just humour.

    Reply
    Please complete the required fields.



  • “I thought it was too good to be true. And I wish I had stuck to my instincts. But I was on my own, and vulnerable. ”

    er…no love….you were being a greedy cow, not being vunerable. I mean, if you had an IQ below 50 – then you might be vunerable. But a supposedly intelligent veternarian – no excuse.

    Reply
    Please complete the required fields.



  • Someone probably DID get rich out of those deals. Bur not the vet!

    Reply
    Please complete the required fields.



  • ‘I was told the sky was the limit’

    Technically, that’s true – if there’s no longer a roof between ‘you’ and ‘it’.

    Reply
    Please complete the required fields.



  • yogi's friend says:

    Oh dear – it shouldn’t happen to a vet…

    Reply
    Please complete the required fields.



  • She’s not regretting her speculation per se, she’s bemoaning the recommendations from the flipping agency, which included 4 properties in Florida. (Talk about not doing your homework!)

    Seriously: no sympathy. It’s speculation like this, by unscrupulous companies and clueless punters, that inflated this bubble in the first place. I have a friend who’s dipped his toe into this area, with one property, and he’s been smart or lucky in the location (Edinburgh).

    Reply
    Please complete the required fields.



  • Truth is this. If you want to get rich quick there’s two paths. Come up with a product or service which can’t easily be copied. The other method involves shafting someone. This “apparently” intelligent woman chose the latter. Unfortunately for her she gave money to a man who is running a complex and unregulated pyramid scheme. She had no concern for those that she might effect by her actions. She only thought of herself. She is quite capable of providing service to others as a vet. Her broken marriage is mentioned,presumably to make the sob story that little more heart wrenching. I’m sorry love but you phucked-up. Deal with it. You lost,don’t lose the lesson.

    Reply
    Please complete the required fields.



  • japanese uncle says:

    ‘I was told the sky was the limit’

    Technically, that’s true – if there’s no longer a roof between ‘you’ and ‘it’.

    ————————————————————————–

    Laugh of the year!

    Reply
    Please complete the required fields.



  • Although I agree that it is difficult to have too much sympathy for someone whose main motivation is greed, I do think this story highlights the larger issue of regulation.

    I find it incredible that companies like this are allowed to charge fees for advice on investments worth millions of pounds with no regulation at all, it really does suck!

    Do we want to encourage con artists to prey on our weaknesses.

    This lady may be a highly intelligent victim, there are many more who are less clever and more deserving of protection by our society.

    Reply
    Please complete the required fields.



  • Well journalists know how to pick a good story. Someone whose marriage has just broken up is vulnerable. I remember the story of a woman in Connecticut, where I used to live, who blew $500,000 in a month in the local casino after her marriage broke up. And the property investment company’s have been predatory in this area. On the other hand highly leveraged investing is extremely risky and the UK BTL folk have done this en masse. So herd mentality and ignorance sure, but greed? If she had made a profit most people would call it a smart investment. We could argue that houses shouldn’t be part of the speculative investment scene. But they are, and in a capatalist society it is hard to avoid this with anything of value. The flip side of this is that the investment market has qualities we can exploit. When panic about loss sets in a bull run tends to over-correct. That’s when I buy my house cash and will in the long run be grateful to BTL people who sent the bull market into such blue sky silliness.

    Reply
    Please complete the required fields.



  • Time to post those keys.

    Reply
    Please complete the required fields.



  • People on this thread are saying that it “shouldn’t happen to a vet” etc etc. Please don’t mix up intelligence and education – one quite obviously doesn’t mean the other!

    Reply
    Please complete the required fields.



  • The other point to be made is that highly trained professional finance experts, heads of international banks, have made the same errors as this vet, judging that house prices always go up.

    Reply
    Please complete the required fields.



  • Have a heart chaps – she was going through a bad time. Yes, a stupid decision – lots of intelligent people make stupid decisions, not usually so expensive though. We should direct our bile at the dodgy company that flogged all this investment rubbish to her. These people are only one tiny legal step removed from charlatans and confidence tricksters. Criminal.

    Reply
    Please complete the required fields.



  • This news might be three years old but the second half of it is probably even more relevant today

    http://www.guardian.co.uk/money/2004/feb/07/jobsandmoney

    As for post number 17 it wasn’t what I was expecting. It thought it would be come up with a product or service that can’t easily be copied
    (Dyson cleaners springs to mind) or buy a load of flats from a developer and then sell them on at twice the price as “Investments”.
    Ten years ago the same people would have been selling technology funds.

    Reply
    Please complete the required fields.



  • it_is_going_with_a_bang says:

    Had she won her ‘bet’ – I have no doubt if she came across someone who couldn’t afford to buy a house she would sniff the air and say tough luck I took the risks and look at wonderful me.
    The fact that she hasn’t – well i’m gona sniff the air and say – tough luck you idiot.
    It is people exactly such as her that have made the problem of rocketing house prices ‘happen’ in the first place.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    What Techieman says, I am also a disciple of Fred Harrison, but Techieman, do you not think that land value tax would help dampen property price cycles a lot?

    Reply
    Please complete the required fields.



  • God, how many others must be out there in a similar position? And how far reaching are the social ramifications going to be? As in the USA the reckless lending has ensnared people who would, under normal circumstances, have added economic benefit to the economy but now they’re going to be in debt for years. A lot of well educated, middle class professionals may well end up on benefits. And as each month goes by the sub-prime catchment drags in more and more people.

    How many times over the past 5 years have Bliar and Brown repeated the mantra about our stable economy etc etc? So often that most people in this country just took it at face value. Well, that optimism and greed is about to be repaid handsomely.

    We may as well just start printing currency with the faces of Kerry Katona, Jordan and Jade Goody (The 3 Whorsewomen Of The Apocalyse) on it and just tell the rest of the world that we’ve given up trying.

    Reply
    Please complete the required fields.



  • If anyone gets the chance to go along to one of those free Inside Track ‘Workshops’ then I would recommend going along for a laugh. They are advertising them on the websites home page. It is such an obvious and scarry con with a big team of people including people in the audience and some fake testimonies from mild mannered average joes who have made millions from property. It seems like a highly organised and sophisticated scam but they probably aren’t breaking any laws but as others have said needs to be regulated.

    Reply
    Please complete the required fields.



  • Now she’s Inside Cack

    Reply
    Please complete the required fields.



  • @ mark wadsworth
    Actually one thing that DOES damp property cycles severely is what the Germans do – tax ALL capital gains on house sales regardless of the original purchase date.

    What would the incentive for house flipping (or using mortgage equity like an ATM) be if the government took tax on the gain at everyone’s marginal tax rate (up to 40% for a higher-rate payer)?

    That kind of structural reform here would not be political acceptable, thought if phased in and accompanied for example with the abolution of stamp duty it might be palatable.

    Reply
    Please complete the required fields.



  • ah see you down at the camp site then…

    Reply
    Please complete the required fields.



  • Just sold my house for a 65K profit, now have no debt or outgoings. Going to save 3k a month on 100k savings and watch prices CRASH. YIPEE I have made money out of HPI and am in a fantasic position as a ftb with a 40% mortgage.

    Reply
    Please complete the required fields.



  • Blogger_friend says:

    I tend toagree with majority of commentators..why not stick to what you were/are good at but you never were that good at the day job otherwise why such a pickle..I agree it is all to do with greed Tamsnin..if people want to make gains in this world it needs to be honest and through hard work..you are clearly capable of neither..hope you have some good friends..sure you do see how many are there for you when you have nothing now that will be the test. I bet your ex is loving this!!

    Reply
    Please complete the required fields.



  • Blogger_friend says:

    why don’t you give to the needy we come in the world naked and we go out naked…your friends need you so do others less fortunate..that may help redeem your selfish intospectiveness get real!! back to a starer home eh!! or less even!

    Reply
    Please complete the required fields.



  • Blogger_friend says:

    Why does it have to be like this…you must know why…

    Reply
    Please complete the required fields.



  • Blogger_friend says:

    dormant and dead

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>