Hello, incase any of you missed the advertisement.

The great house price crash 2005?

if this has been posted before, I appologise in advance.

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

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.

Are you selling up now? Or do you consider it is too late?

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?

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.

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.

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

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

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.

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



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.


250,000 affordable homes


Agreed


Good luck!!!!!



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

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.

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"

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?

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.

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.

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.

Derek,

Congratulations.

You have a very nice business there.

Thank you for sharing this information.

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).

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.




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.




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.

KN0B.

Why don't you go back to playing with your imaginary monopoly property empire and leave this site for the grown up's????

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

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

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?

Genius pure genius

I have no worries about the Spanish properties, I do have a list of people who would rent them each year - by rent, I didn't mean to Joe Public, but to my work collegues, existing tenants and family and friends - the Spanish properties are not for general use.

40% return, the only way I see that is by having HMOs (Houses of Multiple Occupation - aka Student lets), these are still very profitable. However that may change as they are all due to be licensed soon, and I have heard figures of £1250 per room being mentioned (I think that is a 5 year figure), so rents would have to rise by about £5 a week to cover it, and I am not sure the market would stand it.

More and more universities are building accomodation, this is already happening in Norttingham and there are plenty of empty HMO rooms

If you have a non-HMO (IE just a 'normal' let) then I would think the yield would be 7% at best, probably more around 4%

What you mean like those who call people names, those 'grown ups'?


Irony.....yeah?

Derek, when I say 40%+ returns I'm talking about the return on my money, not the gross return on the whole property. I was comparing the return one can get with your own money, to what one can get in the bank.

If I lie, and tell you I'm making a loss will you be my friend too? :-(

In that case, I have no idea how a 40% return could be made, although I am more than sure it could be done.

I once worked as a computer contractor for ICI, who were making very little profits.

We had a 'pep talk' from a senior member of management, who said as the company was only making about 1.8% profit (the chemicals company) he thought it would be better if he sold the company and put the money in the bank, at the time interest rates were in double figures.

some pep talk !!

Simple really kn0b i prefer to read real life post from articulate intelligent people who offer a genuine insight into what is really happening in the market not the inane ramblings of a junior ea who is about to lose his job, 1 bed, rundown bedsit and crappy company car.
And yes i do consider myself and others who contribute to this forum "grown up" yourself excluded of course, as we have a genuine intrest as to what is happening in this madness called a housing market and i have no intrest at all in this becoming an online slanging match, which is what most of your threads/topics consist of, i refer to many of your odious digs at zzg who you seem to have bullied off the forum.
This is my last comment on ANY OF YOUR TOPICS/THREADS/REPLIES ETC.
adios bbb,kn0b whatever your alias is today.

Thanks again,

A couple of more questions if I may

1. Do you think there are too many BTLers?

2. If so, has the increased number of BTL properties meant that any of your tenants have asked for a reduction or moved onto cheaper props, or have you had to do something for them like improve the property say

3. Overall do you think rents are rising, falling, or will remain the same? Some LL's think rising because their costs are going up, other peopel say falling because their is more choice in the market place. What is the situation if Derby.

I am in Leicester and I know that student lets are no longer the cash cow they used to be simply because everyone is at it.

Thanks

C88

He who dares







followed by.....






Yet the only person between the two of us being insulting is you!


When all the 'opposition' can do is call you names you know they've lost the argument.




KOTC.

BBB you slate someone for suggesting your gains are through gearing and then when you start to describe how you arrive at them you quite clearly talking about gearing. How the hell are you calculating this 40%+ returns.

If I buy a house for £100K on a £10K deposit which I then rent out for £4K a year using your "math" I can count that as a 40% return regardless if my property is only worth £80K this time next year.

P.S I'm not 'declaring my friendship' to someone i've never met cause he made a loss.... i'm offering him respect for apparently being open. Someone who has so many alias' (BBB/Yieldman/KOTC) and who makes so many unsubtantiated claims can never be open in my book hence i'm a bit reluctant to offer respect.

When BBB has lost the argument he promptly deletes all his posts and re-engineers himself with another persona!

Certainly some BTL investors are leaving the market, I have seen properties that have been previously rented up for sale and viewed them myself.

They probably can't get any tennants because the propetrties are total sh*t holes with make and bodge repairs (if any repairs have been done at all), so they wont get good money for the properties either.

In general though, I think there may be a small surplus of BTL properties, a lot of people have just 1 property and jumped on the bandwagon at the peak of prices. They also expected the rent to cover the mortgage, and with higher mortgages the rent was high ... and unrealistic.

I have a property (a 2 bed semi) where I let for £440 pcm, which is the going rate. Next door has been bought by a 'professional couple' and was up to let for £495 pcm. Needless to say, no takers. I think eventually they let it for £460, but it was empty for nearly 4 months. My rents are realistic and I have few viod periods.

Certainly for popular modern housing estates, rents have risen, but by about 4 or 5%, I tjink there is little scopt to raise them again for a couple of years.

Tenants ARE looking for value for money now. I poached some tenants from a landlord whose idea of maintenance was to GLUE a pane of glass into the frame with epoxy resin, which ran and set all over the window.

The tenants (HB tenants) complained, and the landlord said they could take it or leave it, so they left it and came to me.

I think there will be a shake out now, in particular where the rent only just covers the interest. Unless the landlord is prepared to 'subsidise' the property with his own money or other income then there is no leeway for repair costs.

Student accomodation is profitable, but is becoming less so. New government regulations will cane HMO owners over the next few years, and university housing expansion programs will be a double whammy.

Not all asylum seeker contracts are being renewed.

Looks like its HB tenants then, I have no problems with the ones I have.

Yawn!

Here we go again, another 10 pages of kn0b professing to just how good he is, I was under the impression that this was a forum concerning the hpc not a vehicle for kn0b/bbb/ignorant steve?? to proclaim his greatness and try to bully people off the forum.

Is that how bad it is in your ea office, instructions that poor.
Couldn't help myself in replying as like i said before i am only interested in real hpc news but rest assured i shall skip any threads of yours in the future as i know from past experience you are like ariston............You go on and on.........

Must be going now as i have real children here at home to play with.

Oh dear, what poor convictions we seem to have going on here,such bold lettering as well, I almost thought you meant it! However it seems to be nothing more than hot air. Just like all of those promises you've made to yourself each and every year for the past few years, ''I really, really must buy a house this year''





KOTC.

Have just agreed to rent a 5 bedroom house in Muswell Hill for £1,950 PCM. Now that seems like a lot and I probably could have got it for a little less but I wasn't really in a position to mess around - however. .... "Current" prices for 5 bed places in Muswell Hill (good school catchement as well) are about £700K .... the interest on which would be £3130PCM/.

Go Figure .....

Cheers guys.

Spare a thought for us mere mortals that can't save enough for a deposit on a two bedroom rundown terrace.

[quote=King of the castle,Feb 27 2005, 06:25 PM]
[quote= He who almost dares previously said ]This is my last comment on ANY OF YOUR TOPICS/THREADS/REPLIES ETC.[/quote]

Oh dear, what poor convictions we seem to have going on here,such bold lettering as well, I almost thought you meant it! However it seems to be nothing more than hot air. Just like all of those promises you've made to yourself each and every year for the past few years, ''I really, really must buy a house this year''

KOTC.


Waste of time me responding really as your reason detre is to convince yourself that you are king of the hpc but oh well here goes.

Kn0b you really should take the time to read peoples post instead of being hell bent on clocking up a record amount of posts and becoming a super member, suprises me that you have the time you being the gordon gekko of the housing world (as i recall it all went tits up for him in wall street).
Fyi, I have owned quite a number of houses and have profited quite well from the sale and purchase of them, not as i have any great economic prowess or insight i just have been lucky with the timing like everyone else who bought in the early/mid 90's.
I have a great deal of sympathy for ftb's or anyone else priced out of the housing game as it must be really soul destroying when all you want is to own a house without it ruining your life, everyone has the right to own a house if they are prepared to go out and graft to pay for it but the idea of slogging your guts out day in day out to be taxed till it hurts and then see a 2 bed terrace what was 17k in 2000 go for 85/90k now is absolutley disgraceful.
Go back to playing battleships on the office pc and for gods sake don't click on the dial up connection again.
Like i say i am expecting this thread to run and run as you obviousley have no life whatsoever and must have tired of playing dungeons and dragons and squeezing your zits.
When you have had some experience of the real world come back then eh?

Real clever, 25k P.a! on rent alone.


It's like me saying, ''look I can hire a jumbo jet for a day for £75k rather than get a chartered flight for £1k, but it's a great bargain as it would cost me £250 million to buy''




Good luck anyway.



KOTC.

mmmm .. I guess this forum is just another of those slagging off opportunities with little serious content then.

What a waste.

He who almost dares


Good job I knew how weak your will would be, and have you on ignore.


Only thing is the blank screen I see has the same 'feel to it' as your previous posts I could see ;-)



KOTC.

KN0B

YAWN.

What aspects of me just seeing a blank screen do you not quite grasp?

I have no idea, i obviousley don't spend as much time on this forum as some.

KN0B

I guess he *knows* you've got him on ignore and his posts are now for the benefit of the rest of us!

I guess I *know* you're another ignoramus who doesn't appreciate there's two sides to an argument, and an equally high probability that you're *wrong*.

If you think that is an appropriate analogy then you lack even a basic understanding of finance.

The analogy is that he is paying 25k to rent an asset from a landlord, rather than 38k+ a year to rent it from a bank.

Are you REALLY saying he would be better off shelling out an extra 13k a year?