But you can very easily go bankcrupt and get reposessed as many are and will continue to do over the next several years. Prperty values have been a pack of cards for many years now.
Buying property without downpayment
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But you can very easily go bankcrupt and get reposessed as many are and will continue to do over the next several years. Prperty values have been a pack of cards for many years now.
any of you guys heard of andy shaw, basically i bought his ebook some time ago and he reckons that you should be able to accumuate £5 million worth of property over 5 years, once you have £5 million worth and the rents are covering all interest only payments, then refinance every year for 2% of your portfolio's value.......thats £100k ayear and its tax free because you don't pay tax on refinancing (loans).............this is all providing the market goes up 2% a year of course, but i feel this is a reasonable estimate and even if it don't so long as you have bought in the right areas and always get the rent covered just sit it out till it goes back up.
It seems to be a different age these days, i have no problem with all the debt i have on morgages, as this is the credit age, the goverement will be borrowing money my whole life time and if its good enough for them..........when i tell my dad what im doing he is so old fashioned and thinks im mad, he thinks i should just have one or two and pay off the morgages completely, but i disagree with him, i have everything on interest only and just keep refinancing every 6 months or so to get another one, i must admit the rate im going though i will not get £5 million worth within the 5 years, only reason is i can't refinance quickly enough otherwise i would, but im trying to find ways around this. Anyway my point is i still think its a great investment if you look at it the way ive describe, or go to andy shaw's site and see.
Trader333
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Yes I am very familiar with this approach and it is based on the fact that property has increased in value by an average of 11% a year since the 1940s. The biggest threat to this type of system is interest rates and if his method had been used in the late 1980s then it would have failed on a spectacular scale. Rates effectively doubled in a very short time and that meant that interest payments also doubled but rents didn't.
In my view it is a sound approach today as the long term view is that the UK population will increase by 50% in the not too distant future (mostly through immigration) and all these people will have to live somewhere. As such I think that property prices will increase and all this nonsense about FTB being unable to get on the ladder will disappear as soon as people realise that the days of 25 year mortgages are over. Elsewhere in Europe they have 100 year mortgages which are passed on to descendants and it will soon be common in the UK in my view.
Of course one of the key things is being able to buy property at well below market value (around 30%) so now is an ideal time to be doing this as some people are wanting to sell at any price. This will allow the weathering of price retracements which happen in any market.
There is a lot of talk about prices falling 40% or more but at the moment I just don't see it. For this to happen then there would have to be a much higher number of people who cannot afford their mortgage than is the currently the actual case. The only way I can see this is if interest rates rocket up which is now highly unlikely. The introduction of HIPS has reduced available supply by nearly 30% in some areas and where I live prices have not reduced at all. I do think that certain properties will see a big reduction but this will be polarised in my view. There was a Jonathan Maitland TV documentary about how several different people had lost out big time in property investment last Monday. However, the programme was very unbalanced as all the people who had lost out had done so through ignorance or outright stupidity.
I think that there will be some issues but long term I think the UK housing market is a very sound investment if you DYOR and make sensible buying decisions.
Paul
In my view it is a sound approach today as the long term view is that the UK population will increase by 50% in the not too distant future (mostly through immigration) and all these people will have to live somewhere. As such I think that property prices will increase and all this nonsense about FTB being unable to get on the ladder will disappear as soon as people realise that the days of 25 year mortgages are over. Elsewhere in Europe they have 100 year mortgages which are passed on to descendants and it will soon be common in the UK in my view.
Of course one of the key things is being able to buy property at well below market value (around 30%) so now is an ideal time to be doing this as some people are wanting to sell at any price. This will allow the weathering of price retracements which happen in any market.
There is a lot of talk about prices falling 40% or more but at the moment I just don't see it. For this to happen then there would have to be a much higher number of people who cannot afford their mortgage than is the currently the actual case. The only way I can see this is if interest rates rocket up which is now highly unlikely. The introduction of HIPS has reduced available supply by nearly 30% in some areas and where I live prices have not reduced at all. I do think that certain properties will see a big reduction but this will be polarised in my view. There was a Jonathan Maitland TV documentary about how several different people had lost out big time in property investment last Monday. However, the programme was very unbalanced as all the people who had lost out had done so through ignorance or outright stupidity.
I think that there will be some issues but long term I think the UK housing market is a very sound investment if you DYOR and make sensible buying decisions.
Paul
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0007
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Possibly ok in an ever-rising market in credit never-never land but it was the same in the dotcom boom / tulip mania etc etc.
Many BTLs are now starting to hurt - what's your fallback plan?
a calm down, whats your problem?
bottom line i was only joining the debate..............yeah i don't have a plan, so what, im going with the flow and making my plan up as i go along to be honest, remember im from the south east so property is a much safer bet here, but i reckon in 5 years time ill be sorted................worth the risk, you only live once and i want to retire young. And if it goes tits up (highly un likely as paul says) so what i got my looks and health.
0007
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No problem - apologies if i gave that impression
(i don't get rattled it loses money!)I suppose my point is that it's very easy to think you've found the Holy Grail (haven't we all sought it?) and from then on pride comes before a fall. I too have had property in the south east until fairly recently, but I'm out now and the dosh is mine & safe. IMHO making money is all about judging the odds / risk / probability call it what you will and right now the short term property market looks dodgy in some respects (but in any situation there is always money to be made and property could become an attractive investment if things progress suitably). If you have the confidence and ability to profit from your scheme, I wish you well. Horses for courses.
i do have a plan, my plan is to buy up easy to let properties until i accumulate 5 mill in value, then refinance at 2% a year.............£100k a year tax free, only once i have 5 mill in portfolio value.......remember i will have 15% deposits in all of them so long as i can buy below market value which im currently doing i can keep refinanceing to get more, until i have 5 mill, if i wanted i could just sell them all and cash in but andy shaw says to never sell them as there is no need. I have ei group but not once had to go to auction as where i live they become available before auction..............by the way i have a long way to go yet i only started last year but i will stick to the plan. I have no pension so at the least this will be my pension, it could fail but i don't think it will, ive done my homework and figures.
jayjay,
forget ebooks like the one you've got.That guy's really talking about what can work given a fairly specific set of circumstances. IMO you will not see those circumstances in the UK again for the forseeable future. I could fill a small booklet for you explaining that in detail ,but if you really really think about it and do your historical due diligence then you should be able to work it out for yourself.
Sometimes the long run accumulation method simply as to pause and wait and look around for the next market that will go exponential and I think this is one of those times as the markets that really appeal to me all look overbought in this cycle.
forget ebooks like the one you've got.That guy's really talking about what can work given a fairly specific set of circumstances. IMO you will not see those circumstances in the UK again for the forseeable future. I could fill a small booklet for you explaining that in detail ,but if you really really think about it and do your historical due diligence then you should be able to work it out for yourself.
Sometimes the long run accumulation method simply as to pause and wait and look around for the next market that will go exponential and I think this is one of those times as the markets that really appeal to me all look overbought in this cycle.
combotrader
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Never mind the 80s,how about the 90s ? IMO, those who bought between 1994-97 are the real winners -not the BTL winners of the last 2-3 yrs - they might think they are IT now - having made a few hundred grand - provided they have sold of course. When young amateurs start to dominate a market and the shoe shine boy thinks the best way to riches is property developement - you know its time to sell out and wait.
The time to buy again is here and will be with us for a while.
As for the refinancing - do interest payments not go up as a resiult of refinancing ? What if the tenants refuse to pay more rent ? WIth 2% rises, by the time one has paid CGT and other fees not much will be left over. Unless I`m missing something of course.
CT.
The time to buy again is here and will be with us for a while.
As for the refinancing - do interest payments not go up as a resiult of refinancing ? What if the tenants refuse to pay more rent ? WIth 2% rises, by the time one has paid CGT and other fees not much will be left over. Unless I`m missing something of course.
CT.
Trader333
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Management of tenants can be an issue if you don't know what you are doing but with the correct approach it is controllable. Also refinancing say a 100K mortgage for 102K (2%) at 6% interest would mean that rents would need to increase from £500 per month to £510 per month to cover the new costs which is hardly a problem. Also what CGT ? You are not selling the property just taking out a new mortgage on it which is tax free.
The key for this approach is to never sell which flies in the face of what most BTL are aiming for.
The biggest risk is a rise in interest rates which could mean very large increases in rent to cover the costs as well as impacting the market in general which could lower prices. The way around this is to try and ensure you get fixed rates when refinancing.
Paul
The key for this approach is to never sell which flies in the face of what most BTL are aiming for.
The biggest risk is a rise in interest rates which could mean very large increases in rent to cover the costs as well as impacting the market in general which could lower prices. The way around this is to try and ensure you get fixed rates when refinancing.
Paul
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I predict jayjay will be bankrupt this time next year.
There's no way to refinance his properties now, you need a minimum 15% equity in the house now to stand the chance of a BTL mortgage and with prices going down there will be no more capital to take out of the property. You also seem to forget the monthly running costs of this portfolio. Mortgages are getting so expensive now that the rental yield doesn't cover the mortgage payments - Especially in the south east.
He is probably sitting on a monthly arrears.
Also just because you buy 15% below the asking price - that doesn't mean you are buying 15% below market price!
There's no way to refinance his properties now, you need a minimum 15% equity in the house now to stand the chance of a BTL mortgage and with prices going down there will be no more capital to take out of the property. You also seem to forget the monthly running costs of this portfolio. Mortgages are getting so expensive now that the rental yield doesn't cover the mortgage payments - Especially in the south east.
He is probably sitting on a monthly arrears.
Also just because you buy 15% below the asking price - that doesn't mean you are buying 15% below market price!
To be honest I find this whole situation quite funny. Many moons ago when money was not particularly cheap ,but property was relatively speaking and thus provided good yields some people bought whatever they could afford to get that yield (ok me)
When the get rich kids ,like the book writer came along and destroyed our yields by making our property expensive we gradually sold them prop for whatever they would increasingly pay putting the proceeds into cash. Now the price of cash is a rarity and we won't let people have it without a decent yield which prevents them from buying property at this price level and we come full circle !
Life's beautiful in it's ironic simplicity.
When the get rich kids ,like the book writer came along and destroyed our yields by making our property expensive we gradually sold them prop for whatever they would increasingly pay putting the proceeds into cash. Now the price of cash is a rarity and we won't let people have it without a decent yield which prevents them from buying property at this price level and we come full circle !
Life's beautiful in it's ironic simplicity.
anyone who does not own a house/flat/appartment at the moment should sit on their hands for the next few years. Time to buy will be over the next five years when the Nationwide house prices index is around £140000 or below, at the moment it's around £179000.The experts calling for a 20% drop over the next few years might be correct for the first time in a long time. I read today Persimmon is going to stop building on new sites until mortgage conditions improve. It looks like next year they will have no earnings at all.
well, what can i say, maybe you are old and like my dad, very old fashioned............my portfolio has not decreased one bit, i have properties in harlow, chingford, stevenage, take alook for your self..................there are bargins to be had by the way
o com on, no one not even me or you can predict nothing..........experts have been saying the same old thing about the property market for years. There is too much scare mongering, people have to live somewhere, and think about this, our country is 27 times smaller than australia and 5 times the population.
JJ,
The geograpical size is pretty much irrelvant given most of it is effectively inhabitable from an infrastructure point of view. I'd be interested to know what size it is if you could just measure it's coastline and multiply it by the depth shall we say a 200km. I wouldn't rely on something like "size" to support your position ,because it isn't that simple.
Basically it all comes down to can people afford to buy in whatever area you are talking about and do they have the confidence to buy which is really about their view of the market and job prospects. There will be pockets of the UK do better than others ,there always is ,but generally that's about the same as trying to pick great stocks in a bear market ...hard.
are you forgeting something, times have changed, the property market now drives this country. no problem anyway, i respect your views.
the way im doing it is very different, im never going to sell, they will be handed down to my kids one day, im just refinancing, im happy to be in debt, not afraid...i think i will profit from this and thank myself one day.
Do what you wish as we all should, but i am forgetting nothing and there is nothing happening here that I have not seen before since early 1970's when i first took an interest in property. As for "doing something different" ,believe me you are not ..LOL... well trodden footsteps. I ask myself one question in matters like this ,can I buy this cheaper in future (and I mean in real terms accounting for inflation). Probability here on this question is yes I can. The more burning question is would that still be true after taxation issues are dealt with and that is a more person specific question.
Good luck with your efforts ,I begrudge no man success if he's willing to back himself.
jayjay,
You might be correct in what you say, but I just don't think you are. Have you ever looked at the Nationwide price index. Since 1950 the price of houses have gone above the trend price on four occasions, every time it has come back below the trend price.The trend price is now around £140000.Inflation is rising and real inflation is way above 2.5%. The interbank markets are grid lock and might stay this way for another year maybe more. Bank losses could be double reported losses by the time this Mortgage Backed Securities mess is dealt with.You also have high credit card debt and personal loan debt,consumer debt is at a all time high. Where are all the homeless people if demand is more than supply. If the economy turns down and unemployment rises, alot of the foreign workers are just going to go home.England is a expensive place to live if you do not have a job. On a price to earning ratio houses are very expensive. These are some of the reasons I think house prices will fall.
