Go  |
New |
Find |
Notify |
|
Reply |
|
Admin |
New PM! |
|
The compliment is genuine, wish I had some decent sales skills....whether you make it on The Apprentice depends on how well your spoken patter is! I really should give up the ghost on this debate like the rest of the forum regulars but feel somehat compelled to keep going. APR as mentioned the more you borrow the lower it goesI'm not sure if you are feigning salesman "stupidity" on me to reel me in to a deal or whether it's genuine. I'll assume it's salesman speak and respond  As a salesman you will know that it's not unreasonable to offer a prospective purchaser a discount or better deal for buying more....that's perfectly reasonable and it's called upsell. Also this discount can be offered at APR or "flat rate" it makes no difference.....generaly it only naturaly drops the more you borrow despite a consistent "flat rate" if there are fixed charges applicable - but hell it's pretty important to understand and take account of those fixed charges, I think you'd agree. Seeing as you like analogies: Company A) Offers a deal on a loan at a "flat rate" of 5% but charges a £10 admin fee. Company B) Offers a deal on a loan at a "flat rate" of 10% with no admin fee. Using your logic the prospective customer should just focus on the "flat rate" therefore Company A is the best deal. But using APR you will see that that is not true for all loan amounts...for example: Borrowing £10 for 1 year Company A) Total pay back after 1 year = £20.50 (APR = 105%) Company B) Total pay back after 1 year = £11 (APR = 10%) Borrowing £10000 for 1 year Company A) Total pay back after 1 year = £10510 (APR = 5.01%) Company B) Total pay back after 1 year = £11000 (APR = 10%) Now this is where the negatives you mention come in...because it is valid/legal to hide certain charges from the calculation.... For example: If there is a missed payment clause where if you are 24hrs late with a payment you will be fined.....This is because it's virtualy impossible to do a like for like comparison on something that only has a probability of occuring. However if there are lots of these "hidden" clauses in your contract you really should be walking away from the deal anyway unless you understand them well enough. Sure APR does have it's downsides doesn't everything (even property investment!) but the positives far outweigh the negatives and that's why it is widely adopted as a "standard". Now that's just APR......there are plenty of horrific mis-representations on "Yield" which can make a terrible investment seem quite compelling on a superficial level. No doubt that's how so many god-awful "city lifestyle" appartments have managed to have been off-loaded onto gullable "investors" through salesmen creating buyer confusion/desire. However "City living falling out of favour" is another thread as I've hogged this one enough  P.S Where do I sign? |
| |
|
|
I think I've made a friend.  Looks like we are actually agreeing with each other, just from different angles. |
| |
|
|
quote: Originally posted by BTLOptingOut: A pretty fair (my opinion) report from the guardian on that Phil and Krusty spectacular.....not sure why it took 2+ weeks to get written though. http://money.guardian.co.uk/property/buyingtolet/story/0,,1773501,00.html
I have been in the property business for many many years and I still am regarding letting property but I would be the first to put my hand up and say I do not know everything there is to know about the property game either now or in the forseeable future. I would wholly agree with the Guardian person's quote that the program 'was a load of drivel' or my quote would be ' thoroughly mis-leading and false representation to prospective BTL'ers on returns which do not currently exist nor likely to for the forseeable future' The way P&K presented the program was like watching an end-of-the Pier Pantomime... but poorly presented. Mel. |
| |
|
|
|
| |
|
|
quote:
Kirstie and Phil maintain you need an annual rental income equal to at least 5% of the purchase price (otherwise known as the yield). But investors need to take into account a string of other costs that will depress the yield - and wipe out profits - most of which were not mentioned in the programme... Given the recent huge rises in property prices, few investors are going to make much (if any) profit from rental income. Instead, most investors are betting they will make a return from further house price rises. But with the possible exception of Belfast, each of the dream locations named in the programme have already shot up in value, pricing them out of the reach of all but the wealthiest investors. Few of the properties featured in the show are likely to cover their costs. Lee Grandin, managing director of Landlord Mortgages, which approves 300 buy-to-let mortgages a month, watched the programme with disbelief. "I thought the whole thing was a load of drivel. I am happy to talk up the buy-to-let sector all day long because it's my business, but I have no idea where they got their figures from or how they came up with the top 10. Suzanne Webb, who manages lettings in Oxford for Cluttons property consultants, didn't see the programme but said it caused great interest in the city. "We are still seeing a lot of people investing in the city, but I'm not sure the figures add up. The rental market is certainly strong for family houses, but less so for flats. One developer is currently selling a big group of flats as investments. They sell for £200,000-£230,000 but achieve rentals of £850-£950 a month, which for most people will be less than the cost of borrowing the money." She admitted that she was involved in a couple of buy-to-lets that have yet to make her any money. "Returns that were 11% a few years ago are now closer to 4%. That said, I have got a one-bed that is making the owner some money, so there are a few jewels out there if you can find one," she says |
| |
|
|
quote: Originally posted by bazzzz:
Kirstie and Phil maintain you need an annual rental income equal to at least 5% of the purchase price (otherwise known as the yield).
Yup If anyone was foolish enough to believe that securing a property on 5% yield will be their passport to sitting in that jacuzzi with Phil sipping champagne or rolling around the bed amongst all those £50 notes with Krusty whilst "money money money" played in the background.....then they are due all the misfortune that's coming their way. A fool and his borrowed money are easily parted. If you are one of those who bought into the property investment club scam and are now sitting on a "City Living New build" portfolio you had better get some decent independent advice fast: 84 Alencon Link, RG21 7TY 26-Sep-2003 £190,995 - 28-Jun-2005 £165,000 139 Alencon Link, RG21 7TW 28-Nov-2003 £213,995 - 29-Jun-2005 £183,000 27 Alencon Link, RG21 7TN 20-Apr-2004 £199,995 - 22-Dec-2005 £160,000 123 Alencon Link,RG21 7TW 31-Oct-2003 £211,995 - 22-Feb-2006 £168,000 Next time you watch Phil, Krusty or Ammanda Lamb on the box....try and visualise who they really are and what they stand for, go on just for one episode, it will show the programs in a completely different light (darkness). All three of them are ex-EA's whose other business interests include either acting as PR front men for property sales companies or running their own finders businesses. "L*3" and "Place in the Sun" are nothing but 1/2 hr advertising slots for the property sales industry. These programmes have nothing to do with advice or insight but are purely about "demand/desire creation".....an essential element in any marketing strategy. If you believe otherwise you probably also believe that eating crisps and drinking coke is the secret behind Owens/Beckhams football prowess. |
| |
|
|
How did I not see this article had been posted 2 hours earlier? I suppose dopiness isn't one of life's worse vices. Lol!
Doh!
|
| |
|
|
quote: Originally posted by bazzzz:
How did I not see this article had been posted 2 hours earlier? I suppose dopiness isn't one of life's worse vices. Lol!
Doh!
 Don't worry about it Bazzzz Your in very good Company on this Forum (myself excluded of course!  ) |
| |
|
|
quote: Kirstie and Phil maintain you need an annual rental income equal to at least 5% of the purchase price (otherwise known as the yield).
However historically it would appear that long term average Yield on rental property is 9.2% with averages 10 years ago at 11.5% Hence jumping on the bandwagon at 5% doesn't sound too clever a move to me. http://www.telegraph.co.uk/money/graphics/2006/05/14/ccecag14big.gifIf ever there was a picture which told the fact that renting is not <b>always</b> dead money that is it. |
| |
|
|
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/14/ccecag14.xmlThe particular wrinkle in the UK housing market has been the influence of buy-to-let investors. They are not sensitive to the house price to earnings ratio. What matters to them is investment returns. Rents may be low but while house prices are rising they don't care.
But if prices were steady, never mind falling, it would be a different matter. Landlords would then have to compare their meagre rental returns with the cost of finance.Which is the key to my earlier argument....If you are "in it for the long term" ( it's my pension init), then yieldis king.
|
| |
|
|
I didn't see the prog but I read about it.
When I saw that the areas they recommended in London were (surprise, surprise) Westminster and Camden, I had to laugh. It's hardly difficult to recommend two of the "gold-plated" areas where people probably will always want to live.
Indeed, perhaps you could see it as a warning sign. All they are prepared to recommend now are the cast-iron certs.
Glasgow as a good bet if it gets the Commonwealth Games because prices also rose in Manchester for the 2002 games also seems tenuous. The latter co-incided with a seven year bull market for property (not to mention a vast regeneration and innovative programme).
|
| |
|
|
quote: Originally posted by vbland:
I didn't see the prog but I read about it.
When I saw that the areas they recommended in London were (surprise, surprise) Westminster and Camden, I had to laugh. It's hardly difficult to recommend two of the "gold-plated" areas where people probably will always want to live.
Indeed, perhaps you could see it as a warning sign. All they are prepared to recommend now are the cast-iron certs.
Glasgow as a good bet if it gets the Commonwealth Games because prices also rose in Manchester for the 2002 games also seems tenuous. The latter co-incided with a seven year bull market for property (not to mention a vast regeneration and innovative programme).
Agreed, if you were going to have a program titled "The least biggest drains on your pocket" those would have been the 10... That wasn't 10 places most likely to make money...It was 10 least likely to loose a fortune. Those locations has a solid foundation to demand (employment/study/growth) rather than purely held up through speculation. |
| |
|
|
This has been my criticism of K&P. If you set yourselves up as experts you have to stand by your claims and run the risk of having them shot down in flames.
BTL as you know I have made some claims (even on this thread) and I stand by my claims. I deal at the coal face everyday with property and see what is currently going on throughout the country, not just a snapshot of the market based in the South East as the luvvies on TV do. Ooh quick lets put some northern towns in the top 10, any ones I don't know, which ones are the famous ones. Quick Leeds, Manchester and Edinburgh, yes everybody has heard of them.
If they were on the ground in these areas they would know that Hull, Doncaster and Bradford have a far better chance of performing well than Leeds. Why on earth they chose Leeds when everybody elses opinion is that the apartment blocks around the centre are saturating an already flooded market.
The entire show was a waste of 1 hour on Channel 4. A countdown show of the best Big Brother bits would have been more informative, and that is saying something.
|
| |
|
|
quote: Originally posted by Bletsoe:
This has been my criticism of K&P. If you set yourselves up as experts you have to stand by your claims and run the risk of having them shot down in flames.
.
I have to agree. When you get experts like Bletsoe completely discrediting these fantasists you can see their stance on BTL has no worth and is completely undermined. And yet they have access to the whole nation and are influencing countless of thoasands to commit financial suicide. These are the weirdest of times we live in. |
| |
|
|
In my city ex-factories are being converted into flats and houses into flats on a fast scale and there is a likewise increase in 'TO LET' notice boards being visable. The council is partly to blame and selling off allotments for housing. BTL seems more risky.
|
| |
|
|
Bletsoe makes a good point. The future predictions were all large cities, last year's climbers were obscure towns (apologies to the residents). Shoddy research from the K&P team. A more interesting programme would have searched out the few remaining 'under-valued' locations and backed them with their insight and expertise.
Next year we'll look back on the '06 risers -and even in a tricky market there will be some- and see how closely they relate to the Location predictions.
|
| |
|
|
Hi
firstly i liked that telegraph article pretty much sums up certain points up about the previous doom and gloom- (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/14/ccecag14.xml)
but i totaly agree how much nonsense this show was. As a fan of K&P im beginning to think their own wages from TV mean more that speaking their mind truthfully. Someone did make a point that this show was more a top 10 of where you are unlikely to loose out in terms of demand...which i agree with
my friends in the city have been telling me to stear well clear of uk property for the last 18 months at least and i like many have gone against the financial investors advice and bought into property and will continue to do so with correct research and knowledge
I feel that the only people who will come unstuck are people who may have bought in a saturated area/development where competition to let out and/or sell upon completion is fierce. I have had at least 3 reservations of this type fall through in the last 12 months because research has found that either over valuation, lack of demand or over supply short term will cause major problems even with a minimum 15 percent discount. It doesnt mean that all property clubs and bulk buyers are creating bad investments.
Another reason risk has increased for us is that as competition between lenders has increased over recent years because of BTL boom, we have been able to secure mortgages at 89 percent LTV, secure mortgages that dont even have rental coverage and obviously as long as the FSA do not regulate this area, anyone with a deposit big enough can secure a mortgage for a property of just about any value, as long as the rent "more or less" covers the interest....and this deposit no longer has to come from you if the vendor decides to offer this as an incentive...not that this is a bad thing, especially as lower valued new properties regularly offer 5 percent paid for FTB.
They did try to focus in on certain areas within the cities they chose but i still cant understand where on earth their figures for growth came from.
Personally im staying well clear of new build. i dont understand why so many people are keen of buying little flats just because they are new. Take the north east as an example. massive increases over the last 3 years which has a lot to do with non-local investment because of relatively low prices and now new build flats are common. In a certain area You can pick up 2 bed flats new build from between 110 and 175, not a lot of room either. For between 100 and 125 you can pick up a much larger victorian period leasehold flat in a terrace having between 3 and 5 floors, and in a good central sought after area. Much more space, much better value and i think they hold it much better. i know a lot of FTBs who are scared of having a small refurb project on their hands. im sure years ago when for example your parents bought...having to get work done was more or less mandatory. As summer arrives the buyers market usually turns into the sellers market and no doubt you will have all read the articles of prices picking back up with increases advertised of between 1 and 4 percent a month over recent months.
estate agents, surveyors, land registry etc all have different criteria for assuming average house price and in a way i try to take this with a handful of salt.
If you buy a house at market value that needs nothing doing to improve it, and youve borrowed maximum available and no margin for monthly profit, then your asking for more risk. Couple that with void periods, saturation and small capital growth and the headache could be worse. Do the opposite and you should be fine.
Did that go on a bit :-)..sorry folks
Mike
|
| |
|
|
quote: Originally posted by Mike99:
firstly i liked that telegraph article pretty much sums up certain points up about the previous doom and gloom- (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/14/ccecag14.xml)
Interesting article thanks. He seems to be saying that BTL are key to the housing market, but that with such low rental yields they will only stay in if it delivers capital gains. Rents may be low but while house prices are rising they don't care.
But if prices were steady, never mind falling, it would be a different matter. Landlords would then have to compare their meagre rental returns with the cost of finance. But on the other hand he's saying house price rises are unlikely to continue. So, doesn't that imply the days of buying by BTL are numbered? If so that's kicking the prop out from under the market, even before we get to talk about the impact of interest rate rises. Bootle is still a bear methinks  A market that relies on rising to be sustainable sounds dodgy to me.
Rent and see!
|
| |
|
|
quote: Originally posted by Fran Tick: quote: Originally posted by Mike99:
Interesting article thanks. But on the other hand he's saying house price rises are unlikely to continue. So, doesn't that imply the days of buying by BTL are numbered? A market that relies on rising to be sustainable sounds dodgy to me.
More or less thats what he is saying. bearing in mind he has been the man i have been bombarded with quotes from for the last 18-24 months telling me to get out. And to be honest im very pleased he admitted getting it mostly wrong...however my friends in the city who still tell me to get out despite the lack of a big crash as predicted(as well as this chap) are simply saying that the advice is still the same but the doom and gloom may take longer to arrive or it will take place over a longer period of time and be less of a sudden impact This is the simple reason i wouldnt call myself a property investor(obviously i am if i buy a house with a view to renting it out). In my view a lot of amateur developers(i can be also put in this bracket myself) think they can be investors only, by buying somewhere, letting it and remortgage to release equity when value goes up. Not since 2004 i would say and certainly not as easy in the uk right now An example of one of my own personal plans to overcome these issues and defend people getting into BTL. An example...take a 3 bed mid terrace within 1 mile of city centre in university town that also has dining room to be used as bedroom number 4. Says it needs a few grand spending on it and at the moment theres nothing majorly wrong with it other than not being appealing to most peoples taste. In fact i will get a real example before being accused of making it look rosy.. property 1 - http://www.rightmove.co.uk/viewdetails-10675247.rsp?pa_n=3&tr_t=buyproperty 2 - http://www.rightmove.co.uk/viewdetails-6247513.rsp?pa_n=3&tr_t=buyproperty 3 - http://www.rightmove.co.uk/viewdetails-6393994.rsp?pa_n=6&tr_t=buyproperty 4 - http://www.rightmove.co.uk/viewdetails-9550253.rsp?pa_n=6&tr_t=buyproperty 5 - http://www.rightmove.co.uk/viewdetails-7188919.rsp?pa_n=7&tr_t=buyokay all three under 100k. take property 5 as working example. £96.5k asking. Say its been on the market for a little while as many of these types have and you get it for 90k. similar properties have celing prices between 110 and 125. purchase price 90,000 fees 1,500 deposit 15% 13,500 mortgage monthly 5.5% 76.5k 350 furniture 1,000 current rental income pcm 780 gross yield around 10 % so at this stage you own the house(and likely most of the furniture) you could actually put student tenants in there now paying 45 a week minimum quarterly in advance bringing in something like £780 monthly which is about 220 percent coverage and to keep lender happy this should be minimum 125%. At the minute you have £16000 capital invested(fees, deposit, furniture) so this probably has a gross yield somewhere around 10 percent which is good although yield is something i dont tend to give that much attention to personally as ive previously said Now lets say you put in new cheap kitchen and bathroom, maybe laminate/wooden floors or new carpets and paint job costing no more than £5000 and its looking good, obviously not top of the range but new and cheap for students. Its original valuation was 96,500. As long as youre coverage is high your lender wont mind remortgaging so you give it a value of £110,000 which is still conservative. so the new figures below assume tenants a bit more for better quality new valuation 110,000 fees 500 deposit 15% 16,500 mortgage monthly 93.5k 428 furniture 1,000 current rental income 845 assuming one tenant still pays £45 small room, 3 pay £50 You paid off first mortgage which owed £76,500 and now owe £93,500, a gap of £17,000 you have released. Minus new fees of £500 and from start to finsh you now have more or less zero of your money tied up and still own 15 % of property value. Monthly income/ mortgage payment Coverage is now lower at 197%, way more than the minimum acceptable level of £535 and a yield of somewhere between 8.5 and 9 percent, still good. It makes money for you without the value in the property ever having to rise and if the market crashed by 15 percent youre still okay. Even some large interest rate increases are unlikely to worry you too much. I hope ive worked that out right and again sorry for writing an essay. Mike |
| |
|
|
quote: Originally posted by Mike99:
I hope ive worked that out right and again sorry for writing an essay.
Mike
Theres always an error at this time of night. At the end the only money you have tied up is the amoun | |
