The Wilsons - 875 buy to let property empire

Generali

Edale wrote: »

This may be a bad assumption and if their interest bill hasn't gone up considerably it could soon, all conjecture I know. I wonder if there are many other Wilson's out there that are not so keen on the limelight.

I don't see how the whole thing can possibly work without positive cashflow overall. It needn't be on each property but it has to be across the portfolio or they wouldn't be able to get borrowing.

Edale

Generali wrote: »

I don't see how the whole thing can possibly work without positive cashflow overall. It needn't be on each property but it has to be across the portfolio or they wouldn't be able to get borrowing.

All their mortgages are interest only, if they are mortgages at 85% in total and all their borrowing was at a rate fixed 3 years ago, say 4.5%. Best rate available now is 6%. The interest bill per property goes from c£1020 per month to nearly £1400 per month. They say that they rent their properties at a very competitive rent to avoid them being empty so there probably won't be much slack. I know most of the figures are guesswork but I would imagine the interest rates could be not far off. The key is the level of mortgage debt they have.

Does anyone know how many properties they had at any given point in the past? it would be possible to then work a guestimate of level of equity.

Sir_Humphrey

RabbitMad wrote: »

How are they trading in peoples dreams? I don't know many people that dream of renting a house for the rest of their lives. Most people dream of being able to buy somewhere to give them security.

such as something to eat. Bloody farmers, how dare they make money growing food for us?

The rather obvious difference is that farmers don't prevent us from growing our own food, whereas BTL prevents many people from choosing to purchase their own house.

In the specific case of the Wilsons, farmers do not create a monopoly. In the case of council housing, the Wilsons cannot be voted out in the local elections.

Generali

Edale wrote: »

All their mortgages are interest only, if they are mortgages at 85% in total and all their borrowing was at a rate fixed 3 years ago, say 4.5%. Best rate available now is 6%. The interest bill per property goes from c£1020 per month to nearly £1400 per month. They say that they rent their properties at a very competitive rent to avoid them being empty so there probably won't be much slack. I know most of the figures are guesswork but I would imagine the interest rates could be not far off. The key is the level of mortgage debt they have.

Does anyone know how many properties they had at any given point in the past? it would be possible to then work a guestimate of level of equity.

They won't have 875 individual mortgages! They'll have a line of credit.

Edale

From here they had 12 properties in 1992 and 60 in 1994 From here it suggests they had 345 properties in 2001 and 465 in 2003 worth £75 million (£161,000 each). They have therefore bought another 410 between 2003 and 2007. Anyone care to work out the equity?

Edale

Generali wrote: »

They won't have 875 individual mortgages! They'll have a line of credit.

I realise that but surely it will be on similar terms to residential mortgages. I assume the funds would have been sourced through securitisation in the same way and would probably be impossible to obtain in the current climate.

GDB2222

Generali wrote: »

Valuations become interesting when one person has or is trying to corner the market. In effect they are monopoly purchasers of 2 bed houses in Ashford so instead of a market price, we have a price that these people are prepared to pay.

If rents drop (probable if we have a recession as I and many others feel is likely) they might have to sell. If they do then we'll see what the next highest bidder was prepared to pay.

The likely outcome is demonstrated by those brothers who tried to corner the silver mkt in the 1970/80s.

Bunker-Hunt

GDB2222

Edale wrote: »

From here they had 12 properties in 1992 and 60 in 1994 From here it suggests they had 345 properties in 2001 and 465 in 2003 worth £75 million (£161,000 each). They have therefore bought another 410 between 2003 and 2007. Anyone care to work out the equity?

At the moment, I think they are still in positive equity. I did some rough sums based on 'average South East' prices, rather than Ashford, and I think they have about 10% positive equity still. So, the question is how their cash-flow is fairing. Also, their credit line may have covenants in about ongoing loan to value requirements that they might breach even if they are in +ve equity and can meet the interest payments.

Of course, they can't sell, and they are probably too large for their lender to call in the loan. What would a lender do with 875 unsaleable properties in Ashford?

GDB2222

Ian_Griffiths_Halifax wrote: »

It's better to die owing a million than to be owed a million:rotfl:

If you die owing a million, then you've made a net profit on life?

HelpWhereIcan

Their 'line of credit' or portfolio mortgage is likely to have been specially negotiated and is unlikely to be of the same kind of deal that a standard buy to let mortgage is eg 2 year fixed.

The reason is that the cost of remortgaging a significant level of borrowing every couple of years really mounts up and there comes a point when a portfolio investor/property company (as they are likely to be now) seeks borrowing that represents long term value and offers the ability to access additional funds very quickly based on the value of the total portfolio rather than the individual properties they are looking at.

Their properties will more than likely be owned in a Ltd Co/SPV and most Buy to Let lenders lend to individuals only and have portfolio limits that they will be well above. eg an 'average' lender would set a max of 10 properties with a value of say £5 m

So they are likely to have a total facility/line of credit that is available at a certain rate eg - 2% above base rate - for the full term of the mortgage/facility.

The facility could be called in/reduced if values dropped too much (but then again probably only dramatically if cashflow also suffers) but I think hoping that they will fall foul of payment shock is stretching it a little.