The 70% club

chucky

macaque wrote: »

What I said was "The problem is witless people buying multiple homes when they have no idea how much to pay or how to manage them." That is not the same thing as saying that everyone who buys multiple homes is witless. However, you saw enough of yourself in the desciption to go on the defensive. For the most part, people who rely on the "I'm in it for the long term" rationale for making investment decisions would do better opting for premium bonds. You are sitting on leveraged assets which are deflating at a rate of 20% a year.

Sorry to bust the bubble macaque but this HPC cult that you are getting your numbers from are not telling you the truth.

where did 20% a year come from?

StevieJ

macaque wrote: »

What I said was "The problem is witless people buying multiple homes when they have no idea how much to pay or how to manage them." That is not the same thing as saying that everyone who buys multiple homes is witless. However, you saw enough of yourself in the desciption to go on the defensive. For the most part, people who rely on the "I'm in it for the long term" rationale for making investment decisions would do better opting for premium bonds. You are sitting on leveraged assets which are deflating at a rate of 20% a year.

Havn't you been paying attention to !!!!!! at all, with the future bounce (sorry I think he used the term rocketing) of inflation, you have just got to be in hard assets.

RDB

Actually the oposite will be the case.

DEFLATION.

Cash is king.

dopester

RDB wrote: »

DEFLATION.

Cash is king.

It sure is. Deflation. Deflationary depression.

And with the consequences... unemployment, pay-cuts, huge cutbacks in welfare-state benefit transfer payments... house prices will crash in a way to melt many people's minds.

It won't be so bad for those who have much equity in their property, especially if fully-owned outright, but will be hard-going for those who have big mortgage(s) debt.

People are increasingly being educated to the consequences of the credit-crunch and deflation, as their perceived realities crash down to the real reality underneath.

The massive credit boom is over. House prices near tripling in 11 years was not based on any sound economic principles, except was fuelled by increasing multiples of cheap easy credit.

Shockwaves from Woolies’ £1 sale talks

One man appears to have had a lucky escape. Malcolm Walker, the founder of Iceland supermarket chain, offered £50m for Woolworths’ stores just three months ago. The fact that these could now be sold for £1 shows just how quickly things have declined.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/3486419/Shockwaves-from-Woolies-1-sale-talks.html

IveSeenTheLight

macaque wrote: »

What I said was "The problem is witless people buying multiple homes when they have no idea how much to pay or how to manage them." That is not the same thing as saying that everyone who buys multiple homes is witless. However, you saw enough of yourself in the desciption to go on the defensive. For the most part, people who rely on the "I'm in it for the long term" rationale for making investment decisions would do better opting for premium bonds. You are sitting on leveraged assets which are deflating at a rate of 20% a year.

No, what you said was

macaque wrote:

How often to we hear the phrase 'I'm in for the long term'. This is the default response from clueless people trying to rationalise stupid decisions.

I wasn't being defensive, I was pointing out that I have previously stated that "I'm in it for the long term" and how by the info I provided showed that your statement was irrational.

As for sitting on a leveraged asset deflating at a rate of 20% a year. I can tell you that the area my properties are in are -currently 2.23% YoY.
My most recent purchase is still sitting at +16.25% since I bought it.
The tenants are paying more than double the interest on the property mortgages.

I'm still happy that in the long term this is a good decision for me.

IveSeenTheLight

dopester wrote: »

Didn't you only buy the first one a few years back? And then your second BTL at the near peak? OK not the peak to the very day... but in 2007... allowing you to get some late on HPI in Aberdeen, but essentially the peak when you consider just how much house prices are going to crash.

So many people, mitchaa included, dismiss unemployment risks, and pay-cut risks even more.... claiming they can walk into another job at better pay... yet time and again these days, as businesses feel the downturn of their profits, the education of reality is coming to so many people who can only understand good times.

http://www.dailymail.co.uk/femail/article-1087204/A-middle-class-recession-One-moment-youre-planning-holiday-youre-abyss-.html

Yawn, unemployment risks again dopester.
I don't live by what if. The percentage made unfortunately unemployed is a very small fraction when compared against those still in work

As for the claim of walking into another job with more pay. I've previously advised you that I recently changed positions with a 35% increase and know of another who moved jobs for a 20% increase.
I know one other guy who changed companies this week. Don't know his percentages, but I would put my properties on it that it was for more than he was on in his previous position.

Now I know that this is not seen accross all industries, but some have limited experienced personnel and are still doing very well.

macaque_2

IveSeenTheLight wrote: »

No, what you said was
I wasn't being defensive, I was pointing out that I have previously stated that "I'm in it for the long term" and how by the info I provided showed that your statement was irrational.
As for sitting on a leveraged asset deflating at a rate of 20% a year. I can tell you that the area my properties are in are -currently 2.23% YoY.
My most recent purchase is still sitting at +16.25% since I bought it.
The tenants are paying more than double the interest on the property mortgages.
I'm still happy that in the long term this is a good decision for me.

I was prepared to give you the benefit of doubt but this post has shattered my belief in you.

"My most recent purchase is still sitting at +16.25% since I bought it."
How on can anyone value capital gains to 2 decimal places at the best of times let alone in the middle of tumbling prices.

"The tenants are paying more than double the interest on the property mortgages"
This is another common mistake made of amateur BTLs. The soundness of your investment in terms of income has to be calculated on asset value not outstanding mortage. For example if you had a £10k mortgage on a £2m house and rented out for £10k a year, you would return would be 100% on the mortgage but 1/2% on the asset.

"the area my properties are in are -currently 2.23% YoY."
This statement worries me on so many levels. First of all you are back to the 2 decimal place problem. Secondly, the value of your home is what you sell it for, not what the statistics tell you. Thirdly, year on year stats are pretty meaninless when we are sitting at the wrong bit of an inverted hockey stick curve. Finally, any where in the country that is publishing 2% price shifts YoY is a statistical abberation.

silvercar

This is another common mistake made of amateur BTLs. The soundness of your investment in terms of income has to be calculated on asset value not outstanding mortage. For example if you had a £10k mortgage on a £2m house and rented out for £10k a year, you would return would be 100% on the mortgage but 1/2% on the asset.

The problem then is that falling asset values increase the rental yield; giving the impression that what isn't covering the mortgage is now a good investment.

IveSeenTheLight

macaque wrote: »

I was prepared to give you the benefit of doubt but this post has shattered my belief in you.

It's nice how you managed to turn it arround from an irrational comment from yourself to questioning my position on a few short sentences.
It's very similar to the type of response !!!!!!? gives, managing to say something but not answer the question posed.

Maybe you should be in politics as well.

But let me try and clarify a bit deeper for you.

macaque wrote: »

"My most recent purchase is still sitting at +16.25% since I bought it."
How on can anyone value capital gains to 2 decimal places at the best of times let alone in the middle of tumbling prices.

I agree to an extent with you. The percentage is taken from RoSEA figures for my area and does not go deep enough into the type of property or the exact location. I only use the percentage as a very rough guide.
However, you will agree that you could never calculate actual capital gains or losses until the property is sold.
Something I wont see for a long time as "I'm in it for the long term"

macaque wrote: »

"The tenants are paying more than double the interest on the property mortgages"
This is another common mistake made of amateur BTLs. The soundness of your investment in terms of income has to be calculated on asset value not outstanding mortage. For example if you had a £10k mortgage on a £2m house and rented out for £10k a year, you would return would be 100% on the mortgage but 1/2% on the asset.

I do not have a £10k mortgage on a £2million pound property and if I did, £10k annual rent would be way too low. The Rental yield would only be 0.5%.
Trying to keep it simple, BTL as an investment has to be treated differently to other types of investments due to the illiquid nature of the assett.
I only mentioned the rent to interest payments to try and show that the tenants are paying a huge percentage into paying off the capital and even in the worst of conditions I have quite a bit of manouverability.
I've said before that I don't run a normal BTL investment strategy. I actively reduce the outstanding debt.
My profit is not for now, its for the "long term"

macaque wrote: »

"the area my properties are in are -currently 2.23% YoY."
This statement worries me on so many levels. First of all you are back to the 2 decimal place problem. Secondly, the value of your home is what you sell it for, not what the statistics tell you. Thirdly, year on year stats are pretty meaninless when we are sitting at the wrong bit of an inverted hockey stick curve. Finally, any where in the country that is publishing 2% price shifts YoY is a statistical abberation.

similar answer to your first point.
Figures taken from the RoSEA so don't understand how the stats can be seen as an abberation
You are correct, percentage capital gain / loss is only seen when the property is sold.
Something I am not going to see for quite a while as "I'm in it for the long term"

While I am waiting to see the capital gains or losses (and it could be 30-40 years). surely it's worth using similar property figures as a guide.

Answer this one simple question?
Do you believe the following statement is rational or irrational?

Originally Posted by macaque
How often to we hear the phrase 'I'm in for the long term'. This is the default response from clueless people trying to rationalise stupid decisions.

RDB

So is the general opinion 70% average drops country wide? including London?