The Market Astounds me!

BobProperty

Two points:

poopscoop wrote:

....I think the majority (and I) know that the market is overvalued, but we just get on with life.....

This is supposed to be a money saving forum. Some of us are suggesting that it may not be a good idea to borrow money to make the biggest purchase of your life when interest rates are about to go up and the item you are buying is at, or near, the peak of its price in a cyclical market.

mystic_trev wrote:

... It's a bit like the Goldrush - the only people who made money in the "Klondike" where those who were there at the begining!....

And shovel sellers

poopscoop

BobProperty wrote:

Two points:

This is supposed to be a money saving forum. Some of us are suggesting that it may not be a good idea to borrow money to make the biggest purchase of your life when interest rates are about to go up and the item you are buying is at, or near, the peak of its price in a cyclical market.

In my area(s) the peak was last year and prices have dipped a bit since then. Still expensive but not as expensive as last year.

People make good suggestions, people also repeat.

poopscoop

mystic_trev wrote:

The problem with this whole BTL thing is it's all getting toatally out of control. Friends have been asking me advice about buying, and although I try to warn them off, they assume as I've made a great deal of money out of it, they can too. It's a bit like the Goldrush - the only people who made money in the "Klondike" where those who were there at the begining!

Whoa, you were really there at the very beginning when man first decided to build property? Hey all we have the pioneer of property right here :T

poopscoop

meanmachine wrote:

Did you buy them, by the way?

Genuine inquiry.

I've made my offer, if it's unsuccesful I will need to look elsewhere to set up my other nursery.

Regards

Ems*Honie

I have no idea, Mr is the one for stuff like that,, I just like the excuse to spend time talking to you guys


Slight change of direction, I live in an area considered 'up and coming' by phil and kirstie (clearly I must have bought a house in a hole) Is there any credence in putting your money into areas that are undergoing rejuvenation?

Ems*Honie

Well I cant get hold of him, so, if someone else would like to do the sums?

Property is valued at 140000

mortgage 115000 (we're moving the equity across to the other house)

monthly rental 650

All our legal/transfer fee's are included in the mortgage.

Conrad

mystic_trev wrote:

a misconceived idea that House prices can only go up!!! You can see some of these on this forum. Many are MEW’d up to their eyeballs and have bought these “Investments” using their homes as security.

Exactly the point.

These new investors dont really understand the concept of investing.

Most didnt consider B2L in the 1990s when it was 'buy time'. They want to buy now based on whats gone before.

Ive sold my B2Ls as I now want maximum exposure to new arena's, in particular those where prices are low.

Investing abroad the key area for me.

In 2002/3 I went much more heavily into the stock market because it had crashed. Almost everyone I knew did the opposite. Just when it was the ideal time to buy they closed thier minds to the idea, IE - "its crashed so it will keep crashing". The SM has massively outperformed property during that time even the simple to understand managed funds which anyone can understand and access.

Now with high priced risky UK property they again invest based upon recent expereince "its gone up, so it will keep going up".

Now they tell you "I dont care if it crashes Im in for the long haul".

This statement simply is'nt accurate. I recall a lot of property people loosing everything in the last crash. Those that survived had years of misery PAYING A MORGTGAGE ON A PROPERTY WORTH LESS THAN THE DEBT - in other words throwing money at a black hole.

I too want my kids to have a good start, WHICH MEANS MAXIMISING THE RETURN ON MONEY INVESTED SO THAT THEY WILL HAVE MORE WHEN THE TIME COMES.

I truly want to help people and not see them suffer. All I urge is that people explore all the options and dont simply go for UK B2L because its dome well the last few years.

Conrad

poopscoop wrote:

Whoa, you were really there at the very beginning when man first decided to build property? Hey all we have the pioneer of property right here :T

Poop there is a beginning and end to all investments. People who made the real money from the California gold rush or UK B2L were those that did it early.

Same with last property boom. Same with dotcom shares (a freind of mine made £6m and retired in his thirties - he sold a year before the crash as he spotted the market was too overdone and crowded).

Fine if people want to get into B2L now but dont expect a decent return for a long time, especially when the pre - 2006 rally ends shortly.

perlof9

Im seriously thinking about buying a flat in Romania. Romania is due to join the EU soon. Also the recent Channel4 program had Romania has the number one investment opportunity for property. Has anyone bought in Romania whi has relvant information to share?

Conrad

Ems*Honie wrote:

Well I cant get hold of him, so, if someone else would like to do the sums?

Property is valued at 140000

mortgage 115000 (we're moving the equity across to the other house)

monthly rental 650

All our legal/transfer fee's are included in the mortgage.

Interest payments @ 5.45% = £523 (interest only so not paying off the house)

Rent = £650 (but rents falling so might be less)

Leaves = £127

Other costs = annual gas checks, agents fees, maintenance and repairs = £50

Leaves = £77.00

Allow for the odd rental void, say £25.00 per month

Leaves = £52.00

Now this doesnt allow for your purchase and mortgage arrangement costs btw.

Now your £25000 deposit would earn £90.00 per month in Bank interest at 4.5% and note this would go up as the interest is added to the capital.

Id rather stick the £25000 in an offplan foreign property with the balance (say £40000) payable in 3 years time when the place is built. You could sell - on the contract just prior to completion (having parted with just £25000).
In the right location there is no reason you wont sell the contract for £120000.
Alternatively certain SM investments for example investing in Indian companies ought to give a far greater return than UK B2L over 5 years, but of course nothing is guaranteed so spread it about.