UK subprime

macaque_2

I need to dispose my portfolio in negative equity.about -50k, total value is about 3M. cash flow 100k+/y
I am looking for companies either taking it over with:
a, straight purchase (no lease option!)
b, "guaranteed" management,

as for the option b, I have heard there are companies specialising taking over portfolios and managing them if the landlord is in financial trouble or any other reasons. Not sure if it is true, can somebody please advise?
http://propertytribes.ning.com/forum/topics/disposing-of-a-portfolio-in?id=2886658%3ATopic%3A187830&page=1#comments

According to one of the responders, cases like this are 'very common'!

Your situation is a very common one unfortunately

Clearly this borrower's greed is only exceeded by his incompetence. How is it that he still has any say over events? Are the lenders that negligent? Or is it a case of the lender preferring to look the other way rather than acknowledge another fat slice of subprime debt?

If this kind of basket case is going under the radar screen, its no wonder that the UK is delivering stats on sub prime debt that defy common sense.

PaulF81

Until they go cashflow negative, its not really an issue though is it? Until rates go up, I dare say they dont face major issues.

And if anything this sort of case re-inforces in my mind that when rates do go up, they wont be going up by much, as there will be plenty of overindebted idiots below me that will be causing mass defaults well before I face problems.

Got to say though, their yeild is pretty poor, meaning they wont have much flex when rates do start to rise.

Thrugelmir

No one is going to overpay for the assets. Given that the net yield is only 3%.

Graham_Devon

How many went through this in Ireland?

Reading that thread, it all seems to hang on interest rates for many of those landlords. Theres someone who's break even point is BOE rates of JUST 2.5%.

Then theres a company who over the past 4 years has / is working with 1,423 clients to exit the property industry. 1,423!! Who do you sell all of this too?!

julieq

Graham. 1,423 clients is a drop in the ocean.

Anyway here we have the usual Macaque nonsense. Firstly this isn't anything to do with "subprime" lending. It's about someone managing a portfolio of rental properties, and looks like they're managing it badly. So what? The fact that someone manages a business badly doesn't mean a business sector is problematic, it just means that someone is managing a business badly.

You really are all going to be sorely disappointed when interest rates rise and prices rise with them - historically this has been what happens. You will figure it out eventually, but please don't put your life on hold waiting for interest rate induced falls which aren't going to happen.

Thrugelmir

julieq wrote: »

You really are all going to be sorely disappointed when interest rates rise and prices rise with them - historically this has been what happens.

Past performance in no indication of future performance.

Something which is a given certainty in the ongoing financial situation we are in.

RenovationMan

There are always a minority of people who jump onto a particular bandwaggon such as BTL, thinkling it's easy money and finding that it's not.

It might be the case that many of these landlords will have to pay more of their personal money into their BTL businesses, paying down the mortgages until they reach a point that the buisiness is self-sustaining. This is no different from any start-up business. A lot of companies make a loss in their early years. I seem to remember that Amazon made large losses for a long time when they first started out.

The bottom line is that as an investment, BTL is still holding its own when compared with other investments, especially for those people who have very little financial know how or accumen. If these landlords tighten their belts and overpay their mortgages, they could still look forward to having their properties mortgage free and having a decent income in retirement. How many others can expect that?

tartanterra

macaque wrote: »

According to one of the responders, cases like this are 'very common'!

Well, if one person on an obscure website claims it's "common", then clearly it must be true.

You should apply for a job at the Office for National Statistics. It would be a true revolution in how we see the wider economy. No need for any time consuming research is there? Any time you need to gather information, you can just pop out into the street and ask any passing stranger what the facts are.
In a stroke you can do away with all that form filling, demographics and statistical analysis.

I don't know why it's never been thought of before!:D

Thrugelmir

RenovationMan wrote: »

It might be the case that many of these landlords will have to pay more of their personal money into their BTL businesses, paying down the mortgages until they reach a point that the buisiness is self-sustaining.

Often 3 years for a start up. Precisely where BTL fails if 100% leveraged at the outset. Yields are to low currently to generate sufficient return to repay the capital debt over the term of the mortgage.

RenovationMan

Thrugelmir wrote: »

Often 3 years for a start up. Precisely where BTL fails if 100% leveraged at the outset. Yields are to low currently to generate sufficient return to repay the capital debt over the term of the mortgage.

Not sure you can generalise over the entire country whether the yields are sufficient to make BTL pay. Certainly someone looking into BTL as a way of providing an income in retirement, they have to make sure of their sums, which is pretty much the same for any investment really.

HAMISH_MCTAVISH

Thrugelmir wrote: »

Yields are to low currently to generate sufficient return to repay the capital debt over the term of the mortgage.

No they're not.

https://forums.moneysavingexpert.com/discussion/3893377

And they're only going to get higher over the term of that mortgage.

https://forums.moneysavingexpert.com/discussion/3893393