1st time buying a flat - and so so sorry for this!!!

jumperabv3

Greetings from New York.

I have decided I wanted to invest in the UK and buy a property with all my savings, which is a huge huge amount for me, but I figured London is a safe place and I've done lots of research before doing it.

I managed to save around $600,000 - and about 2-3 weeks ago I converted that money to £370,000 GBP .... in a purpose to buy a 2 bedroom flat in a very decent location (Wanstead) after doing all the research that I could - I don't think the flat or the location is bad, I just think the £££ is bad !!!

The GBP (£) has lost so much value against its counterpart USD ($) - and today if I wanted to exchange the £370,000 GBP I bought - I would get $568,000 USD in return (in the good case) - and that means $32,000 LOSS!!!

And it looks like it won't be the end for it and that the GBP would keep on declining ... what should I do now? I have already exchanged contracts and I'm about to buy the property after placing 10% deposit - but I've started to lose my faith in both the GBP, London and investments there .... I should have just made that investment in New York! It feels terrible to lose $32,000 dollars (

What should I do now?
Continue with my original plans and get the flat, or do whatever I can to get hold of the dollar ?!?!

Anyone can help?!?!
Thanks so much!

missile

Hi,

It seems you have not thought this through.

I assume you intend to rent this property? Is this your first venture as a LL? Being a LL is not easy money and it is difficult to manage property from a foreign country. You will need a good agent and he is the one who will profit from your investment. Have you worked out a rental return on your investment?

I would cut my losses, but unfortunately you have exchanged contracts. Speak to your solicitor.

Loopgames

First of all you have to stop regreting what you did when you did it. No one can predict the future. So make the most of what you have got.

Right now you have found a property in wanstead, an area i personally visit regularly (especially belgique near the park and
Library! It is a lovely place).

You have two choices, either continue with your plan or change plans midway and lose some money in the process. Making decisions when you are in a panicky state is not a good move imo. But you have to decide.

I would continue with it although would have bought a house with that money in the ilford area which rents well also. Not as nice as wanstead but the roi may be more.

PasturesNew

jumperabv3 wrote: »

I have already exchanged contracts and I'm about to buy the property after placing 10% deposit

If you have exchanged, you are legally obliged to complete. If you do not complete, the seller has the right to sue you for all their losses, including the difference between what you were going to pay and what they end up selling it for if it is less.

You exchanged,.... you have to complete really. You have to forget about your fears.

DannyboyMidlands

I don't see why this has suddenly become a worry. Exchange rates are always going to fluctuate.

Bufger

GBP isnt getting weaker against the USD, its getting stronger but in your case that is a bad thing (for us it means it costs us much less to go on holiday, buy property etc in the States).

You should have researched this beforehand as property investment from a weaker into a stronger currency is a tricky game. The USD hasnt been strong against the GBP for a while now.

Anyway I digress - do you know what you will use this property for? do you intend to let it or have it as a holiday home etc? do you know what the rental market is like in that area and do you have any experience of being a landlord? you'd also need a letting agency or someone to manage the property as its not as if you can just pop down to london to sort it out.

You've exchanged contracts, your losses now would be massive if you pulled out.

jumperabv3

DannyboyMidlands wrote: »

I don't see why this has suddenly become a worry. Exchange rates are always going to fluctuate.

Fluctuate - yes, no problems.
Fall 6% in less than a week - that's scary.

Right now if I wanted to convert back the £370,000 GBP I would get around $565,000 - so basically my initial investment of $600,000 has already started with $35,000 LOSS (I think in USD as this is the currency I want to end with) - I keep asking myself why I haven't waited before exchanging the GBP and why I haven't done anything between then and now - but I guess I told myself it can go up same way it went down ....

Now I'm completely freaking out the GBP would fall to PARITY with the dollar in this direction or lose another 10% of its value against the USD - it's hard to proceed with your investment when this happens ....

No, I couldn't forsee it coming, I just don't know what to do now - it seems like you're less worried about this, but I'm starting to fear if the GBP falls so much in the markets - perhaps the real estate will fall as well ... financial crisis normally does make prices go down ..... look @ Hong Kong in 1997, I don't know if London will follow suit ... but I AM WORRIED and don't know what to do ...

Cut my losses maybe by $40,000 and end up with nothing?
Or just get the flat and take a risk with it?

I just don't know what to do ... I just feel terrible for being in this state... It's not even 5 in the morning here in NY and I cannot sleep.... I'm just full of worries now.

jumperabv3

Bufger wrote: »

Anyway I digress - do you know what you will use this property for? do you intend to let it or have it as a holiday home etc? do you know what the rental market is like in that area and do you have any experience of being a landlord? you'd also need a letting agency or someone to manage the property as its not as if you can just pop down to london to sort it out.

You've exchanged contracts, your losses now would be massive if you pulled out.

I am looking to buy to let, I have a management company to look after the flat, I'm not worried about them taking 10% ... I did it because I know Wanstead is quite a "solid" area, it's not an area that will appreciate by 20% in the next coming years but also won't fall by 20% ... it goes up steadily .... I just wanted a safe / solid place to invest in, my return after all fees taken into consideration would be around 3.6% - I'm not looking into high yields really, didn't wanna be greedy, just wanted a safe place to put the money in ... and now I'm all worried.

I've done all the research that I could before going there, I have no problems myself coming to London every once in a while - right now what worries me is the fact that the GBP has fallen more than 6% in just a week or two against the USD ... it's in a FREE FALL right now ... and as I explained I've lost almost $40,000 in terms of dollar values of my investment ... I know currencies fluctuate but right now I don't know what will happen - it looks like if I just continue with my investment I might end up "losing" $100,000 or more in some point before the exchange rate will correct itself (and if it will ever correct itself who knows)

I am worried about the exchange rate, nothing else is bothering me.

ILW

Cancell the deal and instead a have contact who can supply you a flat in the historic,, quaint London location of Thamesmead for around the same money. (for a small commission). Virtually guaranteed to make you a fortune.

Ivana_Tinkle

jumperabv3 wrote: »

Cut my losses maybe by $40,000 and end up with nothing?

I don't see how that's an option. If you've exchanged contracts then you are legally obliged to complete the purchase, or you stand to lose a lot more than that.

Are you saying that you've exchanged the money into £ but haven't exchanged contracts on the flat yet? If that's the case then, yes, definitely don't go ahead with the purchase as, at the risk of sounding rude, you don't seem very well informed about what you're getting yourself into!

jumperabv3

Ivana_Tinkle wrote: »

I don't see how that's an option. If you've exchanged contracts then you are legally obliged to complete the purchase, or you stand to lose a lot more than that.

Are you saying that you've exchanged the money into £ but haven't exchanged contracts on the flat yet? If that's the case then, yes, definitely don't go ahead with the purchase as, at the risk of sounding rude, you don't seem very well informed about what you're getting yourself into!

I've already exchanged the $ into £ - the £ is in a free fall right now in the markets, everyone is selling it without thinking twice, I am not sure why, I just know that's what's happening as we speak.

I've also already exchanged contracts - so I MUST go ahead with the purchase - the question is what do I do now?! What's the best thing to do? Yes, I might have not been well informed what I'm getting myself into - what should I do now, just let it go and suck it up? Am I in panic for no reason? What would you do if you were in my position?