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

chris_m

jumperabv3 wrote: »

It's not too late to pay upon completion and sell the property and then look for something else in NYC (might find something for $550k) ... but I'm not sure if that's the right thing to do,

Undoubtedly not. You'd be instantly writing off the costs of both buying and selling along with potentially the risk of not selling for as much as you paid plus the effects of any adverse variations in the exchange rate - simply because the short-term view has given you cold feet.

or perhaps the right thing to do is just to SIT with this investment and let it go.

TBH, that would be my view - yes, things could get worse in the short term but, equally, over a longer period they could get better. No-one knows for sure.

The impression I get is that you made a fairly snap decision to go into this and are now considering making another one without waiting for things to settle down. In retrospect, your first decision was probably not the right one but to bail out immediately is almost certainly a worse one.

Running_Horse

From memory, mortgage lenders do not like to lend on properties that come back on the market immediately. Looks like you are stuck with your citron.

With the advantage of hidsight, I would have invested in a property or business in the country I had just chosen to live in; I certainly wouldn't need a tardis to know not to buy a leasehold flat.

jumperabv3

Running_Horse wrote: »

With the advantage of hidsight, I would have invested in a property or business in the country I had just chosen to live in; I certainly wouldn't need a tardis to know not to buy a leasehold flat.

It doesn't make me feel better now that I read this, but thanks for telling the truth in my face.

The lease is very long (250 years) so it won't expire soon. My friend also bought his leasehold flat and put his life savings (plus mortgage) into it and he's not worried and we're both living in a "foreign" country. What I didn't work out is that I was in a better poistion than hm (cash buyer) so I could afford to buy in NYC.

The thing is this flat was already reserved and because those who wanted to buy it had issues getting the mortgage they allowed me to take it... Not sure if it's true or not... Looking backwards I might have made a huge mistake in my life, now I just have to live with it.

Yes, buying a LEASEHOLD flat fOr £400k sounds stupid, although when I was in London there was a new building and all these LEASEHOLDS flats were sold like hot dogs for more than £400k and it was also in Zone 4 like Wanstead so why I need a tardis to tell me I made a huge mistake???

jumperabv3

chris_m wrote: »

The impression I get is that you made a fairly snap decision to go into this and are now considering making another one without waiting for things to settle down. In retrospect, your first decision was probably not the right one but to bail out immediately is almost 77certainly a worse one.

Your assumption is correct.
As a 1st time buyer I feel even worse.
I'm not looking to stop the purchase.
I'm just looking ahead to buy it just really
I don't know what to do now.

Forget about the exchange rate...
One guy says here new builds lose 10% of their value once someone is moving in.
Another one says you don't need a tardis to tell you NOT to buy a leasehold flat.
The service charge + ground rent is £2500 a year.

Except for great location (I hope that's right as well) I see many more downsides than upsides.
I just never invested in real estate and figured this is a "safe place" to invest... I am not sure after reading all this that you will agree with me.

Let's say I check with the solicitor and I can't pull so ok, I buy the place... Then what are the best options?

1) Do forward contract on the GBP to USD with the bank for 1 year at the current market rate for 1 year, sell the flat, get the 10% back of the deposit from the sale, convert it to USD, use the forward contract to get the USD back and lose around $50k from the low rate exchange rate, selling the flat for probably lower price etc?

In a case the GBP-USD will correct itself (not likely in my opinion) then there won't be a big loss from the exchange after all.

2) Just STICK to this investment for 20 years?

What would you have done if you were in my position?

becominganobsessivesaver

This thread is an interesting read, but essentially you are now asking for very specialised investment advice on an internet forum. If I had about half a million to play with never in a million years would I just follow the advice of some faceless randoms who thought fit to post on my thread, I'd be finding a specialist financial advisor (which may have been wise in the first place, but hindsight is a wonderful thing).
If i were you i'd speak to your solicitor, the developer and get an idea of what the options really are and the financial implications, and then find a specialist who can help you analyse the options.
To be honest I find it difficult to fathom how someone who comes across as extremely risk averse on this thread made such a risky investment based on the advice of a friend a matter of weeks ago!

societys_child

You're not the only one looking to invest in London property. The number of Greeks, Spanish, Italians looking to buy in London has grown steadily over the past year . Hope this helps calm your nerves a little.

http://london.county-homesearch.co.uk/2012/05/15/greeks-and-spanish-continue-to-buy-in-london/

jumperabv3

becominganobsessivesaver wrote: »

If i were you i'd speak to your solicitor, the developer and get an idea of what the options really are and the financial implications, and then find a specialist who can help you analyse the options.
To be honest I find it difficult to fathom how someone who comes across as extremely risk averse on this thread made such a risky investment based on the advice of a friend a matter of weeks ago!

I spoke to financial advisors and I wasn't happy with what they offered to me ... I think best friend's advice can be sometimes better than one from a financial advisor who has interest to offer you what's good for him but not for you ... My friend did the same thing and he's completely not worried about it and he thinks I will be mad/crazy to pull off from this investment.

Why do you call what I did a "risky investment"? I guess real estate in London is no longer safe, correct? Can you please elaborate on this if you can, why do you see it as a risky investment? It's not a stock in the market after all, no?

jumperabv3

societys_child wrote: »

You're not the only one looking to invest in London property. The number of Greeks, Spanish, Italians looking to buy in London has grown steadily over the past year . Hope this helps calm your nerves a little.

http://london.county-homesearch.co.uk/2012/05/15/greeks-and-spanish-continue-to-buy-in-london/

I saw the article - it means nothing to me.
Look at the graph here:

http://static.alsosprachanalyst.com/2011/01/Hong-Kong-Real-Estate-History-in-a-chart1.png

What we experience in London now is the same thing that happened in 1996 in Hong Kong and do you see the "top" of the graph? Asian Finacial Crisis hit Hong Kong and prices crashed!!

What's the diference between 1996 in Hong Kong and 2012 in London with the European Financial Crisis hitting London and causing property prices to crash as well?

I'm telling you now, I did not consider this before buying, but now I do - if you think I'm overreacting or freaking out then please let me know your opinion.

One guy says he thinks I'm a troll ... well, I'm not, I'm just worried about turning a £400k investment into a £150k one in the next course of 7-8 years, getting low rent because of it, and having to wait 20+ years for the price to return to the same where it is now ...

Why bother to get into this mess instead of simply not risking it?
The only issue the contracts have already been exchanged ... that's what worries me...

- I see GBP falling down.
- Property prices in London will fall down.
- Rent will fall down as well.

Investing in London right now is a very risky move, don't you agree?

becominganobsessivesaver

jumperabv3 wrote: »

Why do you call what I did a "risky investment"? I guess real estate in London is no longer safe, correct? Can you please elaborate on this if you can, why do you see it as a risky investment? It's not a stock in the market after all, no?

A safe investment is surely placing your funds in a bank account/government bonds - you have the guarantee you get back what you put in. There isn't any guarantee that you'll get back what you put in with property, and then there's the added element of foreign exchange, which I would consider pretty speculative/risky. I'm sure you could have got close to the 3.6% ROI from a savings account.


A risk averse investor would generally spread their investment, putting all your eggs in one basket, especially without guarantees, is pretty risky IMO.

mjdh1957

You've got half a million dollars so you're richer than 99.9% of the people who live on this planet.

If financial downturns happen life goes on. I've lived through several and though I don't have as much money as you, I have my health and my sanity so I am grateful for life as it is.

I see no reason to panic.