Interesting Post on MFW Board

Eellogofusciouhipoppokunu

I know that several people in here don't venture outside this board, so I thought I'd re-post this here for discussion:

https://forums.moneysavingexpert.com/discussion/comment/57372845#Comment_57372845

"With an intial starting budget of £50K I bought into the london market on a decent rate 15% LVR. Within 18 months saw a increase of 25% in property value, re-mortgaged again at 15% to release the increased capital, which has then been put into a property (actually 2 connected properties) on the south coast that had been on the market for 2 years and reduced by 35%. I'll do these properties up over the next 6 months (while living in them and renting my london house), split them onto seperate leases (as they were just on one freehold), then re-mortgage as seperate properties - hopefully at values increased enough from my purchase price that I can get some more equity to put into property number 4.

The point being from above, that although we all dream of living in a mortgage free property, there is more than one way to get there if your prepared to be flexible and take risks - even in the current market (actually this may help as when else could you have you been able to get 35% of a house price - which itself was already knocked down significantly from its 2007 high)."

Anyone thinking of doing anything similar? I know we have several BTL landlord in here, though probably not too many who are willing to take on this sort of risk?

Jegersmart

If I am looking at this as purely an investment (i.e. I have no need to live in these properties etc) then according to my own rules I would need to know at the very least what my maximum loss would be. In my view, this could be tricky. I also tend to only invest in instruments/commodities that have a transparent price discovery process, so that at the very least I can get daily valuations of how my positions are doing. That is not to say that this would not be a good investment, and to be clear if I did do something like this again that I would probably only do so if I put down 25% minimum on each property and I would not re-leverage existing properties in order to manage my risk.

HTH

J

chewmylegoff

I'm out. I'm relying on my amazing world famous interest rate gamble instead.

chewmylegoff

Plus the poster just looks like he committed mortgage fraud when he remortgaged. 25% increase in capital value in 18 months with a £50k deposit on a house worth £333k my @rse. Maybe you might have seen that sort of increase in prime central London but that money wouldn't buy a studio there.

Generali

I agree with chewy: the story does seem a little unlikely.

The underlying point is a reasonable one. If you take a risk you can make a profit and if you are prepared to use your great advantage as a small business and be nimble then you can turn a losing situation into a winning one.

He's not made a profit yet however and investing money into assets that are failing (ie dropping in value and not producing any income) is at best counterintuitive and possible quite dumb.

Still I wish him/her luck.