How low will property go?

chucknorris

Crashy_Time wrote: »

Chuck is at least a couple of years too late probably, as I told him many times, but some people just can`t sense the changes as they blow through, Chucker is definitely one of the richest/ smartest guys at the party..... until he isn`t :rotfl: The microscopic clown collective that post on here are definitely a good reflection of the wider HPI mania that took over UK society for a decade or so, and they will no doubt wonder what happened as all their imaginary gains blow South for the credit winter that is approaching.

When will you finally realise that it isn't/wasn't about capital growth, it is/was always about income! I first invested in the early 90's because I wanted to become financially independent, and I achieved that many years ago. What is really ironic is that you think that I am obsessed with house values, but it is actually you that is obsessed about this, not me, what I focus on (and always have done so) is the income. You don't just walk away from an investment which produces £150k rental income per annum, simply because you think the capital value might have peaked, the capital value is not as important as the income. How many times in the past have thought property had peaked? If we had sold back then, we would have literally less millions than we have now. The correct time for us to sell involves consideration of more variables:

1. Age, selling at a point in time when I no longer want the hassle of being a landlord (not quite there yet, but getting close). In December I drop down to working only one day a week, so it probably won't feel like hassle any more.

2. Age again, selling at a point when I still have enough years of life left to spend the equity (I am nearly there).

3. Where to invest the equity, how much will the income drop with the alternative investments, this is inevitable, but 1 and 2 are more important and will drive the decision, nevertheless this is also important.

4. Selling before a significant crash (we finally get to what you think that it is all about), I don't think that we are going to get one, but even so points 1, 2 and 3 above take precedence (after all shares can fall just like property).

5. Even after selling, my wife (who is 11 years younger than me) will still keep some property to maintain portfolio diversity, and we will also be upsizing our home too, we have identified that as something definitely worth doing, in fact we will be doing that as early as next year.

When I first invested, my outline plan was to sell up when I was about 60, I'm 59 in January, so I haven't really diverted from my original plan over 25 years ago.

economic

Chuck - if you were in my position what would you do? i too want to be financially independent. i own one property where i reside worth about 600k. about 35% ltv. very manageble debt. i also have other savings and investments (including pension) of around 400k.

now my parents are 60 and have quite a lot of savings and properties that will pass down to them from their parents. so they will start now by gifting some cash. they will give me around 100k soon. question is do i buy another property? or do something else?

i was thinking buying a one bed (400k or so) in a nice area in london and let out this two bed i have now. a one bed is all i need. you mention in real terms prices have peaked i agree as well. but certainly a diversified stream of income is what i should try to achieve? income from property, stocks and cash? i am 33 so have time on my side but i also want to make the right financial decision. aim is to be financially independent soon as possible.

chucknorris

economic wrote: »

Chuck - if you were in my position what would you do? i too want to be financially independent. i own one property where i reside worth about 600k. about 35% ltv. very manageble debt. i also have other savings and investments (including pension) of around 400k.

now my parents are 60 and have quite a lot of savings and properties that will pass down to them from their parents. so they will start now by gifting some cash. they will give me around 100k soon. question is do i buy another property? or do something else?

i was thinking buying a one bed (400k or so) in a nice area in london and let out this two bed i have now. a one bed is all i need. you mention in real terms prices have peaked i agree as well. but certainly a diversified stream of income is what i should try to achieve? income from property, stocks and cash? i am 33 so have time on my side but i also want to make the right financial decision. aim is to be financially independent soon as possible.

Obviously you have to decide for yourself, but I think property is very high in London, at current values I would rather invest in equities, but obviously they can (and will) fall too. But as I said above, I think income is more important than capital growth and shares offer certain advantages over property:

- It is easy to avoid capital gains tax
- Dividend income is more favourably treated for income tax than rental income

I do agree about portfolio diversity though, I think if I was you I would be looking at what my various portfolio asset class (property, equities and bonds (I don't do bonds at the moment but I will eventually) percentages would be in about 10-15 years time. That might tell you more about where you should invest.

economic

chucknorris wrote: »

Obviously you have to decide for yourself, but I think property is very high in London, at current values I would rather invest in equities, but obviously they can (and will) fall too. But as I said above, I think income is more important than capital growth and shares offer certain advantages over property:

- It is easy to avoid capital gains tax
- Dividend income is more favourably treated for income tax than rental income

I do agree about portfolio diversity though, I think if I was you I would be looking at what my various portfolio asset class (property, equities and bonds (I don't do bonds at the moment but I will eventually) percentages would be in about 10-15 years time. That might tell you more about where you should invest.

yes very good points - thanks.

currently my split is as follows:
- property - 50%
- equities - 25%
- cash - 25%

ideally i would want more in equities so am looking to buy more soon. if i release 100k in my current property plus 100k gift and buy the 400k property with a 50% ltv my portfolio splti would be like this:

- property - 60%
- equities - 20%
- cash - 20%

not a huge difference to before mainly becasue of me releasing equity. plus any additional income after expenses would go to stocks so would grow more.

the other alternative is to let ou tmy two bed and rent a one bed so that the rent i pay for the one bed is lower then the rent for two bed.

chucknorris

economic wrote: »

yes very good points - thanks.

currently my split is as follows:
- property - 50%
- equities - 25%
- cash - 25%

ideally i would want more in equities so am looking to buy more soon. if i release 100k in my current property plus 100k gift and buy the 400k property with a 50% ltv my portfolio splti would be like this:

- property - 60%
- equities - 20%
- cash - 20%

not a huge difference to before mainly becasue of me releasing equity. plus any additional income after expenses would go to stocks so would grow more.

the other alternative is to let ou tmy two bed and rent a one bed so that the rent i pay for the one bed is lower then the rent for two bed.

Whatever you do you are in a good position, I don't think you need any advice, you seem to have a grasp on what the important factors are.

kinger101

Crashy_Time wrote: »

Chuck is at least a couple of years too late probably, as I told him many times, but some people just can`t sense the changes as they blow through, Chucker is definitely one of the richest/ smartest guys at the party..... until he isn`t :rotfl: The microscopic clown collective that post on here are definitely a good reflection of the wider HPI mania that took over UK society for a decade or so, and they will no doubt wonder what happened as all their imaginary gains blow South for the credit winter that is approaching.

Microscopic clown collective? Complete and utter drivel.

Most people just want a home they can afford, and which they'll eventually own. In case you hadn't noticed, pensions in the UK aren't brilliant, so not having to pay rent until the day you die is good retirement planning. They also want some security of tenure, and not to have to ask permission to do basic things like own a pet or paint a wall blue.

You only really expose yourself to losses on property if you sell in the short-term in a falling market. Even if you bought a house 10 years ago and it's worth the same price today, you'd have a good chunk of equity from paying off the mortgage. For example, if I bought a house for £150K with a £135K mortage, even at 4% I'd now have about £55K of equity instead of £15K. Even falls in prices don't matter within the same geographical region. In fact, they make upsizing cheaper.

But rather than look at the realities, it's better to string three random words together to make a non-nonsensical insult isn't it. Because you're part of the intergalactic dimwit circus.

Jason74

Crashy_Time wrote: »

Chuck is at least a couple of years too late probably, as I told him many times, but some people just can`t sense the changes as they blow through, Chucker is definitely one of the richest/ smartest guys at the party..... until he isn`t :rotfl: The microscopic clown collective that post on here are definitely a good reflection of the wider HPI mania that took over UK society for a decade or so, and they will no doubt wonder what happened as all their imaginary gains blow South for the credit winter that is approaching.

You are hilarious, I'll give you that :T :beer:

chucknorris

Jason74 wrote: »

You are hilarious, I'll give you that :T :beer:

The funny thing is that it is him that is obsessed with house prices, yet he accuses others (including me), you could almost understand it if I was (given my investment), but he doesn't actually have any reason to care what values houses are, yet he goes on and on about house prices like a broken record :rotfl:

lisyloo

mwpt wrote: »

Too late? Does that mean you think there are price drops occurring around London? I see that the out of reach to any normal person areas like Kensington and Chelsea are seeing price drops, but in my area, I don't see reductions in asking prices.

I'm not seeing any reductions in Westminster at the moment, but I think it'll harder to sell than it was previously with many buyers sitting on the fence.

Crashy_Time

chucknorris wrote: »

When will you finally realise that it isn't/wasn't about capital growth, it is/was always about income! I first invested in the early 90's because I wanted to become financially independent, and I achieved that many years ago. What is really ironic is that you think that I am obsessed with house values, but it is actually you that is obsessed about this, not me, what I focus on (and always have done so) is the income. You don't just walk away from an investment which produces £150k rental income per annum, simply because you think the capital value might have peaked, the capital value is not as important as the income. How many times in the past have thought property had peaked? If we had sold back then, we would have literally less millions than we have now. The correct time for us to sell involves consideration of more variables:

1. Age, selling at a point in time when I no longer want the hassle of being a landlord (not quite there yet, but getting close). In December I drop down to working only one day a week, so it probably won't feel like hassle any more.

2. Age again, selling at a point when I still have enough years of life left to spend the equity (I am nearly there).

3. Where to invest the equity, how much will the income drop with the alternative investments, this is inevitable, but 1 and 2 are more important and will drive the decision, nevertheless this is also important.

4. Selling before a significant crash (we finally get to what you think that it is all about), I don't think that we are going to get one, but even so points 1, 2 and 3 above take precedence (after all shares can fall just like property).

5. Even after selling, my wife (who is 11 years younger than me) will still keep some property to maintain portfolio diversity, and we will also be upsizing our home too, we have identified that as something definitely worth doing, in fact we will be doing that as early as next year.

When I first invested, my outline plan was to sell up when I was about 60, I'm 59 in January, so I haven't really diverted from my original plan over 25 years ago.

But you have been pontificating on here for years every day about whether or not to sell up? Thought you had a team of guys that did your repairs and management for you, you should have with all those millions, so why is it a hassle? You either want to keep the income stream or you don`t, why the drama? Warren Buffet is much older and richer than you and seems to able to enjoy himself and the use of all that money, why are you so conflicted about how to spend your money/time :rotfl:Start giving it away to good causes mate, you will feel much better inside.