First Steps to Solvency

alt80

@NorthernSoulSouthernLife I’m sorry to hear you lost your husband and everything you’ve been through. Know that’s no help to you and cannot even begin to understand what you’re going through. Keep strong for you and your little one. Do you have accommodation now? Appreciate I’m a stranger on the internet but feel free to send me a message if you’re struggling - I’m in property which you will have already gathered and may be able to help / know someone or be able to point you in the right direction.

I’m terrified I’ll take things too far one day and not be able to live with the consequences, that’s why I’m on the journey because I know I’ve lived in a way that’s not sustainable prior to setting the budget I had another car and generally spent £3-4k/m more than earning. Not proud of that. Never been in arrears and have access to a lot more credit than I’ve used. Here on the journey because I want to rein it in now stop using cards. Wouldn’t say I’m a massive risk taker / gambler tbh but maybe I am compared to people on here I definitely am.

My wife wants the family life and to meet her fitness goals (100 mean that in the health way ha). I even sat through Strictly with her tonight lol usually look at stuff to buy when she’s watching that or do some work. I want a bigger house, fleet of cars, more property, owning as much as I can. I want my business to outlive me, pass it on to my son but will never force that if he doesn’t want it happy for a different succession plan but I want it to still be around in 100 years and more leave a legacy I suppose. Making money is better than sex to me by a country mile, spending it I’d be happy to be celibate for the rest of my life if it meant I had an endless stream of funds. Would sell my soul to the devil for that. Madness I know. 

@TheAble There’s literally no risk, say I had res home paid for and refinanced 75LTV, I’d get the BTLs in SPV Ltd. at 60/65LTV no PGs. Net would easily outweigh res mortgage and extra properties in portfolio to leverage further when refurbished and as and when capital value increases. Property can decrease in value agreed but over long term has always increased historically. 100% win/win. Genuinely cannot see what’s stupid about adding to portfolio?? 

@lostmyusername yes. Why did you want to know?

TheAble

I'll put it in simple terms:
You don't NEED any more properties.
Let that thought sink in for a moment.
Now I'm not saying - don't buy any more, ever. Clearly it's your area of expertise. I'm also not against risk. But as I pointed out in a previous post, you should never take a risk that would put your financial well-being in jeopardy, however remote the possibility. Remortgaging your family home to make a few extra percentage points of return *that you don't even need* is a crazy thing to do.

alt80

@TheAble Sorry I don’t really understand where you’re coming from. Not trying to be obtuse but if we’re talking needs and nothing else, I don’t even need a lot of things I have now never mind the stuff I want in the future. Human needs - food, water, shelter, enough money to pay for utilities on shelter and buy food practically nothing else. Could get that from a £50k ex-LA flat, 2 salads and a slice of toast a day and the water that comes out of the tap. Not going to be a great life but that’s the needs level all in for £50k upfront and well under £1k/m. Less than £50k upfront in some parts of the country.

I’ve needed to take the risks to get where I am tbh if I’d taken no risks I’d probably be earning about £3.5-4k/m, still live in my old house sold for £300k worth £350k now so not big money, probably still have my old RRS no other car and maybe have 3 BTLs so I don’t see why it’s crazy. Yeah spending on cars and cards is stupid I know that and something I need to stop doing but investing in as much property as I can get my hands on especially if at sensible LTVs with no PGs isn’t stupid at all imo. Just want to understand where you’re coming from on this as it’s 100% sense to me?

TheAble

But you are where you are now. Comfortably off, plenty of income. I'm not saying don't try and accumulate more, just do it in a way that doesn't risk what you have.
Here are a few risks for you:
- Your tenants start struggling to pay their rents owing to Covid or some such ( you seem to have been miraculously unaffected by this - guess you got lucky)
- Supply of credit dries up as it did in 2008 and you struggle to refinance
- Loss of your main job
- You suffer some kind of health catastrophe. Stroke/heart attack or the like. Car crash. 
All risks have their place. And some are worth taking. But you've taken enough and I would say have "made it" now. My advice, and I'm sure many on here: Pay off your debts. Pay off your house. And *then* expand - without risking what you already have.

strawb_shortcake

Your wife seems to be craving some financial security, knowing that whatever happens her family will keep a roof above their heads, there is nothing remotely wrong with this attitude it is wholly sensible. 
You want to keep remortgaging your family home in order to grow your portfolio, but should your house of cards tumble then your family home goes with it. 
My friend has his own business, earns around £100k per year, but his whole business is set around being separate from his own personal finances. His goal is to get £1m in the bank, once he has that he plans to sell up, move away and live mortgage free for 20 years on £50k (taking inflation into account) a year until his pension kicks in. 
He will likely work part time as he likes to be busy, but he doesn't want the stress that comes with running a business. 
Him and his wife like the glam lifestyle, but their thing is holidays, they can live their dream knowing they have financial security for the rest of their lives. 

mamamu

One  should never mix  business and personal finance. 

If you do, you risk loosing family home if your business goes bust. 

One can aim to repay mortgages on existing business property and then refinance them if there is wish to grow. 

warby68

Caught up after a few days away
Its exhausting just reading the endless repeats of 8 fig this and 7 fig that and levels.
Its not rocket science - your wife (and probably a very large part of the population) craves more financial security than you do. Your inability to see risk (or see it but dismiss it such as uninsurable health declines for any of you, legislative and tax regime changes and concentration risk to name a few) may explain that. Critically, your view of risk is also outside the appetite of most mainstream lenders - they do not want borrowed deposits and that is your plan.
I really believe you get it now with regard to overspending and overcommitting personally ahead of earnings but this other stuff clearly needs a lot more work if you're going to set up a medium/longer term plan that also involves you having a happy family life. 
Perhaps, and I'm sure @getmore4less has also said this several times, limit your detailed plans and the sharing of those plans to what you can achieve in say the next 2 years and agree to a rethink at the next key stage. It gives you breathing space to keep giving that blinkered stubborn head of yours even more of a shake and to start working in partnership rather than against your wife. Whether you like it or not, your wife is your partner (as a divorce would show you) and has contributed more to your success than to your problems with her behind the scenes efforts which leave you 100% free for work. When you can start saying 'we' instead of 'I' for some things, that will be a start. 
I don't doubt you can get get to another level but if its the only thing that ever matters to you I don't think it will be as rewarding as you think. Steady growth of portfolio from retentions/capital growth and a happy family life along the way however - its much easier to see how that would bring fulfilment. I think your upbringing and even how your father lives now has done a number on you even though its your FIL that gets the 'hate'. Some time trying a different path, with your wife and with professional (mental health) support might start to change your views - still only a couple of months into changing a mindset of 20+ years after all. I will say it again, the disrespectful way you speak about your wife sometimes and women in general here and on other threads is a hard read and hope that matures too. 

ladyholly

I admit I know nothing about running a property business but I have run other businesses and the first rule is NEVER mix business and personal finances unless you want to risk losing the lot. OK I know you like risk but your wife doesnt and whilst you say she doesnt work she still has a stake in what you do.

I would also dispute the not working as she keeps your home spotless, cares for your son etc. It is not paid work but it is still work. I think I said a while back if you dont think its work tell her to go away for a week or two (when we are out of lock down obviously) and you do it all to the same standard. If you find it easy then fair enough sneer at your wife not working as you seem to do, until then accept she does work she just doesnt get a pay packet at the end of the week. She does it for love and your famillies well being. If anything happened to her think how much a nanny/ cleaner/ cook etc would cost you.

enthusiasticsaver

alt80 said:

@TheAble Sorry I don’t really understand where you’re coming from. Not trying to be obtuse but if we’re talking needs and nothing else, I don’t even need a lot of things I have now never mind the stuff I want in the future. Human needs - food, water, shelter, enough money to pay for utilities on shelter and buy food practically nothing else. Could get that from a £50k ex-LA flat, 2 salads and a slice of toast a day and the water that comes out of the tap. Not going to be a great life but that’s the needs level all in for £50k upfront and well under £1k/m. Less than £50k upfront in some parts of the country.

I’ve needed to take the risks to get where I am tbh if I’d taken no risks I’d probably be earning about £3.5-4k/m, still live in my old house sold for £300k worth £350k now so not big money, probably still have my old RRS no other car and maybe have 3 BTLs so I don’t see why it’s crazy. Yeah spending on cars and cards is stupid I know that and something I need to stop doing but investing in as much property as I can get my hands on especially if at sensible LTVs with no PGs isn’t stupid at all imo. Just want to understand where you’re coming from on this as it’s 100% sense to me?

It makes no difference that there are no PGs if you use  the equity in your home to buy the BTLs because you have milked the business dry by borrowing against the BTLs for overspending.  You are mixing business finance with personal again. Even if your wife agreed to that, she would be mad to do it, then you have increased your mortgage (and the monthly repayments) and the BTLs will need to be refurbished (more costs) so if they take longer to refurbish or cost more than expected or you cannot get reliable tenants you are building up a lot of expense without any income.  A health incident or downturn or interest rate rise  very quickly means you  fall into arrears with mortgage (or build up credit card debt again) given the much larger repayments and BTLs don't sell quickly.  You have no liquidity due to your other debt. 

  I think increasing your portfolio is a good idea from the £1500 a month (or whatever it is) you should be leaving to reinvest but instead you are using it to live off because you cannot afford to survive just on the decent salary you get from your other business. Using your home as a cash cow to remedy the borrowing from the business you did to pay off the last credit card debts is madness personified.  Doing the same thing over and over.  

It does not make sense to me at all given your lack of liquidity, the vulnerability of property to recessions both in terms of capital values decreasing and tenants unable to pay due to redundancy and the extremely high level of debt you already have in terms of PCP contracts and what would be a much higher mortgage. You cannot afford to survive now without the BTL income so how would you refurbish them?  Borrowing again against your home? 

enthusiasticsaver

alt80 said:

I’m terrified I’ll take things too far one day and not be able to live with the consequences, that’s why I’m on the journey because I know I’ve lived in a way that’s not sustainable prior to setting the budget I had another car and generally spent £3-4k/m more than earning. Not proud of that. Never been in arrears and have access to a lot more credit than I’ve used. Here on the journey because I want to rein it in now stop using cards. Wouldn’t say I’m a massive risk taker / gambler tbh but maybe I am compared to people on here I definitely am.



 

Just because you have access to credit it does not mean that the banks think that you can afford it.  They have the security in terms of your properties and believe me they will use it very quickly if they think they will lose money due to you being unable to meet repayments. 

 You have prioritised repayments by borrowing on cards probably for other things in the past like food or living costs and that is the reason you have no arrears.  However you are in this perpetual cycle of debt.  You have the BTLs and the lower value house which is fine and you can survive on that.  Then you move to a bigger house with a bigger mortgage which again is ok as you have a decent LTV on that and the BTLs are taking care of themselves. Then you go mad and take three PCP contracts out and put your son in private school and things spiral.  You build up over £100k of credit card debt just to survive and start milking the BTLS.  That has not sorted the problem so you build up £40k of credit card debt which you have no option to deal with now other than sell stuff and cut back which to your credit you are doing. 

However the plans over the last month have veered to taking out new PCP contracts for AM or eyeing up £1m houses on RM and now leveraging your home to raise money to buy more property even though you are scratching around for income now and will have to pay a higher mortgage while you are waiting for the properties to bring in income.  I am also ignoring the possible refusal of an FA you need to finish the current development  which may mean you have to raise money on cards again to pay to finish it.  You are in this cycle of using borrowing to sort out every desire and objective you have as you have very little liquidity in spite of your highish income because it is all going on debt repayments.  Adding to that is quite simply crazy.