Some advice needed from an experience property developer..

chappers

Doozergirl wrote: »

Scheme 2: Where's the profit? Interest Only mortgage, and you put £100 towards the interst payments

It's called investing the profit comes at the end

with a 100/month shortfall in the mortgage that equates to £30,000 over the life of a 25 year mortgage.
If you invested that £30,000 at an average of 5% per month for 25 years it would be worth £101,590

Now if you bought a house in 1980 for £22,677 (nationwide price index) 25 years later in 2005 it would have been worth £157,387 after repaying your mortgage that would leave a profit of £134,710. Thats an extra £33119 more than leaving it festering in the bank.

And that is lower than the real figure as with the house purchase you are only laying out the 100 each month if you saved 100/month at 5% for 25 years you wouldn't have as much as £101,950 (please don't ask me to do the maths)

Obviously its all about buying the right property in the right area at the right time and selling at the right time too.
Now if you could average 7% then that would be adifferent matter

MissMoneypenny

Twinblade wrote: »

Nope. A small seaside town in Kent. We have luckily, since purchased had a new privately funded School open, and brand new shopping centre open and development plans granted for the seaside area to have a complete make over including galleries, museums, cinema and other entertainment facilities, not to mention luxury apartments built.

Also, the area has got the benefit of a brand new high speed rail link to London in under an hour being scheduled for introduction at the latter end of this year.

Is it a Shepway Council town? Gods waiting room? Starts with F and ends with E - and has olkeston in the middle?

Catblue

chappers wrote: »

Now if you bought a house in 1980 for £22,677 (nationwide price index) 25 years later in 2005 it would have been worth £157,387 after repaying your mortgage that would leave a profit of £134,710.

This "profit" is based on the assumption that the bank gave you an interest-free mortgage for 25 years, of course.

And that you haven't paid anything towards repairs and maintenance during the 25 years.

poppy10_2

nj106 wrote: »

Does this make sense?

God no. :eek:

Have you been living under a rock for the last 6 months?

Doozergirl

chappers wrote: »

Obviously its all about buying the right property in the right area at the right time and selling at the right time too.

My point made. Wrong price, wrong time.

Paying interest only on a mortgage and subsidising the rent isn't much of an invesment in my view when if you look hard enough you can still find property that will pay a full repayment mortgage, with money left over for upkeep. Hardly the time to take a long term view on property either if you have to subsidise the rent for no capital gains.

Flats come with service charges and often vastly overinflated maintenance bills. Far better a freehold property where you decide.

chappers wrote: »

It's called investing the profit comes at the end

I'd call it gambling at this moment in time.

fc123

SouthCoast wrote: »

It must be Brighton, as house prices only ever rise and the City has a miracle economy that walks on water.

Absolutely, my walking on water skills are fantastic.
The economic rumbles are happening though....bit like an earth tremor.

chappers

Doozergirl wrote: »

My point made. Wrong price, wrong time.

Paying interest only on a mortgage and subsidising the rent isn't much of an invesment in my view when if you look hard enough you can still find property that will pay a full repayment mortgage, with money left over for upkeep. Hardly the time to take a long term view on property either if you have to subsidise the rent for no capital gains.

Flats come with service charges and often vastly overinflated maintenance bills. Far better a freehold property where you decide.



I'd call it gambling at this moment in time.

Think you might well be right

No reason not to still make money developing in a falling market just need to adjust your strategy towards quick turnover projects and the same rules about price apply.

Twinblade

MissMoneypenny wrote: »

Is it a Shepway Council town? Gods waiting room? Starts with F and ends with E - and has olkeston in the middle?

Indeed it is that lovely old peoples town.

Over the weekend we had an offer £165,000 (house isn't officially on the market yet) from the daughter and husband of the old dear across the road from where we live.

So, if we sell for this, we make, after disgarding the purchase price of the property and the amount spent on the house (£10,000) a £30,000 profit, which isnt bad for just over 2 months work.