Calculations - My Brain Hurts!

scottp_2

Retired_I.F.A. wrote: »

£340.53 P/m Esc At 3.5% P/a Yielding 6% For 20 Years =£198978.89 =100000 Today If Inflation = 3.5% P/a

Yielding 7% The Initial Investment Needs To Be 308.72
At 8% 279.32
At 9% 252.30
At 10% 227.50

By Yield I Mean Car/apr Which Is The Same Thing. For A Deposit Saving. Or A Yield After Charges In An Investment Plan.

My Keyboard Is Playing Up Thus All Capitals When I Fix It I'll Host The Spreadsheet So You Can Play Around With It Yourself.

EDIT, THATS FUNNY I MISSED A 0 TYPING 100000 EDITED IT AND EVERYTHING WENT TO SMALL CASE :d

How can I work that out with no investment yield? this would give me the figures i need.

thanks!

Retired_I.F.A.

At 0% yield £586.35

to be honest i'm just giving you the maths answers here I'm faffing around with the keyboard too much to even fully comprehend your plan.


ooooh look it's typing right now

Retired_I.F.A.

I think you and your dad have been watching too many of them tv programs where they buy land build a house on it and walk away with a fat profit. They are as saft as the estate agent who says spend 10k on an extension and it'll sell for 20k more. Does it hell as like any buyer with common sense will buy next door and build his own extension. the 10k difference the estate agent means is after 3 months the way prices have been going up you'll sell it for that much more. When prices are falling the estate agent will be saying don't spend anything on it as what you spend will not be recouped, the same goes for building a house.

In the real world if you own land it basically has two values the lower one being without planning permission the higher with. Assuming this land is worth 100k with planning permission for the house you'd like to build which will cost you 85k, then the value of it once built is 185k plus x which is your own time and labour involved in the build lets say 10k for a figures sake, thus £195k plus or minus whatever land and property has increased by in that area during the build time. Your dad isn't going to make 30k as he thinks he will, he's no better off if he simply sells the land and invests the 100k by buying the house down the road.

Why not simply buy half the land from him for 50k now and jointly build the house. 10, 15 years later buy the other half at the market price of the land and house then?

scottp_2

Retired_I.F.A. wrote: »

I think you and your dad have been watching too many of them tv programs where they buy land build a house on it and walk away with a fat profit. They are as saft as the estate agent who says spend 10k on an extension and it'll sell for 20k more. Does it hell as like any buyer with common sense will buy next door and build his own extension. the 10k difference the estate agent means is after 3 months the way prices have been going up you'll sell it for that much more. When prices are falling the estate agent will be saying don't spend anything on it as what you spend will not be recouped, the same goes for building a house.

In the real world if you own land it basically has two values the lower one being without planning permission the higher with. Assuming this land is worth 100k with planning permission for the house you'd like to build which will cost you 85k, then the value of it once built is 185k plus x which is your own time and labour involved in the build lets say 10k for a figures sake, thus £195k plus or minus whatever land and property has increased by in that area during the build time. Your dad isn't going to make 30k as he thinks he will, he's no better off if he simply sells the land and invests the 100k by buying the house down the road.

Why not simply buy half the land from him for 50k now and jointly build the house. 10, 15 years later buy the other half at the market price of the land and house then?

No, we have been watching those types of program and laughing at some of the things people do. IF this was 3 years ago he would have built the house quickly and made a quick buck. This is why now we are looking at better ways of building the house, so that everyone benefits. I have a house that is perfect for me, my dad gets the money he wants and the tax man sees nothing!
The land is in the middle of a new Barratt development, when tiny semis are up for £180,000. What you have said is exactly what I have been trying to drill into my dad, he will not walk away with a massive profit from this, even less if you factor in the time and effort taken to get it sorted, plus selling costs. If I were to get the land and build myself, I would have a house perfect for me, for a price that will be affordable.

Does that make any sense?

Thanks!

Retired_I.F.A.

Yep. Your dads five or six years younger than me perhaps he did not own a house when interest rates were 15% and then fell to 13% along with property values by 25%. I do I bought my first when the rate was 13% and lived on beans on toast till it hit 15% then it was just toast, remortgaged when the missus quit work with our son and got divorced when the values dropped 25%. It's my parents generation that said buy property you cant lose and the current generation seem to think the same I'm in the middle and lost your dads in the younger.

Buying a percentage off him and doing a self build with you raising the capital fo the build in joint names then buying him out later seems the best solution to me for you both but a chat with both a solicitor and an IFA first is a must as you need to address as many what if scenarios as possible.

scottp_2

Retired_I.F.A. wrote: »

Yep. Your dads five or six years younger than me perhaps he did not own a house when interest rates were 15% and then fell to 13% along with property values by 25%. I do I bought my first when the rate was 13% and lived on beans on toast till it hit 15% then it was just toast, remortgaged when the missus quit work with our son and got divorced when the values dropped 25%.

Ouch!

What input could a IFA have about the situation, other than an opinion? Do you mean in respect to tax etc?

Thanks!

CLAPTON

with respect.. you dad seems to want the profit but not the cost of financing.
I'ld suggest you treat it as a normal financial transaction.

so either buy your own house and ignore this opportunity

or buy the land as market price and assume the risk/ cost of building

or let him borrow the money and make the profit.

or let him sell the land etc.

scottp_2

CLAPTON wrote: »

with respect.. you dad seems to want the profit but not the cost of financing.
I'ld suggest you treat it as a normal financial transaction.

or buy the land as market price and assume the risk/ cost of building

This is ultimately what I wanted to do, but of course my dad can only see the 'paper' profit, not the other costs involved.

Guess I will just have to talk it all through with him and see what he actually wants from this, do our sums and then see what we can come up with, which is why I wanted to see how much this method would work out at.

Thanks!