Singing Pig

Pod:

brit1234:

rc169:

Which ones? I see this sort of statement repeated often at the moment, but rarely with any more details. I would be genuinely interested to know - I am a property investor, and have achieved satisfactory returns, but I am broad minded enough to consider other forms of investment, if the full information is available. Unfortunately it rarely is.

 Last year the big ones were most metals, oil and international agriculture.  At the moment if it wasn't for the mining stock the FTSE would have fallen far more.Have a listern to some of the podcasts on this site below to give you some idea or watch the videos on Bloomberg.http://www.minesite.com/webcasts/commodity_watch_radio.html

don't take this the wrong way brit ... but did you actually invest in any these ... if so did you actually make any money?  how much?  %?  if you didn't invest, why not?  if there were sound reasons, what were they?  if there weren't sound reasons, why are you posting on a financial freedom website (!) ... i'm genuinely interested.  i was having a chat with a friend the other day who seriously thought that cash (itself) was an investment?  when i queried how the underlying capital value would be maintained while skimming off the income my mate's face was a picture ... the concept of actual investment, risk vs reward, income vs capital growth ....... etc ...... had passed him by.  it's all very way dissing other people's investment plan .... without showing your own?!  (take this is the constructive way intended!!)............

It would be interesting to know if brit1234 has followed his own advice on this!

I did have a look at the website brit recommended, and I am aware of Mr Frisby from other sources. From what I can ascertain, the shares of the mining companies have not risen in line with the commodities they work in, and I would suggest that investing in specific companies requires knowledge and understanding of those businesses, and the company accounts, etc. Direct investment in the commodities is not really advisable for amateurs, and, in effect, it is merely speculation on future increases in the price.

I guess I'll have to look elsewhere for these alternative investments!! 

SpeedyThing:

Pod:

SpeedyThing:

mbga9pgf3:

 Pod, as an aside, would you agree that purchasing at the top of the cycle will get you  significantly less  for your money than investing at the bottom?

 I wouldn't bother Sam. I've asked this question many times and only ever received responses that drone on about "medium-to-long term investments" and actually ignore the question altogether.

ahhh. diddums speedy!  not quite sure what exactly you're spitting your dummy out about ... you came on a the property section of a financial freedom website & got the answer you must, surely, have been expecting?  

You must be going senile in your 'experienced' old age Pod. As I stated in the quote you used, I haven't received an answer... I feel like Jeremy Paxman asking whether Michael Howard "threatened to overrule him"!It's a simple question yet all the bulls on this site get so defensive and sidestep the answer!  Let's make it easier and propose a specific example,- Property worth £200,000 in year 0- Property worth £150,000 in year 3- Property worth £300,000 in year 10In what year should the property be bought to maximise profit? It is a simple question but one that you have yet to answer. And don't start polluting the question with rents etc. Unless they equal £50,000 profit over the 3 year period then it won't change the answer.

Pod:

SpeedyThing:

Pod:

SpeedyThing:

mbga9pgf3:

 Pod, as an aside, would you agree that purchasing at the top of the cycle will get you  significantly less  for your money than investing at the bottom?

 I wouldn't bother Sam. I've asked this question many times and only ever received responses that drone on about "medium-to-long term investments" and actually ignore the question altogether.

ahhh. diddums speedy!  not quite sure what exactly you're spitting your dummy out about ... you came on a the property section of a financial freedom website & got the answer you must, surely, have been expecting?  

You must be going senile in your 'experienced' old age Pod. As I stated in the quote you used, I haven't received an answer... I feel like Jeremy Paxman asking whether Michael Howard "threatened to overrule him"!It's a simple question yet all the bulls on this site get so defensive and sidestep the answer!  Let's make it easier and propose a specific example,- Property worth £200,000 in year 0- Property worth £150,000 in year 3- Property worth £300,000 in year 10In what year should the property be bought to maximise profit? It is a simple question but one that you have yet to answer. And don't start polluting the question with rents etc. Unless they equal £50,000 profit over the 3 year period then it won't change the answer.

sensitive aren't we speedy?  calm down dear ... it's only an internet forum discussion!  i don;t actually know what on earth you are talking about ... you didn't ask a question.  what was i supposed to say?  you then go on to patronise me and "the bulls" (eh?  who?  you mean people with a different opinion to you property-wise?).  anyway, cutting to the chase .... i'm baffled by your nonsensical question about prices.  if you're asking would i buy a house (i don;t buy flats ... funny like that) that I KNEW would fall 25% in 3 years .... would I buy?  no ... surprised?  but, you, or I, or anyone else don;t have that psychic ability!  however, am i prepared to conduct diligent price research in my own small area, and buy well, and accept a solid postive cashflow .... and repeat ... yes, i am.  and over 10,20,30,40 (etc) transactions, i will do very well.  so, as i said to brit & mbga ...... what's your plan?  don't tell me ... bank your cash and wait and wait and zzzzzzzzzzzzzzzzzzz

Actually my plan is to put my money into euros whilst the pound devalues and then buy UK property after seeing 6 months of consecutive growth. And patronisation comes from all parties.. neither the bulls (economic optimists), and the bears (economic pessimists) have a monopoly on that.

I'm going to go pick that dummy up now.... 

Has the house price crash started?  In a word yes, although I would be cautious about using the word 'crash' to be more precise we are in a correctional phase of the cycle. My colleagues and I are of the opinion that a an average fall of 0.5pc per month is perfectly feasible over the next 30 - 36 months indicating that the bottom of the market will leave properties worth on averavge circa 15 to 20pc less in 2011 than in 1st qtr 2007.

Most people will not need to worry about this as it will effectively mean that their home is still likely to be worth substantially more than it was say 10 years ago; also, the people that bought at the top of the market need not panic either as long as they're not put in a position whereby they need to sell up.

The only group of people that should be nervous are the amateur investors (i prefer to use the word speculators) that jumped on the BMV bandwagon and bought a number of properties at 15 - 20pc BMV leveraged at 85pc or even 90pc.  These people will find themselves in 3 years time with properties achieving valuations some 20pc lower than today meaning that they won't be able to remortgage, therefore will have exposure to the SVR which is likely to have an effect on their cashflow and ultimately they may end up in negative territory.  Multiply this by say 50 properties and you've got a serious problem and will find it a real strain to weather out the storm. Add to this the fact that the lender is entitled serve margin calls - meaning that under the mortgage deed they can demand that the equity be maintained at the agreed level and the problem is magnified.

Regards

John

SpeedyThing:

Actually my plan is to put my money into euros whilst the pound devalues and then buy UK property after seeing 6 months of consecutive growth. And patronisation comes from all parties.. neither the bulls (economic optimists), and the bears (economic pessimists) have a monopoly on that.I'm going to go pick that dummy up now.... 

K3lly:

Has the house price crash started?  In a word yes, although I would be cautious about using the word 'crash' to be more precise we are in a correctional phase of the cycle. My colleagues and I are of the opinion that a an average fall of 0.5pc per month is perfectly feasible over the next 30 - 36 months indicating that the bottom of the market will leave properties worth on averavge circa 15 to 20pc less in 2011 than in 1st qtr 2007.Most people will not need to worry about this as it will effectively mean that their home is still likely to be worth substantially more than it was say 10 years ago; also, the people that bought at the top of the market need not panic either as long as they're not put in a position whereby they need to sell up.The only group of people that should be nervous are the amateur investors (i prefer to use the word speculators) that jumped on the BMV bandwagon and bought a number of properties at 15 - 20pc BMV leveraged at 85pc or even 90pc.  These people will find themselves in 3 years time with properties achieving valuations some 20pc lower than today meaning that they won't be able to remortgage, therefore will have exposure to the SVR which is likely to have an effect on their cashflow and ultimately they may end up in negative territory.  Multiply this by say 50 properties and you've got a serious problem and will find it a real strain to weather out the storm. Add to this the fact that the lender is entitled serve margin calls - meaning that under the mortgage deed they can demand that the equity be maintained at the agreed level and the problem is magnified.RegardsJohn

i don;t think there are many landlords with 50 props bought at 15-20% BMV ... i've done a few, although only a couple where i've bridged & remortgaged ... the rest i've just stuck in 15% cash deposit so have 65-70% LTV max,,,and most have excellent cashflow, SVR wouln;t be ideal, but certainly do-able.  i tend to spend 4-6k on a refurb anyway, so i tend to get top valuations .... so say 60% LTV.  most people who do BMV tend to do a handful & get bored & stop .... so have minimal worry.  the ones, for me, to worry about are those that bougth new-build who are making rental losses now, and are finding that with credit crunch meaning 75% LTV & 125% renatl cover is needed,,,,,they need sizeable cash injections to remortgage.  (15-20k).  those guys (i know quite a few) are in serious trouble when their SVR hits 8% (LIBOR +2%) ... 

Hi Pod (there's a musical joke there somewhere....!)

I completely agree with you regarding the new build investors - I live in Leeds and work out of Manchester so I know both markets and know a lot of people, including professional investors that have got seriously damaged by the credit crunch together with the over supply of city apartments in both locations. I know of a development in Leads where the off plan prices were £205,000 for a two bed flat in 2005 - the going rent for this type of apartment today is £750 pcm on a good day!

My business is commercial property with only a small personal interest in the resi market - I got involved in the BTL market some years ago when I could get the figures to stack, since the market took off in 2001/02 I've not invested at all, but have watched with interest the BMV phenomenon evolve and call it a gut feeling but I can see problems ahead.  Clearly your strategy is sensible and based on proper investing i.e. putting some cash in and increasing the value of the asset by renovation, I would say anyone with less than 25pc equity is going to feel the pinch.  I suppose my main concern is for the poor sods who sold there home in good faith to one of the guys who has zero cash and transacted the deal by the use of a day 1 remortgage at 85pc LTV - what's going to happen to these people when the property is taken into possession?

All the best

John.

e.g. .... guy i know, paid 165k for a house rented at 600pcm ...... (i know this ... i'm his accountant! ... although i have son many clients who this could apply to there's not much point saying "let's call him john, to hide his identity).  he used his gifted deposit as full deposit & mortgaged 165k at 6.5% ... £893pcm,,,,rent £600pcm.  "property always goes up" .... etc.  in fairness, he can live with the rental loss.  but then in comes the ground rent (£230), gas safety (£50), insurance (£180),,,,,,,,again, its not going to ruin him, but its starting to hurt a bit at a total annual loss of  £4k (excluding voids). 

problem will come in about 10 months when his current fixed rate runs out .... he can afford to put in another 10-15k ... bu will it be enough?  most lenders are looking at 110-115% interest cover as a minimum, so its not just the LTV that's a problem, its the interest cover.  to get a half-decent rate he might need to put in 30k .......which is silly money.  there are a lot of people like this ....... (relatively speaking) ....... what will they do?  my mate reckons he will remortage his PPR & chuck in 30k to get a decent rate ....... but that still doesnlt hide the poor underlying investment.