Here is an excellent programme on personal debt in Australia. Start at the top and work your way down.
Sunday, April 13, 2008
Friday, April 4, 2008
BTL - the madness continues
I checked out a buy to let website - Nice Investments - today. I picked up a few quotes.
"New turn key service means high returns no longer demand huge resources."
"Multi-Let Residential: "This solution is uncompromisingly the best in the market for gaining the highest rental yields and equity growth."
"Example: Canada Water 4-bedroom property; Purchase price is £400K; Re-developed to provide 6 bedrooms: Monthly interest mortgage payment c£2K: Rental income c£4K: Property re-valued at £600K, freeing up cash to buy the next property."
Example: 1 Bedroom Flat in SE1: Market Value 205K: Negotiated purchase price 155K: Full re-furbishment and high rental fit out for 15k: Pre development rental £650 pm: Post development rental £1,050 pm: Revaluation after development £210k: Equity gain after 6 weeks of development £47K. Surplus cash funding next portfolio purchase.
Our unique approach enables us to double standard market rental yields.
So if any project in which you participate fails to return a profit by the end of the stated period, nice investment will return your original sum plus a return of 10% per year for the duration of your investment (not compounded).
Single-Let: The focus here is to achieve payback for an investor within months of purchase.
The promises here are extraordinary; high returns without "resources" (presumably this means investments without any down payments); the highest rental yields, equity growth, and a guarantee of a 10 percent return plus original investment.
However, I failed to find a single warning on this website that said that the value of an investment can go down; that leveraging multiplies the risk of loss, and that there is some risk with property speculation. Check the website out, and see if you can do better than me.
"New turn key service means high returns no longer demand huge resources."
"Multi-Let Residential: "This solution is uncompromisingly the best in the market for gaining the highest rental yields and equity growth."
"Example: Canada Water 4-bedroom property; Purchase price is £400K; Re-developed to provide 6 bedrooms: Monthly interest mortgage payment c£2K: Rental income c£4K: Property re-valued at £600K, freeing up cash to buy the next property."
Example: 1 Bedroom Flat in SE1: Market Value 205K: Negotiated purchase price 155K: Full re-furbishment and high rental fit out for 15k: Pre development rental £650 pm: Post development rental £1,050 pm: Revaluation after development £210k: Equity gain after 6 weeks of development £47K. Surplus cash funding next portfolio purchase.
Our unique approach enables us to double standard market rental yields.
So if any project in which you participate fails to return a profit by the end of the stated period, nice investment will return your original sum plus a return of 10% per year for the duration of your investment (not compounded).
Single-Let: The focus here is to achieve payback for an investor within months of purchase.
The promises here are extraordinary; high returns without "resources" (presumably this means investments without any down payments); the highest rental yields, equity growth, and a guarantee of a 10 percent return plus original investment.
However, I failed to find a single warning on this website that said that the value of an investment can go down; that leveraging multiplies the risk of loss, and that there is some risk with property speculation. Check the website out, and see if you can do better than me.
The UK housing crash is here
(click on the chart for a sharper image)If you want to understand what is happening to house prices, you must look at a chart. Today, the Nationwide produced their monthly survey of house prices. Unfortunately, the media reported this data by producing a battery of misleading percentage growth numbers.
The plan facts are that the Nationwide data shows a substantial nominal price drop since October, when prices peaked. In percentage terms, prices are down almost 4 percent lower than the peak.
If prices continue to fall at the rate we have seen over the last five months, then we are likely to see an 8.7 percent annualized nominal fall in prices.
Assuming that the RPI inflation rate remains at 4 percent a year - a reasonable assumption since it has been at that level for around two years - then in 12 months time, the real value of housing is likely to be about 13 percent lower than today.
The crash is here.
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