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  • Property-a-holics

    According @MoneyWeek, investors are doomed!

    I just watched this Special Presentation from Money Week.

    It is full of doom and gloom and urging anyone investing in property to get out now.Hmmmmm!  Self-fullfilling prophecy? 

    They might cause a house price crash all on their own!The perplexing thing is that they go on and on about capital growth and house prices crashing, but no mention of cash flow.If none of us sell and continue to generate cash flow, then we can survive any crash in prices over the long term. 

    The video seemed to suggest that Landlords were just chasing capital growth and "free money from capital appreciation" rather than running a "business" where cashflow is always the foremost consideration.I was disappointed in this video on a number of levels. 

    I thought the voice over was somewhat unprofessional and the arguments just too basic.  Not the standard I would expect from one of the U.K.'s leading authorities on money matters.

    I would go as far as to say this video is a danger to itself.

    What do the tribe think?

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    Money Week has been claiming the world will end for the property sector for 3-5 years now. It attracts attention. Their position has historically been a bit extreme and rather off if reality matters.

     

    I am not sure they have much of a readership so their ability to drive the market is suspect.

     

    John CoreyFollow me on Twitter-> https://www.twitter.com/john_coreyhttps://www.ChelseaPrivateEquity.com/blogLondon RE meeting, 2nd Tuesday of the month -> meetup.com/real-estate-advice

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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    If you cut through the marketing froth and hype the underlying points made about the current state of the property market are IMO not too far off reality.

    Economies burdened by debt both in the UK, Europe and the US, rising unemployment rates, falling incomes, a scarcity of lending and artificially low interest rates which have to rise at some point - all factors which individually can detrimentally affect house prices and collectively have the potential to cause havoc.I agree entirely that putting capital growth to one side and concentrating on cash flow negates the core of the argument for an investor. 

    However, my opinion is that house prices could still suffer a double dip and drop substantially.  There are two other underlying issues which Money Week (and few others) fail to address ie., the increasing reluctance of the younger generation to buy (house ownership is not as important) and the debt burden and pension inadequacies of the over 60's.  The former reduces the number of new buyers entering the market and the latter is increasingly forcing many to sell and rent rather than buy the traditional retirement bungalow. 

    Together that is a big chunk of buyers who are leaving the market.

    Whilst we may be in a period where some of the previous fundamentals of the property market are changing I still think wise investors can benefit hugely. 

    Big change always brings big opportunities for the savvy and brave.

    Colin Parker

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    It's tied in with Bill Bonner and Agora, and is very involved in information marketing in a fairly brash way; I'm a subscriber and also take their Red Hot Penny Shares tip sheet (best performance so far - an 11-bagger!).

    And, to be fair, the vast majority of non-PT, small scale investors in most of the south of the country don't make cashflow (if they have mortgages) and are in the game for capital growth.

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    Money week is a little like The Daily Mail - long on doom mongering to sell copy or divert eyeballs, scarce on reality.

     

    ...but you did John, you did - and frequently.

     

    This is a fav of mine, Barry Wigmore;

     

     

    Needless to say he was referring to the pic below ...

     

    Which happened to be a still taken from a computer game and nothing to do with Al QuedaIf it's going to go t*ts up, The Daily Mail and Money Week will be the last to notice. They'll be too busy "making it up".

     

    I can get up every morning and announce that "I'm going to die today" - one day I will be right, the other days I'll be full of s**t.

     

    I wish they would enter into something that is, clearly, alien to them - reporting.

     

    At some point in the future, property will be worth nothing - at some point in the future. the question is when and, moreover, shall we discuss it to be prepared or discuss it to be right? I doubt Money Week will be able to enter into this debate as they appear to be poorly armed.

     

    Reality; cut away all the cr@p and the western world is knackered, capitalism will not work forever as nothing can keep going up in value, a value based on confidence, and a fine one at that.

     

    So when it all does come crumbling down, the last thing on my mind will be "how much is my house worth" - it will be more like "where am I going to get any food from" or "how am I going to stay alive"?

     

    This is an altogether different topic of conversation. But for the time being, and until other factors come into play, I have no issue with buying houses.

     

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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director, site owner and moderator - propertytribes.com

    Thanks everyone for the input.I do agree with MW that there are worrying times ahead. 

    I addressed my concerns on "Ctl. Alt. Delete. The world is re-booting.  Can you survive the recession?".  Read it >>> here.

    However, urging people to dump property assets because of possible price slumps is not particularly sound advice in my opinion. 

    They could have given some caveats and addressed it to those hobby landlords who are in negative cashflow, rather than tarring every property investment with the same brush.

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    i like merryn somerset webb, the editor of moneyweek & read her column in the F.T.

    However she has always been against property,probably because of her background is as an ex- trader in the city.

    She does not class property as an investment & would prefer you buy equity's & gold, despite the fact that many blue chip shares lost 90%+ in the credit crunch, dont pay an income (dividends) at the moment and you cant leverage your position to buy more (unless using spread betting -- very risky).

    Also Gold is a bubble ready to burst having gone from $250 to nearly $2000 in a few years, which she is still heavily promoting (again it doesnt do anything nor does it provide an income).

    If property prices had gone up 10x their value like gold she would be promoting their collapse (actually she always has).

    Like capital economics, property week have always adopted a position of not buying property as an investment, and have always been negative  & bearish hopeing one day to be proved right, despite promoting equitys (down by 90%) & commercial property (down by 60%)

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    PMSL Nick.    Sums up a lot of the experts level of prediction skills.   nick tadd said:

    I can get up every morning and announce that "I'm going to die today" - one day I will be right, the other days I'll be full of s**t.

     

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    Re. gold - my take is that it's not a commodity or an investment; it's a form of money - one that cannot be debased like fiat currencies are currently having done to them by the inflation brought about by low interest rates and Quantitative Easing. The result is not that gold is rising in price but that the debased currencies are falling in relation to the value of gold.
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    They were basing it on property speculation, not investment.  They were saying about prices are going to fall over the next 6-9 months. If you worry about prices falling over a 6-9 month period, you really are in the wrong game.

     

    Falling prices = higher returns = better cashflow.

    Vanessa said:

    However, urging people to dump property assets because of possible price slumps is not particularly sound advice in my opinion.  They could have given some caveats and addressed it to those hobby landlords who are in negative cashflow, rather than tarring every property investment with the same brush.

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    I remember watching merryn somerset webb on TV many many years ago, and she was advocating a huge property crash then.

    Every so often I get an e-mail from Moneyweek or one of its off-springs or a Moneyweek in the post, and guess what, the front page always stays a "PROPERTY CRASH IS NIGH!".

    One day she may be right, one day Mystic-Meg will give me the correct lottery numbers. One day my neighbour will sell me his house @ 50% BMV.

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