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  • Property-a-holics

    Jonathan Clarke - how did you scale up?

    The market has changed and will keep on changing where it is harder for amateur LL and you will have to become professional.

    It is so much easier to borrow on yourself compared through a company and through a company it is more complex and has extra cost.

    In the “good old days” you would be crazy to buy through a company. 

    Also renting gives a lot of flexibility so for many people it is a good option besides if you only get 4% yield on your property you might be better off renting (not looking at capital growth as it is not certain)

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    Perhaps like a Pension we should advise people based on their position. If you are young and you have little to lose and a long time to invest, then perhaps we should understand if people choose to ramp up their risk?

    I am all for risk mitigation, but no risk generally means no return and to grow takes some grit and some some gall...

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    There's nothing wrong with risk as long as its informed.

    Advice is only as good as the questions asked. I stopped asking "How do I do this?" and instead asked "This is what I plan, can you see any problems?". The advice was a lot clearer.

    I'm cautious regarding leverage, but I'm comfortable with other risks.

    I've never understood why banks lend at 2 or 3% to investors that will make 5 to 10%. It doesn't seem a good business model. The banks are more than capable of better performing, and possibly lower risk, investments than BTL mortgages yet they still persevere. 

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    I think it’s because they are diversifying and in the business of wealth preservation?

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    "...I've never understood why banks lend at 2 or 3% to investors that will make 5 to 10%. It doesn't seem a good business model. The banks are more than capable of better performing, and possibly lower risk, investments than BTL mortgages yet they still persevere..."

    What other investments are you thinking of? BTL is similar to owner occupier mortgages - secured lending but they make more money from BTL. car loans (secured on a depreciating asset), personal loans (unsecured?), business loans (unsecured / secured on business assets or property?) - all higher risk?

    At 2-3% the banks are still probably making quite a bit of profit - especially if they fund with current account balances where they pay essentially 0%.

    Historically isn't it also down to competition from the likes of the building societies who operated for the benefit of their members?

    Additionally, just imagine the consumer backlash nowadays if a bank were seen to be making exceptional profits from its products (wonga, credit card charges etc)

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    I don't understand banking and outside of property I don't understand investing. I presume that banks do understand investing.

    I could borrow a sizeable chunk of money from a bank at around 2% and invest it in property, P2P, crowdfunding, stocks, shares, bonds, REITs and probably some others and make a good profit on the bank's money... if I knew what I was doing. I could also invest my own money in the same way.

    I could also put my own money into a bank savings account but I would get very little return. I assume, maybe incorrectly, this is because banks lend the money at low interest rates. If the banks were to invest my money, and again I may be wrongly assuming they would know what they're doing, as a consumer I would get a much better return on my savings and the bank could achieve a greater profit than through lending.

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    I agree that banks should understand investing, and should be able to produce a better return than some of the individuals that they lend money to, but I think this sort of activity, if not the cause, was a significant contributory factor in a number of the financial crises that we have seen within our lifetimes.

    As a result of the financial crises, I think the regulatory regime now either prohibits certain risk taking / investment activities or it requires them to set aside such a high level of capital (to protect them and the rest of the financial system in the event of negative outcomes) that the investment activity is rendered unprofitable.

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    I suppose it is similar to the governments war on landlords!

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    what a handsome chap Norman Wisdom is LOL x

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.