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  • Property-a-holics

    No Capital Gains, why bother?

    Looking at several occurances on PT now, some members have said prices are only just above where they were back in 2008.

    So I ask the question, why bother holding onto an asset which is back to where it was a decade ago? Taking say 3% inflation into account each year, in real terms you're still down and if you had to sell at auction 6 weeks from now there's a very high chance you'd be even further negative.

    Now some like to hold onto the 'Yield is King' mantra but that can't be the only reason to have an investment?

    It would appear the North is having another mini-boom (not sure why as I can't see what is different now to ten years ago), so in a few years time will there again be the startings of another lost decade?

    Adding in value when they buy doesn't seem to be high on a lot of investors list and I'm not sure why that is?

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    If you have 10 properties bringing in 200 a month then you've got a wage you could possibly live on, 20 properties and you're comfortable.
    The prices will also go up in the long run. They have gone up an average of 8% a year since 1954 albeit that's the country as a whole (Nationwide stats).

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    I am one of those who has posted about stagnant prices in the North and here is the reasoning behind why I kept my properties -

    The three terrace houses in Liverpool I bought in 2006 have been in negative equity for much of the time, however  . . . 

    they are close by the university and the new flagship £335m Royal Liverpool hospital (the largest in the country), they have cash-flowed well since day one and have had not one day void in all that time.

    The fact that the area is now article 4 has pushed up prices recently and is the icing on the cake but really, what's not to like??  The reason I bought them was for cash flow and in that regard they have never missed a beat, the underlying value of the properties was irrelevant.

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    I have a property which was bought in 2007 and totally overvalued. It was bought for £110k the mortgage was/is £93.5k and today's price is £80k. It makes around £200 a month. I am keeping hold of it as it is not costing me anythng and I would have to pay £13.5k of my own money to pay off the mortgage. I am hoping that it will eventually break even. It is in Yorkshire.

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    Being a land lord since 1982

    and I purchased property on a big scale since 2000 to 2015

    90% of my property are in a capital growth positive 10% are slightly in negative equity

    i am in the north but I have still made a lot of money

    yeild is my driver and all my Propertys yeild over 8%

    my feeling is long term you will win

    and for me I have no intention of selling anything so the capital fig has no value it’s just a fig on a balance sheet

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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.

    ``capital fig has no value it’s just a fig on a balance sheet``

    That`s not  really true though is it DL .

    Capital fig of course has a value if you free the capital  from the prison of the balance sheet

    This is a very very basic strategy on how to grow a portfolio

    By freeing up the capital fig from the balance sheet you now have two properties not one

    Personally I like to have a Yield King and a Capital Growth King .

    Most people would but unfortunately not all areas of the UK have seen the Capital Growth King

    Capital Growth Kings have the power to release capital from that balance sheet prison

    And that capital is  invested further to produce more growth and more income

    Lone Yield Kings dont have that power unfortunately . They can still do well though so shouldnt sell

    Yield Kings all hope the Capital Growth King will come and pay them a visit one day

    But he is a busy man . Traditionally he lives in the SE but does travel north on occasions

    So hang on in there I urge as even if his visits are infrequent...........

    The Yield King is still far better than No King

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    Jonathan Clarke. http://www.buytoletmk.com

    It has no value to me

    I never sell and I don’t remortgage

    so it’s only a fig JC 

    other than  the two points above how would it effect my plans

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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.

    It still has a value to you

    Its just that you personally chose not to tap into that value you have at the moment

    One day you might do and at least you have that option

    The way it was written it could have been misleading ( not intentionally ) to a newbie

    The ability to release equity for further investment is a crucial advantage property has over say an ISA

    With an ISA  I agree with you  - the capital fig  is simply just a fig on a balance sheet until you sell

    Property however is a much more dynamic and flexible asset to work with as it has value you can extract

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    Jonathan Clarke. http://www.buytoletmk.com


    I started in property after losing my job in 2013. I wanted an income to live off, and I got one.

    Capital gains were very much secondary, though I hung on to my former home in Reading to take advantage of Crossrail.

    Manchester is booming because of things done starting 20 years ago -  completion of the M60 as the only orbital motorway in the UK - the commonwealth games starting redevelopment of the east of the centre, massive expansion of the tram system, movement of media companies to "Media City". The number of people living in the centre of Manchester has gone from 500 to ~30k (it was previously mostly offices and warehouses)..

    I was hoping for capital growth in line with inflation from my northern properties - last year it was double that as the boom spread to areas around Manchester, but that doesn't really matter as I don't intended to sell them.

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    I wouldn't be where I am without capital gains and anyone who says its all about yield is a fool in my mind.

    Like jc I built a portfolio by buying at the right price and adding value at the start, capital gains then make that property a low ltv earner that is safe in my mind.

    The very people who bemoan cg seems to be the ones who leveraged to the eyeballs, then think they're clever seeing the future after the event.

    I planned for eventualities by using cg to help me buy at the right time and make each asset safe.

    Now I just take deals when they drop in my lap, and believe me I can still come out with almost infinite return on investment.

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    The fool is the one who is so narrow minded as not to understand that property works differently for different people and in different areas.

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