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Today I am going to see my Mortgage Broker to re arrange a Re-Mortgage and I thought I would take the opportunity to show some genuine figures from the North East :
The Property is a Two Bed Tyneside flat and I purchased it just after the 2007 crash
The Property was a repo and it was sold to an investor who had up dated the flat to a high standard so when I purchased the property I spent very little before it was rented
The property was purchased by an Irish Investor for £95000 in 2005 which was the going price before the crash
The property was open to offers over £79000 and I made an offer of £75000 which I thought was a good deal
Today the value of the property is still around the price I paid in 2007 £75000
when I did the purchase I used 85% LTV ie a mortgage £63700
I imagine when I have this property valued it will value around £70000 to £75000
so I will have to introduce some cash to bring down the LTV to around 75% £56250
I will need to use £7500 to stand still
The property is in a Private area Low crime good schools and transports links
On the Good side it rents well for around £495 per month and its got good cash flow
But it just shows what can happen with high leverage
I will hold onto this property because I know it will increase in value at some point
But depending on Capital Growth doesn't always work out
I'm just glad I was not the Irish investor who paid £95000 in 2005
We are today in Low Growth so heed my little story
Keep leverage down and buy on high yields
The Southern Model is very different to the Northern Model and Landlords in my opinion need to factor the difference in
I think we need a Northern version of "Rich Dad, Poor Dad".
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.
an example from my area of London
bought a mixed use shop and flat for £265k plus costs in 2007, total rent £25k per annun after some minor works
bought the shop and flat next door in 2018 for £405k, now have planning permission for an extra 3 flats with works now started
total GDV approx £1.45m with total costs £850k, some of this gain will be capital growth
The difference between the two areas is stark
Of course the knock on effect it the EU vote - London voted in, the rest of the UK voted out
Out of interest what sort of Capital Growth do you forecast in the next five years in your area of business?
The rest of England (and Wales). Scotland and NI voted to stay.
As an example from London:We purchased a one bed house in 2004 for £147,500 and spent about £4K on refurbing it.The one next door recently sold for £340K. This property rents out for £1100 pcm.An example from High Wycombe:We purchased a four bed house for £350K in 2006. Similar houses are now selling for £450K. This property rents out for £1500.00 pcm.An example from Manchester:We purchased a four bed house in 2005 for £180K. That property today would sell for £190K. This property rents for £895.00 pcm.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
This is only one Property . As I have said, I went on to buy similar property £45K to £55K and they have all made money
All have yields of over 8%
So its not a loss over the period - in fact when I look at capital growth and yields its healthy profits.
Slowly working towards financial freedom
Your Figs are the Normal for the SE
and I think this is the very reason why the North Voted out of the EU
Its very unfair to have such differences in wealth
out of interest where do you forecast growth in your areas in the next 5 years
The anger in the North is High
a lot of blame is immigration and Poverty
The average home owner has seen little return on there homes most have made little to nothing in 10 years
when folk are hard done by they look for a reason
Immigration and the EU is there choice
You cant run such a small country with such devsion
We are only seeing the start of change and part of that change is the areas outside of the SE bubble need to see some wealth
The History of the Northern regions has been poverty so even when we leave the EU the NE will be no worse than it is now
If you have nothing you cant have it taken away it just breeds resentment