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Well I don’t remortgage now to capital raise JC
and I haven’t done so since 2007
with S24 it’s folly
I have enough cash flow to buy properties with a good cash deposit
so for me capital in a property is only a fig which I can’t touch
buy a good yeilding property with a good deposit then save another deposit and move on
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.
I am aware you dont personally release equity but that is only half the picture you present
I think a slight linguistic adjustment by you maybe will resolve the meaning for others benefit
Given your success and standing in this forum some will take your words as gospel
So its important not to give the impression that CG only matters when you sell
To an investor who doesnt just focus like you on yield and non growth areas that is misleading
It would be depressing if they thought that they could not release equity as it may curb their ambitions
If they are stuck with 100K of equity then they might want to release say 25K to buy another
So maybe precis some of your comments with `I` not `you` .
For the likes of you and I, yes I agree to remortgage with S24 as it stands may be folly
But for 100`s it wont be as their circumstances and structures are entirely different
The gov has one hand round our throat to dampen us down
If you hold an additional hand to an investors throat also by suggesting you have to sell to access CG you may be accused figuratively speaking of assault as well
And I know you wouldn't want to be viewed that way and stifle their ambition
So the statement you said
`capital growth is worth nothing until you have the gain in the bank when you have sold``
is not true for many and you may want to clarify/ amend it - unless you stand by it ?
Jonathan Clarke. http://www.buytoletmk.com
I really understand where your comming from JC
so I do agree that extracting profits via a re Mortgag will work if you reinvest
the printable has worked well for 25 years
the problem is taxation and maybe PRA lending rules
if someone is starting from scratch and they wish to build quick it will work
but it’s limited due to taxation or regulation
the only way to do it is via a company but as I have outlined its will be less tax efficient and more tax will be paid when the investor takes profit
I used re mortgage for years but we are in a different world now
leverage works two ways I believe low levarge and high yields are safe and much more tax efficient
Yes its more difficult I agree but the door is not closed, just 50% tougher maybe
It’s a case by case issue like all bussinss JC
it made us all a lot of money in the past
as I have said cash is king but not borrowed cash in 2019
but if you have the cash BTL can be very good
Cash is King
Borrowed cash is Queen
Then there is the rest of the pack 1/2/3/4/5/6/7/8/9/10/Jack who don`t take action
PS for the purpose of this analogy ace is low or else it messes up my point :-)
Thats all very well , but when calculating equity in property no one i’ve spoken to takes into account the tax and costs in realising the true value. It’s another area where bank lending was to my mind lax, when borrowers fell into difficulties finding that even by selling they still could’nt clear debt and so repossession became an easier option, this helped to depress the market further at the time.
I freely admit i’m very cautious and risk adverse, but feel that many do not put a realistic value on their assets. The other favourite is valuing their property with the higher prices achieved on land registry with no knowledge as to what condition/standard property is compared to their own.
There’s optimism, pessimism and reality or you can have your truth,my truth the truth.
Yes I agree there will always be the over optimistic and also the eternal pessimists and a whole range in between.
They sit alongside each other in a room and you never know until they speak what their mindset is made up like
Some investors I meet have had to have their idealism and their realism drastically realigned
You have to bring them down gently sometimes as they are buzzing
I myself still think on the rare occasions when Harry Kane misses a goal that I probably could have squeezed it in
So some want to release 75K maybe when only 25K is possible so they can buy only 1 more now , not 3 maybe
Others need a jump start to even consider borrowing that 25K which is staring them in the face
25 years later some own 2 BTL`s some own 20 some 200
They may have all started out in the same financial position though. The rules were exactly the same
Its their mindset that differentiates them - not PRA , or tax or any of the other annoying hurdles
Thats very true, I would also add another great differentiator, the attitiude and behaviour of those that chose to expand and borrow aggressively IF/WHEN it all goes wrong, there are those that actively atempt to retain all they can by knocking any one they owe money to , on the one hand , on the other you have those that go round to visit those they owe money to explain whats happened and promise to pay it back but that it’ll take time.
It’s noticeable that those that invest from out of the area that generally fall into the former and local hands on investors that make up the latter more often, again not hard and fast rules by any means.
A moral compass is surely another factor to be considered when looking at a room full of investors, along with their appetite for risk and levels of optimism.