ben
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SPV34
Dec 18, 2015 11:44:15 GMT
Post by ben on Dec 18, 2015 11:44:15 GMT
Just had look at this one , think the final valuation could be a bit out
So who actually prefers these options where they are managed by others and rent paid either way?
Also does anyone know how they decide if it is going to be 2 years or 3 years to begin with
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littleoldlady
Member of DD Central
Running down all platforms due to age
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SPV34
Dec 18, 2015 19:10:48 GMT
Post by littleoldlady on Dec 18, 2015 19:10:48 GMT
Just had look at this one , think the final valuation could be a bit out So who actually prefers these options where they are managed by others and rent paid either way? Also does anyone know how they decide if it is going to be 2 years or 3 years to begin with IMO it's too early to tell. We will have to wait and see how things pan out. Actually that applies to PM in general, we won't know how successful our investments are for a couple of years.
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j
Member of DD Central
Penguins are very misunderstood!
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Post by j on Dec 18, 2015 20:11:51 GMT
Just had look at this one , think the final valuation could be a bit out So who actually prefers these options where they are managed by others and rent paid either way? Also does anyone know how they decide if it is going to be 2 years or 3 years to begin with IMO it's too early to tell. We will have to wait and see how things pan out. Actually that applies to PM in general, we won't know how successful our investments are for a couple of years. Not to mention the effect of the property market in 2-3 yrs' time. PM & THC investments have a double advantage, imho. Firstly, you have the basic rent coming in (the bread & butter component). Secondly, if the capital growth bit comes up trumps, it's a nice bonus. If, when the term ends, the market is negative but, the properties are still renting well, one can wait till it picks up again & sell later. In essence, be prepared for long(ish) term view rather than banking solely on future profit (if possible) from uprise in house values. This is a nice option to have as a back drop to pure p2p investments with which we have seen declining rates over the last few months.
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SPV34
Dec 19, 2015 16:15:05 GMT
Post by Financial Thing on Dec 19, 2015 16:15:05 GMT
On a side note, my friend is a Chartered Surveyor who values for several p2p lending sites and has warned of the bubble that is surfacing within the HMO residential market.
Can't really go into specifics but he has 20 years experience in the property market in the NW of England and rarely warns me about anything so when he does, I listen.
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hazellend
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SPV34
Dec 19, 2015 22:50:07 GMT
Post by hazellend on Dec 19, 2015 22:50:07 GMT
On a side note, my friend is a Chartered Surveyor who values for several p2p lending sites and has warned of the bubble that is surfacing within the HMO residential market. Can't really go into specifics but he has 20 years experience in the property market in the NW of England and rarely warns me about anything so when he does, I listen. Is he basing this on current yields being lower than historical? They look okay to me but I haven't been investing for anywhere near 20 years.
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hazellend
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SPV34
Dec 19, 2015 22:54:21 GMT
ben likes this
Post by hazellend on Dec 19, 2015 22:54:21 GMT
IMO it's too early to tell. We will have to wait and see how things pan out. Actually that applies to PM in general, we won't know how successful our investments are for a couple of years. Not to mention the effect of the property market in 2-3 yrs' time. PM & THC investments have a double advantage, imho. Firstly, you have the basic rent coming in (the bread & butter component). Secondly, if the capital growth bit comes up trumps, it's a nice bonus. If, when the term ends, the market is negative but, the properties are still renting well, one can wait till it picks up again & sell later. In essence, be prepared for long(ish) term view rather than banking solely on future profit (if possible) from uprise in house values. This is a nice option to have as a back drop to pure p2p investments with which we have seen declining rates over the last few months. They are definitely income investments. It will be interesting to see if and PM investments have any potential resale market in a few years time. I feel the PM deals are too short term but at least we will be able to see what happens with them sooner.
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ben
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SPV34
Dec 19, 2015 23:28:49 GMT
Post by ben on Dec 19, 2015 23:28:49 GMT
Not to mention the effect of the property market in 2-3 yrs' time. PM & THC investments have a double advantage, imho. Firstly, you have the basic rent coming in (the bread & butter component). Secondly, if the capital growth bit comes up trumps, it's a nice bonus. If, when the term ends, the market is negative but, the properties are still renting well, one can wait till it picks up again & sell later. In essence, be prepared for long(ish) term view rather than banking solely on future profit (if possible) from uprise in house values. This is a nice option to have as a back drop to pure p2p investments with which we have seen declining rates over the last few months. They are definitely income investments. It will be interesting to see if and PM investments have any potential resale market in a few years time. I feel the PM deals are too short term but at least we will be able to see what happens with them sooner. I agree I have no intention of voting to sell in 2/3 years time if they are rented out and making money unless house prices has significantly increased. I see this as more of a longer term
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ben
Posts: 2,020
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SPV34
Dec 19, 2015 23:31:43 GMT
Post by ben on Dec 19, 2015 23:31:43 GMT
On a side note, my friend is a Chartered Surveyor who values for several p2p lending sites and has warned of the bubble that is surfacing within the HMO residential market. Can't really go into specifics but he has 20 years experience in the property market in the NW of England and rarely warns me about anything so when he does, I listen Is he basing this on current yields being lower than historical? They look okay to me but I haven't been investing for anywhere near 20 years. I suppose it depends if you are looking to make a killing on selling it on in the next few years or looking more for the long term. To me 5 years would be a better option for initial investment and then see, or even have them for sale at a set price and if anyone buys it then great if not nothing lost
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Steerpike
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SPV34
Dec 20, 2015 10:10:47 GMT
Post by Steerpike on Dec 20, 2015 10:10:47 GMT
There is always someone with a story about a bubble that will burst tomorrow, next quarter, or in a couple of years. North West safer than London |
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ben
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SPV34
Dec 20, 2015 10:39:14 GMT
Post by ben on Dec 20, 2015 10:39:14 GMT
There is always someone with a story about a bubble that will burst tomorrow, next quarter, or in a couple of years. North West safer than LondonTrue, even if house prices do not go up as PM estimate which is probably most likely it is unlikely the rent will go down
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adrianc
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SPV34
Dec 20, 2015 10:58:36 GMT
Post by adrianc on Dec 20, 2015 10:58:36 GMT
I can see both sides of the "HMO bubble coming" logic.
Yes, bubble:
- Lots of BtL money heading that way with little thought.
- Ever-increasing regulation.
No, it'll continue:
- More and more people looking to live in HMOs.
plus, of course, a myriad of other reasons on either side.
I think the reality will sit somewhere in the middle. As has been said, rents are unlikely to fall - and HMOs tend to be priced by yield rather than as residential properties. In practice, too, you'll find that any bubble effects will hit the ill-thought-out amateurs far quicker and harder than the properties owned and run by people-with-clue, such as we'd fondly imagine PM and THC to be. Then there's the restriction of exposure through diversification.
Strikes me that, if there is a strong likelihood of a bubble, that's a good argument to be investing in this sector through a wrapper like PM than diving in as a DIYer.
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SPV34
Dec 20, 2015 15:25:28 GMT
Post by Financial Thing on Dec 20, 2015 15:25:28 GMT
I will provide more specifics soon.
One thing I noticed in PM's recent report, occupancy rates in their HMO's have been lower than expected, therefore decreasing yields. I do know HMO's are notoriously difficult to manage, less reliable tenants who cause more wear and tear. Management quality is the key and how good the PM's adopted management is remains to be seen.
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Maestro
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SPV34
Dec 20, 2015 19:09:20 GMT
Post by Maestro on Dec 20, 2015 19:09:20 GMT
I have looked at some of the HMO deals being sold by some of these platforms, and decided against investing. My primary concern is that they are valuing property purely on (estimated) yield basis with no regard for the brick and mortar valuation.
I could live with pure yield valuation but if brick and mortar valuation is off by say 40-50% vs yield valuation I see this as a very high risk investment. If there is no one willing to buy this on cash as an HMO in 3 or 5 years time, IMO there is a high risk of capital loss.
My understanding is that it is very difficult to get bank financing on HMOs even today with very low mortgage rates, and relatively easy access to credit. In few years time lending standards may have tightened further, interest rates may be higher etc etc
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hazellend
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SPV34
Dec 20, 2015 21:45:12 GMT
Post by hazellend on Dec 20, 2015 21:45:12 GMT
I have looked at some of the HMO deals being sold by some of these platforms, and decided against investing. My primary concern is that they are valuing property purely on (estimated) yield basis with no regard for the brick and mortar valuation. I could live with pure yield valuation but if brick and mortar valuation is off by say 40-50% vs yield valuation I see this as a very high risk investment. If there is no one willing to buy this on cash as an HMO in 3 or 5 years time, IMO there is a high risk of capital loss. My understanding is that it is very difficult to get bank financing on HMOs even today with very low mortgage rates, and relatively easy access to credit. In few years time lending standards may have tightened further, interest rates may be higher etc etc A couple of PMs HMOs have had 2 - 3 months of zero tenants, so very poorly managed. Their mixed commercial properties have been very good for yield.
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ben
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SPV34
Dec 20, 2015 21:49:49 GMT
Post by ben on Dec 20, 2015 21:49:49 GMT
I have looked at some of the HMO deals being sold by some of these platforms, and decided against investing. My primary concern is that they are valuing property purely on (estimated) yield basis with no regard for the brick and mortar valuation. I could live with pure yield valuation but if brick and mortar valuation is off by say 40-50% vs yield valuation I see this as a very high risk investment. If there is no one willing to buy this on cash as an HMO in 3 or 5 years time, IMO there is a high risk of capital loss. My understanding is that it is very difficult to get bank financing on HMOs even today with very low mortgage rates, and relatively easy access to credit. In few years time lending standards may have tightened further, interest rates may be higher etc etc A couple of PMs HMOs have had 2 - 3 months of zero tenants, so very poorly managed. Their mixed commercial properties have been very good for yield. The mixed one appear best for yield
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