Property Magic, Simon Zutshi. *******???

[rufusgti]

A friend passed me this book, and I will admit i'm only up to the third chapter.

http://www.amazon.co.uk/Property-Magic-Using-Peopl...

Just wondering if anyone else has read this. I noticed the other thread on "Rich dad, Poor dad" so thought this could go in the finance section also.

Firstly. His method seems to be based on what he considers the norm, That house prices double every 9-12 years and always have done. Now, I havn't checked the history of house prices, yet I did buy a house 7 years ago and it's still worth 20% less than I payed for it. It will Not be worth double in 3 years time. Ok, so I did buy at the wrong time, and I have witnessed huge capital gain in property in my lifetime prior to my purchase. But I think I'm correct that there's big differences between houses doubling in value over ten years from 20k to 40k. But it's very different when the average house price is what? 235k I believe. Those houses are extremely unlikely to double in ten years as wages always lag meaning lending would just dry up.

There's other things I distrust about this book but what are your feelings on this. Obviously nobody knows what prices will do over the next decade, which is why a struggle with someone advising £million worth of debt on the fact prices will double.

[Simpo Two]

'Past performance is not a guide to future performance' or something they say (just before the bit about crystal balls). But it must be self-evident that nothing can keep on doubling for ever - draw the graph and see for yourself. And check with Tescos

[z4RRSchris99]

very easy to make money in a rising market

but property is a cycle. always has been. anyone who thinks otherwise is a fool. If you hold ultra long term you can ride out cycles.

[bogie]

dont forget about inflation ....prices can double in ten years but in real terms you have made little unless it out grows inflation

check property versus the stock market over a 30 year period and property wasnt really that good unless you got lucky when you bought and sold ....mind you, similar with the stock market too

[to3m]

There's a graph here. As you might guess from the URL, the site could have something of a bias, but I'd imagine their numbers are realistic. (As property bears they'll doubtless subscribe to the doctrine of reversion to the mean, or something like - so they don't need to fudge anything.)

Look at the real house prices column: http://www.housepricecrash.co.uk/indices-nationwid...

See also: http://monevator.com/historical-uk-house-prices/

This suggests the theory is wrong. But if you pick the right 9-12 year period it might not seem like it.

[GrizzlyBear]

z4RRSchris99 said:

but property is a cycle. always has been. anyone who thinks otherwise is a fool.

Please tell our politicians, they keep on wasting increasing amounts of taxpayers money on ever more ludicrous schemes to support high prices, it worries me just how much of our money they are willing to waste to rig the market.

[Zoon]

Bit of a thread revival but this whole concept relies on buying properties from people who may get their homes repossessed and then renting it back to them for a share of the equity. A little unethical and pretty dodgy, the author makes his money from charging £2500 to attend a seminar.

[z4RRSchris]

Zoon said:

Bit of a thread revival but this whole concept relies on buying properties from people who may get their homes repossessed and then renting it back to them for a share of the equity. A little unethical and pretty dodgy, the author makes his money from charging £2500 to attend a seminar.

Not too sure how that would work.

If they may get their home repossessed its because they are either a) unable to keep paying repayments or b) underwater

if they are a) they should be selling up, but the usual reason why they cant sell up is because they are b) underwater.

in that situation the best thing to do is hand the keys back to the bank.

[NickCQ]

z4RRSchris said:

Not too sure how that would work.
If they may get their home repossessed its because they are either a) unable to keep paying repayments or b) underwater
if they are a) they should be selling up, but the usual reason why they cant sell up is because they are b) underwater.
in that situation the best thing to do is hand the keys back to the bank.

It's more complicated than that.

The reason that they are (a) unable to keep making repayments might be that they can't refinance due to (b) LTV or (c) changes in income or bank affordability criteria since they took out the mortgage.

Now they flip onto an SVR at 4-5% and are paying in excess of the rental yield in interest alone, as well as principal repayments, maintenance costs etc. Mortgage-to-rent schemes definitely have a place for these sorts of borrowers that can afford to pay the market value to occupy the property (i.e. the rent), but are trapped paying above that by an off-market mortgage arrangement.

Should be win-win because the bank avoids the enforcement costs (and bad publicity) but creates a liquid tenanted asset that should be easy to sell. Moreover the local council doesn't have a potentially vulnerable (maybe due to age) homeless family on its hands.

[Shnozz]

z4RRSchris99 said:

very easy to make money in a rising market

and also easy to make money selling books or how to guides on how easy it is to make money in property

[z4RRSchris]

NickCQ said:

It's more complicated than that.

The reason that they are (a) unable to keep making repayments might be that they can't refinance due to (b) LTV or (c) changes in income or bank affordability criteria since they took out the mortgage.

Now they flip onto an SVR at 4-5% and are paying in excess of the rental yield in interest alone, as well as principal repayments, maintenance costs etc. Mortgage-to-rent schemes definitely have a place for these sorts of borrowers that can afford to pay the market value to occupy the property (i.e. the rent), but are trapped paying above that by an off-market mortgage arrangement.

Should be win-win because the bank avoids the enforcement costs (and bad publicity) but creates a liquid tenanted asset that should be easy to sell. Moreover the local council doesn't have a potentially vulnerable (maybe due to age) homeless family on its hands.

that doesnt make much sense, why wouldnt the person in this situation just sell.. ? they are not trapped on an SVR.

[WF36]

Shnozz said:

and also easy to make money selling books or how to guides on how easy it is to make money in property

A bit like https://www.progressiveproperty.co.uk/ ?

[trowelhead]

Shnozz said:

and also easy to make money selling books or how to guides on how easy it is to make money in property

Can of worms, but this:
https://www.youtube.com/watch?v=vC5cmW8O3L8

Basically, the business model is free seminar or book, pressure upsell to weekend event costing £XXXX upsell to "mentorship programme" costing £XX,XXX

The "product/dream being sold" can be forex / property / options / bitcoin / random MLM whatever - all sold using a similar "formula" -

Not to say that the info sold is completely worthless - some of it MAY be useful. You MAY meet contacts doing these courses etc. But the main winners will be the people selling the dream.


They vary on a scale from legit to very very dodgy. Countless people on the "property" circuit have been jailed for fraud - there is some pretty horrendous tactics being used to pressure sell vulnerable people into taking £xx,xxx courses they cannot afford, pressing them to put it on a credit card.

This book is outdated now and the info is on the whole to be taken with a pinch of salt. Triple verify all claims made by these property gurus - the info is all out there.