Does anything out there pay about 10% interest/year?
Discussion
tight fart said:
Pal of mine funds a small developer with around £500k, secured against properties and gets a 1% per month return, all looks pretty safe to me.
Might sound safe to you, but ask yourself why would the developer prefer to pay 1% per month, rather than go to one of the larger banks like Handelsbanken who specialise in this area where they would pay a much lower rate?EddieSteadyGo said:
These are bulls
t figures. You are suggesting £6k per month from residential letting from £400k which equates to circa 18% gross margin.
My experience on this topic is from my family who specialise in this niche.
Firstly you are talking subprime property, and there are a lot of issues/costs to take account of most agents won't deal with. Secondly, you have exaggerated the returns.
Not sure how big your property portfolio is but dangling juicy carrots which don't exist doesn't help the OP.
Oh well, that's me told...t figures. You are suggesting £6k per month from residential letting from £400k which equates to circa 18% gross margin. My experience on this topic is from my family who specialise in this niche.
Firstly you are talking subprime property, and there are a lot of issues/costs to take account of most agents won't deal with. Secondly, you have exaggerated the returns.
Not sure how big your property portfolio is but dangling juicy carrots which don't exist doesn't help the OP.
But y'know I haven't always been a joyless lobotomised parrot. Once upon a time I was a Real Fun Guy! Hard to believe I know, but (seeing as it's Easter) here's a little story:
10 years ago or so I was in a gang of likeminded dodgy Scottish slum landlords. And one day, fed up with polishing our Lambos and Ferraris gleaned from preying on the hardworking poor, we decided we'd have a competition. Who could get the best yield from a property?
Here was my entry:
Price £2,500
Applicant/s Hidden
Property
Title No. Parent Property
GLA187746 - 14, Aitken Street, Glasgow, G31 3NA
Registry Title Description
Sale Date 7th February, 2008
Land Class Residential
Application Type Dealings with Whole (DW)
Deed Type/s Disposition
Other Sales of these Titles
Application No. Date Title Number Price
08GLA06204 07-Feb-2008 GLA187746 £2,500
06GLA27912 19-May-2006 GLA187746 £9,750
Good, eh? Mind you, it didn't win. Another flint eyed baby eating tax dodging scamp managed to get one for £ZERO which obviously beat all comers as it's 'yield' (as you would calculate it) becomes infinity. But not bad. And I've kept it ever since.
It's had 3 tenants since '08 and no voids. Currently it's just been re-rented to a very nice kid who rents a few commercials from me and she's actually just bought my business centre. So she gets a 'mate's rate' rent of £200 pcm. So. Cost £2500. Rent£200pcm. Which as you would calculate it is a 96%yield!
Bet your mum would like to own THAT one!
ps: Google "Glasgow Housing Benefit rates". See the 1-bed rate? That's paid for studios and r&k's too. Now get a calculator and do the math. 18% Pah! That's for newbies!
Happy Easter
joyless lobotomised parrot said:
EddieSteadyGo said:
These are bullst figures. You are suggesting £6k per month from residential letting from £400k which equates to circa 18% gross margin.
My experience on this topic is from my family who specialise in this niche.
Firstly you are talking subprime property, and there are a lot of issues/costs to take account of most agents won't deal with. Secondly, you have exaggerated the returns.
Not sure how big your property portfolio is but dangling juicy carrots which don't exist doesn't help the OP.
Oh well, that's me told...t figures. You are suggesting £6k per month from residential letting from £400k which equates to circa 18% gross margin. My experience on this topic is from my family who specialise in this niche.
Firstly you are talking subprime property, and there are a lot of issues/costs to take account of most agents won't deal with. Secondly, you have exaggerated the returns.
Not sure how big your property portfolio is but dangling juicy carrots which don't exist doesn't help the OP.
But y'know I haven't always been a joyless lobotomised parrot. Once upon a time I was a Real Fun Guy! Hard to believe I know, but (seeing as it's Easter) here's a little story:
10 years ago or so I was in a gang of likeminded dodgy Scottish slum landlords. And one day, fed up with polishing our Lambos and Ferraris gleaned from preying on the hardworking poor, we decided we'd have a competition. Who could get the best yield from a property?
Here was my entry:
Price £2,500
Applicant/s Hidden
Property
Title No. Parent Property
GLA187746 - 14, Aitken Street, Glasgow, G31 3NA
Registry Title Description
Sale Date 7th February, 2008
Land Class Residential
Application Type Dealings with Whole (DW)
Deed Type/s Disposition
Other Sales of these Titles
Application No. Date Title Number Price
08GLA06204 07-Feb-2008 GLA187746 £2,500
06GLA27912 19-May-2006 GLA187746 £9,750
Good, eh? Mind you, it didn't win. Another flint eyed baby eating tax dodging scamp managed to get one for £ZERO which obviously beat all comers as it's 'yield' (as you would calculate it) becomes infinity. But not bad. And I've kept it ever since.
It's had 3 tenants since '08 and no voids. Currently it's just been re-rented to a very nice kid who rents a few commercials from me and she's actually just bought my business centre. So she gets a 'mate's rate' rent of £200 pcm. So. Cost £2500. Rent£200pcm. Which as you would calculate it is a 96%yield!
Bet your mum would like to own THAT one!
ps: Google "Glasgow Housing Benefit rates". See the 1-bed rate? That's paid for studios and r&k's too. Now get a calculator and do the math. 18% Pah! That's for newbies!
Happy Easter
EddieSteadyGo said:
tight fart said:
Pal of mine funds a small developer with around £500k, secured against properties and gets a 1% per month return, all looks pretty safe to me.
Might sound safe to you, but ask yourself why would the developer prefer to pay 1% per month, rather than go to one of the larger banks like Handelsbanken who specialise in this area where they would pay a much lower rate?You asked why not go to a bank -
Speed, flexibility, privacy to name a few. I know a significant number of developers and they are all funded in this way without exception. They want to be able move fast, change collateral on a regular basis, bridge & part pay loans as funds flow, none of which is easy to do with the commercial funders.
Regarding risk - nothing is risk free and you need to be clear what you are getting into, but a first charge on a piece of land worth 3 times the loan, is about as secure as it gets at that level of return.
The point about timing and how quickly you can get your money back is the most valid because if you can't be flexible on that, then you need to look elsewhere.
cashmax said:
EddieSteadyGo said:
tight fart said:
Pal of mine funds a small developer with around £500k, secured against properties and gets a 1% per month return, all looks pretty safe to me.
Might sound safe to you, but ask yourself why would the developer prefer to pay 1% per month, rather than go to one of the larger banks like Handelsbanken who specialise in this area where they would pay a much lower rate?You asked why not go to a bank -
Speed, flexibility, privacy to name a few. I know a significant number of developers and they are all funded in this way without exception. They want to be able move fast, change collateral on a regular basis, bridge & part pay loans as funds flow, none of which is easy to do with the commercial funders.
Regarding risk - nothing is risk free and you need to be clear what you are getting into, but a first charge on a piece of land worth 3 times the loan, is about as secure as it gets at that level of return.
The point about timing and how quickly you can get your money back is the most valid because if you can't be flexible on that, then you need to look elsewhere.
Edited by joyless lobotomised parrot on Monday 2nd April 16:45
cashmax said:
Speed, flexibility, privacy to name a few. I know a significant number of developers and they are all funded in this way without exception. They want to be able move fast, change collateral on a regular basis, bridge & part pay loans as funds flow, none of which is easy to do with the commercial funders.
Regarding risk - nothing is risk free and you need to be clear what you are getting into, but a first charge on a piece of land worth 3 times the loan, is about as secure as it gets at that level of return.
I accept it is a common practise for some developers to use this method. And I would add another reason to your list : this type of lending from the banks usually involves numerous and various fees which can bump up significantly what appears initially to be an attractive headline rate.Regarding risk - nothing is risk free and you need to be clear what you are getting into, but a first charge on a piece of land worth 3 times the loan, is about as secure as it gets at that level of return.
EddieSteadyGo said:
cashmax said:
Speed, flexibility, privacy to name a few. I know a significant number of developers and they are all funded in this way without exception. They want to be able move fast, change collateral on a regular basis, bridge & part pay loans as funds flow, none of which is easy to do with the commercial funders.
Regarding risk - nothing is risk free and you need to be clear what you are getting into, but a first charge on a piece of land worth 3 times the loan, is about as secure as it gets at that level of return.
I accept it is a common practise for some developers to use this method. And I would add another reason to your list : this type of lending from the banks usually involves numerous and various fees which can bump up significantly what appears initially to be an attractive headline rate.Regarding risk - nothing is risk free and you need to be clear what you are getting into, but a first charge on a piece of land worth 3 times the loan, is about as secure as it gets at that level of return.
Do the Lendy's and Bridgecrowd's answer that problem? (opinions appreciated as I'm very interested myself)
Granfondo said:
DoubleSix said:
Don’t feed the troll folks - should be banned as wading through his inane drivel is beyond tiresome...
Why should posting very good percentage returns on a thread that was looking for good returns get him banned?To be fair, I quite like some of Braindrain's posts but on the returns from subprime properties, I think he often only tells one half of the story.
Yields are definitely a lot higher than you get from buying and then letting a 2 bedroom North London flat to a professional couple.
But on the other hand the problems can be much more numerous and serious, and are certainly outside the realm of what a normal lettings agent will deal with.
Direct examples are one tenant found by the police to be growing a cannabis farm, one starting a serious fire deliberately, negligent use of the property causing serious flooding, tampering with electric meters potentially making a lethal system, not always paying rents on time etc etc.
Now I am not saying this happens each and every day - in fact through careful tenant vetting it is rare, but to imply it is the type of business you could run remotely and reap 10%+ returns with little effort is not realistic IMHO
.EddieSteadyGo said:
Granfondo said:
DoubleSix said:
Don’t feed the troll folks - should be banned as wading through his inane drivel is beyond tiresome...
Why should posting very good percentage returns on a thread that was looking for good returns get him banned?To be fair, I quite like some of Braindrain's posts but on the returns from subprime properties, I think he often only tells one half of the story.
Yields are definitely a lot higher than you get from buying and then letting a 2 bedroom North London flat to a professional couple.
But on the other hand the problems can be much more numerous and serious, and are certainly outside the realm of what a normal lettings agent will deal with.
Direct examples are one tenant found by the police to be growing a cannabis farm, one starting a serious fire deliberately, negligent use of the property causing serious flooding, tampering with electric meters potentially making a lethal system, not always paying rents on time etc etc.
Now I am not saying this happens each and every day - in fact through careful tenant vetting it is rare, but to imply it is the type of business you could run remotely and reap 10%+ returns with little effort is not realistic IMHO
.Here's an example of a company (Cairn) which specialises in portfolio sales of just such properties:
http://www.rightmove.co.uk/property-for-sale/prope...
Properly managed/let that portfolio would do about £22kpcm and I'd be surprised if it sells to a local. More likely to a Chinese buyer via a certain law firm in that area who has a niche market of supplying just such portfolios to just such buyers from China.
Edited by joyless lobotomised parrot on Monday 2nd April 17:17
EddieSteadyGo said:
I realised it was Braindrain after I posted lol.
To be fair, I quite like some of Braindrain's posts but on the returns from subprime properties, I think he often only tells one half of the story.
Yields are definitely a lot higher than you get from buying and then letting a 2 bedroom North London flat to a professional couple.
But on the other hand the problems can be much more numerous and serious, and are certainly outside the realm of what a normal lettings agent will deal with.
Direct examples are one tenant found by the police to be growing a cannabis farm, one starting a serious fire deliberately, negligent use of the property causing serious flooding, tampering with electric meters potentially making a lethal system, not always paying rents on time etc etc.
Now I am not saying this happens each and every day - in fact through careful tenant vetting it is rare, but to imply it is the type of business you could run remotely and reap 10%+ returns with little effort is not realistic IMHO.
A lot less risky than some of the "investments" mentioned on here. To be fair, I quite like some of Braindrain's posts but on the returns from subprime properties, I think he often only tells one half of the story.
Yields are definitely a lot higher than you get from buying and then letting a 2 bedroom North London flat to a professional couple.
But on the other hand the problems can be much more numerous and serious, and are certainly outside the realm of what a normal lettings agent will deal with.
Direct examples are one tenant found by the police to be growing a cannabis farm, one starting a serious fire deliberately, negligent use of the property causing serious flooding, tampering with electric meters potentially making a lethal system, not always paying rents on time etc etc.
Now I am not saying this happens each and every day - in fact through careful tenant vetting it is rare, but to imply it is the type of business you could run remotely and reap 10%+ returns with little effort is not realistic IMHO
.Also - I see Lendy mentioned. My experience based on an investment of 10K when they were Savingstream -
Got nervous when I saw their valuations were often fiction and changed my loans to stop rolling over.
Got £7.5K out and the other £2.5K is now all defaulted and all at least a year ago. Some of the valuations mean that property is being sold at a huge loss (example - house in Surrey valued at £4M, loan of £2.7M, just about to sell for £2.1M) so I will loose a large proportion of my capital.
When all said and done I will exit Lendy with 90% of the original investment after taking into account the interest on the successful loans.
Funding secure was much better with less loans and much better researched.
Got nervous when I saw their valuations were often fiction and changed my loans to stop rolling over.
Got £7.5K out and the other £2.5K is now all defaulted and all at least a year ago. Some of the valuations mean that property is being sold at a huge loss (example - house in Surrey valued at £4M, loan of £2.7M, just about to sell for £2.1M) so I will loose a large proportion of my capital.
When all said and done I will exit Lendy with 90% of the original investment after taking into account the interest on the successful loans.
Funding secure was much better with less loans and much better researched.
cashmax said:
Also - I see Lendy mentioned. My experience based on an investment of 10K when they were Savingstream -
Got nervous when I saw their valuations were often fiction and changed my loans to stop rolling over.
Got £7.5K out and the other £2.5K is now all defaulted and all at least a year ago. Some of the valuations mean that property is being sold at a huge loss (example - house in Surrey valued at £4M, loan of £2.7M, just about to sell for £2.1M) so I will loose a large proportion of my capital.
When all said and done I will exit Lendy with 90% of the original investment after taking into account the interest on the successful loans.
Funding secure was much better with less loans and much better researched.
Surprised they don't use fsv's rather than open market. All the bridgers or short term private lenders I've met/used would always want a forced sale value. But thanks for the forewarning. Got nervous when I saw their valuations were often fiction and changed my loans to stop rolling over.
Got £7.5K out and the other £2.5K is now all defaulted and all at least a year ago. Some of the valuations mean that property is being sold at a huge loss (example - house in Surrey valued at £4M, loan of £2.7M, just about to sell for £2.1M) so I will loose a large proportion of my capital.
When all said and done I will exit Lendy with 90% of the original investment after taking into account the interest on the successful loans.
Funding secure was much better with less loans and much better researched.
Mind you, a £4m resi was always going to hit a pretty restricted market if it had to be sold. The expensive stuff is probably the very hardest to sell just now and not just In S-E.
cashmax said:
Got £7.5K out and the other £2.5K is now all defaulted and all at least a year ago. Some of the valuations mean that property is being sold at a huge loss (example - house in Surrey valued at £4M, loan of £2.7M, just about to sell for £2.1M) so I will loose a large proportion of my capital.
Sorry to hear that this particular investment isn't going to pay off. No question that the £2m+ housing market is going through a 'tough time' at the moment.EddieSteadyGo said:
joyless lobotomised parrot said:
You are way way wrong about this, Eddie. etc etc
I realise you have a lot of experience on this topic, but I think we will have to agree to disagree on this one 
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