Thursday, August 14, 2008

Still Selling, or Sold Out?

With the credit crunch and fears of recession, fact or otherwise continually being written about in the press, one has to ask "Is there any money to be made in selling property anymore?"

Well, on the golf course, in the pub and according to the industry, yes there is, but on closer inspection of the market place, no-one seems to be buying except the heavily cash rich. So which is it?

Granted it can be argued that there are some bargains out there, but how much of a bargain are they really? We see agents purporting to advertise property and land for "less than 10K" only to find upon closer inspection that that is just the deposit, and the seem to have conveniently forgotten about the other several hundred thousand that's involved at some point!

Just nipping into Google and entering "cheap investment property", and what do we find? The second site in is claiming to promote "Free Property" in London! Now I am sure if it was all that simple, we would all be lazing around in Utopia without a care in the world, putting our £3k down and then getting £3k cashback, how simple is that?

On not very much closer inspection however with an "example property(This one is £5000 down, prices from £199,950)" we find that whilst the deposit is "paid", along with the Stamp Duty, Legal fees and a bunch of cash back on a different property than the banner ad on the front, the "average rental is apparently £725 per month.

So OK, sounds great! where can I get one? in fact I'll take 2! But hold on a moment, what about the mortgage?, So, off I pootle again to Google, and this time type in "UK Mortgage Quote" and take a top 3 site from there and very carefully enter in the numbers. Property cost (not "value")
and take into account the 10% down already in the deal.

After calculating very carefully using the days interest rate, and working on 25 years, interest only is £990 per month, and interest plus capital is £1241.12 per month!

Given this, the property that is apparently £3000, that I also cannot live in, because I need to rent it out, has just bought me £516.12 per month worth of debt, so all in, over 25 years and hoping that the interest rates don't go any higher, this "£5000" property has actually cost me £154,836 even if I rent it out for 25 years!!!!!

There is no claim or statement about commissions being included, or the percentage or charge involved, and as much as this is property for sale, is it really any wonder at all that no-one is buying with figures like that?

What I would like to know, and this is just one example I came across, but how much money is there in this business, and how do I get some of the action if there is that much?

Anyone wanting to buy £150k of debt for £5k, please do let me know.....

COMING SOON! Bargains in the USA?

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