Credit deflation and the reflation cycle to come (part 2)

[Loki]

2 minutes ago, ThoughtCriminal said:

 

Has anyone any ideas which investment would be the best hedge against the Armageddon scenario? If indeed there is one.

Precious metals, tinned food, and sharpened spoons.

Have a read of the SHTF Survivor series (Tales of the Yugoslav War) 

[ThoughtCriminal]

5 minutes ago, Loki said:

Precious metals, tinned food, and sharpened spoons.

Have a read of the SHTF Survivor series (Tales of the Yugoslav War) 

Just googled that. Jesus. 😳

 

I think you’re right about precious metals. They’re the only asset I can think of that would do well in both scenarios.

 

Madness not to have significant amounts in my opinion.

[Loki]

2 minutes ago, ThoughtCriminal said:

Just googled that. Jesus. 😳

 

I think you’re right about precious metals. They’re the only asset I can think of that would do well in both scenarios.

 

Madness not to have significant amounts in my opinion.

I don't know much, but being around the trades on site the key thing to remember is "Rather be looking at it than for it"

'FOR FUCKS SAKE WHERE'S THE DISCOMBOBULATION VALVE????' 

[ThoughtCriminal]

7 minutes ago, Loki said:

I don't know much, but being around the trades on site the key thing to remember is "Rather be looking at it than for it"

'FOR FUCKS SAKE WHERE'S THE DISCOMBOBULATION VALVE????' 

🤣🤣

 

I run my own demolition and asbestos removal company, and discombobulaters are always being hunted for Haha

[DurhamBorn]

2 hours ago, ThoughtCriminal said:

Yes, I follow SP’s counter narrative thoughts very closely on here.

 

Whilst having the greatest respect for DB (we wouldn’t be here without him) and STILL thinking he’s VERY likely to be right, I do have an uncomfortable nagging voice in my head that’s telling me the Bankers are greatly underestimating what’s happening and what’s required to get out. 
 

Has anyone any ideas which investment would be the best hedge against the Armageddon scenario? If indeed there is one.

Yep,very real risk.Remember these are macro road maps,and its what we EXPECT them to do that turns things,if they dont,or if they act too slow etc then the road map simply carries on.All we can do is try to avoid as much of the draw down as we can.Try to cover other bases etc.

I dont see complete collapse simply due to us being in deflation giving the CB unlimited room,but there is still huge risk of 50% drops in many areas.

There is a nice 3 bed ex council link house just come up around the corner from me for £65k needs a kitchen and new central heating,so £70k,im tempted to buy it.Simple reason is it gives me another asset outside of the banking system,even if it might be dead money.Its also tempting to put the rent at £380 instead of the £450 around here on those houses.With no leverage i can always be cheaper than most.I would have to do some self-flagellation though wouldnt i 

[reformed nice guy]

3 hours ago, M S E Refugee said:

https://www.hl.co.uk/shares/shares-search-results/p/petroleo-braseileiro-sa-petrobras-ads

Has anybody got any thought about Petrobras?

I bought them when they were low. I have family that have worked for them. The biggest draw for me is the state backing!

[ThoughtCriminal]

4 minutes ago, DurhamBorn said:

Yep,very real risk.Remember these are macro road maps,and its what we EXPECT them to do that turns things,if they dont,or if they act too slow etc then the road map simply carries on.All we can do is try to avoid as much of the draw down as we can.Try to cover other bases etc.

I dont see complete collapse simply due to us being in deflation giving the CB unlimited room,but there is still huge risk of 50% drops in many areas.

There is a nice 3 bed ex council link house just come up around the corner from me for £65k needs a kitchen and new central heating,so £70k,im tempted to buy it.Simple reason is it gives me another asset outside of the banking system,even if it might be dead money.Its also tempting to put the rent at £380 instead of the £450 around here on those houses.With no leverage i can always be cheaper than most.I would have to do some self-flagellation though wouldnt i 

Funny you say that about a house DB as I was going ask what you in particular, but also anyone in general, thought about a cheap house to rent out as part of a diversification strategy.

 

ive been offered the chance to buy a 3 bed ex council house from a friend here in Teesside. They go for 65-70 but he o my wants 60k as he’s decide he’s had enough of the U.K. and is emigrating to Hungary with his gf. Needs no work (house not his gf) as kitchen, bathroom all new. 10% yield with a long term tenant already in who causes no problems.

 

Ethics aside (I don’t really care if I’m honest) I’m very tempted. Thoughts welcome from anyone. Good or bad.

[MrXxxx]

6 minutes ago, ThoughtCriminal said:

Funny you say that about a house DB as I was going ask what you in particular, but also anyone in general, thought about a cheap house to rent out as part of a diversification strategy.

 

ive been offered the chance to buy a 3 bed ex council house from a friend here in Teesside. They go for 65-70 but he o my wants 60k as he’s decide he’s had enough of the U.K. and is emigrating to Hungary with his gf. Needs no work (house not his gf) as kitchen, bathroom all new. 10% yield with a long term tenant already in who causes no problems.

 

Ethics aside (I don’t really care if I’m honest) I’m very tempted. Thoughts welcome from anyone. Good or bad.

The only thing with residential property is the hassle of letting management (you don't get this with other assets as if you choose you can just buy and forget), and the lack of liquidity, especially important if government decide to change policy and/or taxation...methinks if you want the diversity in your portfolio you are better off with a REIT or specialist fund.

[Agent ZigZag]

45 minutes ago, DurhamBorn said:

Yep,very real risk.Remember these are macro road maps,and its what we EXPECT them to do that turns things,if they dont,or if they act too slow etc then the road map simply carries on.All we can do is try to avoid as much of the draw down as we can.Try to cover other bases etc.

I dont see complete collapse simply due to us being in deflation giving the CB unlimited room,but there is still huge risk of 50% drops in many areas.

There is a nice 3 bed ex council link house just come up around the corner from me for £65k needs a kitchen and new central heating,so £70k,im tempted to buy it.Simple reason is it gives me another asset outside of the banking system,even if it might be dead money.Its also tempting to put the rent at £380 instead of the £450 around here on those houses.With no leverage i can always be cheaper than most.I would have to do some self-flagellation though wouldnt i 

Is the rent weekly or monthly at monthly I wouldn’t be tempted.

[CVG]

49 minutes ago, DurhamBorn said:

There is a nice 3 bed ex council link house just come up around the corner from me for £65k needs a kitchen and new central heating,so £70k,im tempted to buy it.Simple reason is it gives me another asset outside of the banking system,even if it might be dead money.Its also tempting to put the rent at £380 instead of the £450 around here on those houses.With no leverage i can always be cheaper than most.I would have to do some self-flagellation though wouldnt i 

You'll be permanently banished from TOS!

[JREWING]

https://www.hl.co.uk/investment-services/vantage-service/transferring-your-existing-investments/cash-back-offer-extension

 

Anyone recieved their cashback offer – Spring 2020 – SIPP transfers

 

Yet?

[Sasquatch]

1 hour ago, DurhamBorn said:

There is a nice 3 bed ex council link house just come up around the corner from me for £65k needs a kitchen and new central heating,so £70k,im tempted to buy it.Simple reason is it gives me another asset outside of the banking system,even if it might be dead money.Its also tempting to put the rent at £380 instead of the £450 around here on those houses.With no leverage i can always be cheaper than most.I would have to do some self-flagellation though wouldnt i 

This approach is very high up our list of possibilities for our surplus business money. I only have a relatively small SIPP so we need to generate income from somewhere (although the SIPP is about 75% geared towards PM and PM miners - maybe it will go to the moon??).

Assuming the SIPP moon shot doesn't work out, I'm comfortable with letting out houses. We owned three terraced houses between about 1999 and 2005. Other than one nightmare tenant, our tenants were fantastic and very pleased to  be able to rent a house in top order at a fair rent. We certainly didn't go for the top end of the range in terms of rental and made sure the houses were 100% maintained. We got out after a terrible tenancy where we ended up with an alcoholic tenant who basically lost the plot and cost us quite a lot in lost revenue and major hassles with eviction. Shelter got involved in the end (and they were utterly useless by the way). We were too busy with our business by then in any case.

Will be keeping an eye on the auction market in due course but we need to move first.

 

[sancho panza]

1 hour ago, ThoughtCriminal said:

Funny you say that about a house DB as I was going ask what you in particular, but also anyone in general, thought about a cheap house to rent out as part of a diversification strategy.

 

ive been offered the chance to buy a 3 bed ex council house from a friend here in Teesside. They go for 65-70 but he o my wants 60k as he’s decide he’s had enough of the U.K. and is emigrating to Hungary with his gf. Needs no work (house not his gf) as kitchen, bathroom all new. 10% yield with a long term tenant already in who causes no problems.

 

Ethics aside (I don’t really care if I’m honest) I’m very tempted. Thoughts welcome from anyone. Good or bad.

It's a lumpy investment if you only have one.10% yield++ is viable.Especially if bought with cash.

Being an LL gets hard wehn you're working a 6% gross yiedl on a 70% LTV IO,section 24 on a 40% income ,outsdie of a limited company(ie your assets are exposed in the default chain).

Big issues are non payment,tenants wrecking the place.We rent and much as I get on with my LL if he serves me a section 21 then he'll need to spend a lot of cash to get us out if we're not of a mind too.Getting people out is a big issue,particualrly if they have kids,even for non payment.

I'm genuinely surprised at the attitude of some LL's to tenants in that they don't see them as a customer but an encumbrance.

If you approach it a business,get a good tenant and keep them,then by the time you hit a decent cost eviction(hopefully you never will if you're shrewd),you'll have some reserves to pay the court costs.

A guy at my work had two BTL's(paramedic),from what it sounded like he had boguth near the 07 peak iirc,IO etc,ended up funding two evictions by doing loads of overtime(cost circa £5k iirc)...........because he couldn't use the rent they weren't paying.

With the sort of yield you're looking at -same with DB's potential purchase-and the the fact you're forward looking enough to read this thread,then there's a lot of room for manouvre.

Unlike the guy here.Probably buillt for sale at £500,000 at prices in Jan 20,asking £1250pcm,probably get £1000pcm.gross yield circa 2%.One non payer and you'll be waiting a few years to claw it back.

For me the yields higher up the chain don't bear any scrutiny.

https://www.rightmove.co.uk/property-to-rent/property-77754796.html

[sancho panza]

57 minutes ago, Sasquatch said:

This approach is very high up our list of possibilities for our surplus business money. I only have a relatively small SIPP so we need to generate income from somewhere (although the SIPP is about 75% geared towards PM and PM miners - maybe it will go to the moon??).

Assuming the SIPP moon shot doesn't work out, I'm comfortable with letting out houses. We owned three terraced houses between about 1999 and 2005. Other than one nightmare tenant, our tenants were fantastic and very pleased to  be able to rent a house in top order at a fair rent. We certainly didn't go for the top end of the range in terms of rental and made sure the houses were 100% maintained. We got out after a terrible tenancy where we ended up with an alcoholic tenant who basically lost the plot and cost us quite a lot in lost revenue and major hassles with eviction. Shelter got involved in the end (and they were utterly useless by the way). We were too busy with our business by then in any case.

Will be keeping an eye on the auction market in due course but we need to move first.

 

Sas, given my reply before id read yours,any chance you can go into some details of the eviction process and why it was so hard? understand if you;'d rather not.

 

its just that with all investments if the parameters of your worst case scenario are well established before purchase then it leessens the pain if the worst does happen.

[Hardhat]

Unless you're under 45 leave the houses for the rest of us 

[spygirl]

On 05/05/2020 at 10:13, spygirl said:

Strip back to statutory services.

Max 5 days paid sick days a year.

All Oaps to be funded by OAP assets. OAPs offered housing a local, all in one place OAP house. Otherwise OAP pay time n travel or carers/

 

Yorkshire councils could declare themselves 'bankrupt' in months due to pandemic

Yorkshire's town hall leaders could be forced to effectively declare themselves bankrupt this autumn because of the devastating toll the coronavirus pandemic is taking on their finances.

https://www.yorkshirepost.co.uk/news/politics/yorkshire-councils-could-declare-themselves-bankrupt-months-due-pandemic-2846622

 

The Yorkshire Post has been told by council chief executives across the region that they will struggle to meet their legal obligation to balance their books if no more government support arrives in the coming months.

They have already discussed the prospect of many of the 22 local authorities in the Yorkshire and the Humber region making a choreographed joint declaration that they have run out of money.

Only the services councils are legally obliged to provide would remain intact, with spending on services like parks, museums and economic development halted or dramatically pared back.

Those are the only services they should have been providing.

OMFG! No more economic development!!

 

[Castlevania]

27 minutes ago, sancho panza said:

It's a lumpy investment if you only have one.10% yield++ is viable.Especially if bought with cash.

Being an LL gets hard wehn you're working a 6% gross yiedl on a 70% LTV IO,section 24 on a 40% income ,outsdie of a limited company(ie your assets are exposed in the default chain).

Big issues are non payment,tenants wrecking the place.We rent and much as I get on with my LL if he serves me a section 21 then he'll need to spend a lot of cash to get us out if we're not of a mind too.Getting people out is a big issue,particualrly if they have kids,even for non payment.

I'm genuinely surprised at the attitude of some LL's to tenants in that they don't see them as a customer but an encumbrance.

If you approach it a business,get a good tenant and keep them,then by the time you hit a decent cost eviction(hopefully you never will if you're shrewd),you'll have some reserves to pay the court costs.

A guy at my work had two BTL's(paramedic),from what it sounded like he had boguth near the 07 peak iirc,IO etc,ended up funding two evictions by doing loads of overtime(cost circa £5k iirc)...........because he couldn't use the rent they weren't paying.

With the sort of yield you're looking at -same with DB's potential purchase-and the the fact you're forward looking enough to read this thread,then there's a lot of room for manouvre.

Unlike the guy here.Probably buillt for sale at £500,000 at prices in Jan 20,asking £1250pcm,probably get £1000pcm.gross yield circa 2%.One non payer and you'll be waiting a few years to claw it back.

For me the yields higher up the chain don't bear any scrutiny.

https://www.rightmove.co.uk/property-to-rent/property-77754796.html

My old man and his business partner used to rent out the flats above their commercial premises - back in the day when no bank would lend for a flat above one. He always used to moan about what a pain in the arse it all was.

They had one tenant who they later realised had mental health issues. Every morning he’d wait beside the window for one of them to turn up for work by which point he’d leap into action, open the window and shout obscenities and slurs at them. It took them months to eventually evict him.

Another tenant had a small chip pan fire which damaged the paint on the walls. Panicking over losing his deposit, before he left he decided to repaint. He clearly bought the cheapest paint he could find and so the entire kitchen and front room were repainted in bright red.

One tenant died of aids.

I don’t think I’d want the hassle.

[ThoughtCriminal]

1 hour ago, sancho panza said:

It's a lumpy investment if you only have one.10% yield++ is viable.Especially if bought with cash.

Being an LL gets hard wehn you're working a 6% gross yiedl on a 70% LTV IO,section 24 on a 40% income ,outsdie of a limited company(ie your assets are exposed in the default chain).

Big issues are non payment,tenants wrecking the place.We rent and much as I get on with my LL if he serves me a section 21 then he'll need to spend a lot of cash to get us out if we're not of a mind too.Getting people out is a big issue,particualrly if they have kids,even for non payment.

I'm genuinely surprised at the attitude of some LL's to tenants in that they don't see them as a customer but an encumbrance.

If you approach it a business,get a good tenant and keep them,then by the time you hit a decent cost eviction(hopefully you never will if you're shrewd),you'll have some reserves to pay the court costs.

A guy at my work had two BTL's(paramedic),from what it sounded like he had boguth near the 07 peak iirc,IO etc,ended up funding two evictions by doing loads of overtime(cost circa £5k iirc)...........because he couldn't use the rent they weren't paying.

With the sort of yield you're looking at -same with DB's potential purchase-and the the fact you're forward looking enough to read this thread,then there's a lot of room for manouvre.

Unlike the guy here.Probably buillt for sale at £500,000 at prices in Jan 20,asking £1250pcm,probably get £1000pcm.gross yield circa 2%.One non payer and you'll be waiting a few years to claw it back.

For me the yields higher up the chain don't bear any scrutiny.

https://www.rightmove.co.uk/property-to-rent/property-77754796.html

Just what I was looking for SP. someone to make me consider the downsides, I knew you were the man. Not that I’m saying you’re a pessimist or anything. 😉

 

You’re right though, it is all hunky dory until its not. A bad tenant would see me and my German shepherd kicking the door in as I don’t suffer fools, but then do I really want that hassle? 
 

I wouldn’t pay tax on it as I think the chances of being caught for not doing so are infinitesimally small. 
 

In a rising market I think I’d do it in a heartbeat, but in these conditions it’s really not so clear cut. 
 

I think I need to ponder. 
 

Cheers SP

1 hour ago, sancho panza said:

 

Unlike the guy here.Probably buillt for sale at £500,000 at prices in Jan 20,asking £1250pcm,probably get £1000pcm.gross yield circa 2%.One non payer and you'll be waiting a few years to claw it back.

For me the yields higher up the chain don't bear any scrutiny.

https://www.rightmove.co.uk/property-to-rent/property-77754796.html

Yes, I’ve never understood the logic behind the higher end stuff. You pay 10 x the price but barely get more than twice the return. 

[ThoughtCriminal]

53 minutes ago, spygirl said:

Yorkshire councils could declare themselves 'bankrupt' in months due to pandemic

Yorkshire's town hall leaders could be forced to effectively declare themselves bankrupt this autumn because of the devastating toll the coronavirus pandemic is taking on their finances.

https://www.yorkshirepost.co.uk/news/politics/yorkshire-councils-could-declare-themselves-bankrupt-months-due-pandemic-2846622

 

The Yorkshire Post has been told by council chief executives across the region that they will struggle to meet their legal obligation to balance their books if no more government support arrives in the coming months.

They have already discussed the prospect of many of the 22 local authorities in the Yorkshire and the Humber region making a choreographed joint declaration that they have run out of money.

Only the services councils are legally obliged to provide would remain intact, with spending on services like parks, museums and economic development halted or dramatically pared back.

Those are the only services they should have been providing.

OMFG! No more economic development!!

 

And as ever with government, local or central, there’s never any metric for success or failure. 

 

If you asked any council about the success of their economic development spending they’d look at you like you were an alien and shrug. 

[Sasquatch]

1 hour ago, sancho panza said:

Sas, given my reply before id read yours,any chance you can go into some details of the eviction process and why it was so hard? understand if you;'d rather not.

 

its just that with all investments if the parameters of your worst case scenario are well established before purchase then it leessens the pain if the worst does happen.

We let the property (2 bed terrace) to a single lady. Probably in her 50's. Always very polite but I think she had had troubled life. We didn't use an agent and let it directly to her using an assured shorthold tenancy. She was getting some kind of benefit (can't remember what now) and that was paid to us directly and she topped it up. I think she had a part time job. Anyway, to cut the story short she had a major drinking problem and would go off grid at times and wouldn't answer the phone or the door. After about 12 months the benefit payments stopped and so did her contributions. We were then paid erratically but never enough and the arrears started to build up. She would sober up and plead with us to let her stay (I'll get myself sorted out etc, get a job etc). Looking back we were far too lenient. Eventually I think the debt built up to the equivalent of about 4 months rent and after more and more broken promises we set up a meeting with Shelter to sort things out. She didn't turn up! However, from Shelters perspective it was our problem, not the tenants. Eventually we'd had enough and served notice to leave. Shelter then advised her that we hadn't used exactly the right wording and we had to serve notice again. She stayed right up to the date stated in the eviction notice but then left of her own accord, leaving the house in a total mess. In the end we lost at least 6 months rent. All of our other tenancies were fine.

I'm not sure what would have happened if she had refused to leave by the stated date. Presumably we would have needed a court order and bailiffs.

In the future we would use an agent and make sure the vetting is more robust. As I said before, most people are extremely happy to let a fully maintained property in good order. 

[leonardratso]

hav i come to property118 by mistake?

Is that fat chav from benidorm or wherever gonna turn up?

[Sasquatch]

To add, our plan is potentially to buy 3 or 4 houses. Very likely to be 2 bed terrace or maybe a small bungalow. Either bought via auction and requiring refurbishment or something in good order maybe just needing freshening up.

The purchases would be 100% cash so no mortgage.

Something like this would be an interesting buy (but hopefully for a little less). In top condition. Modern. Likely rent ppm would be about £550.

https://www.rightmove.co.uk/property-for-sale/property-76168216.html

[JMD]

4 hours ago, DurhamBorn said:

Yep,very real risk.Remember these are macro road maps,and its what we EXPECT them to do that turns things,if they dont,or if they act too slow etc then the road map simply carries on.All we can do is try to avoid as much of the draw down as we can.Try to cover other bases etc.

I dont see complete collapse simply due to us being in deflation giving the CB unlimited room,but there is still huge risk of 50% drops in many areas.

There is a nice 3 bed ex council link house just come up around the corner from me for £65k needs a kitchen and new central heating,so £70k,im tempted to buy it.Simple reason is it gives me another asset outside of the banking system,even if it might be dead money.Its also tempting to put the rent at £380 instead of the £450 around here on those houses.With no leverage i can always be cheaper than most.I would have to do some self-flagellation though wouldnt i 

DB, great to see you have an open mind (joking of course), given what you have said about property prices etc, previously. Not being sarcastic btw, as I think this is crucial in identifying all sorts of opportunities in next cycle. Also if I may say it shows a certain fortitude of character to state this 'openly', ie. I expect you'll get some blowback from some here.                                                                                                                                                                                                                     Others have already commented about problem tennants, my advice here would be to only have female tennants, after all that would remove 90%+ of the type of 'characters' mentioned here by other landlords. I had a neighbour who successfully let his 5 flats on this basis. In fact for full disclosure I have been thinking of ways to deploy some of my own capitol (as I don't want to put all in the stock market), and have previously posted about this subject in regard to potentially buying a larger residential property in order to utilise part of it for letting, storage business, etc. 

[Loki]

Does anyone know if buying a plot of currently agricultural land comes with any ongoing costs/liabilities? 

I am not looking for planning permission, council can deal with that when they compulsory purchase it in 10 years

As a bloke, imagine being up to say "Going up the field, back later/Up the field lads, fire's lit, booze cold" 

[sleepwello'nights]

8 minutes ago, Loki said:

Does anyone know if buying a plot of currently agricultural land comes with any ongoing costs/liabilities? 

I am not looking for planning permission, council can deal with that when they compulsory purchase it in 10 years

As a bloke, imagine being up to say "Going up the field, back later/Up the field lads, fire's lit, booze cold" 

Woodland might be a better bet for you. You'll also have a source of firewood.