Negative equity advice wanted
5:09 PM, 26th February 2014, 12 years ago
29
Categories:
I have two apartments bought a the top of the market which now have £30k negative equity.
With mortgages, ground rent and service charges etc. I’m losing £100 each property every month.
I have 10 years left on the mortgages. 
Should I just hope for the best?
Thanks
Mark
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Damage to property
Member Since June 2013 - Comments: 8
8:39 PM, 26th February 2014, About 12 years ago
No Dss or pets allowed bae workers doctors mixture of tenants
Comments: 65
8:45 PM, 26th February 2014, About 12 years ago
Reply to the comment left by “mark walsh” at “26/02/2014 – 20:35“:
Impressive, only one 2 bed flat on Rightmove and Zoopla for £90k and only a few to let at £500 to £550.
If you paid £60K and got £550 that’s an 11% yield, well done!
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Member Since January 2011 - Comments: 12196 - Articles: 1396
8:57 PM, 26th February 2014, About 12 years ago
Reply to the comment left by “mark walsh” at “26/02/2014 – 20:39“:
I wouldn’t worry too much, on this basis rents and values are highly likely to rise over the next 10 years.
If I was still buying I’d be looking very seriously at these. I can see why my brother asked the questions he did, he’s still buying 🙂
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Member Since August 2013 - Comments: 126
11:17 PM, 26th February 2014, About 12 years ago
Reply to the comment left by “Mark Alexander” at “26/02/2014 – 20:57“:
Interest rates are likely to progressively rise over the same time frame. So any benefit of an improving economy may be neutralised.
Member Since July 2013 - Comments: 282 - Articles: 2
12:03 AM, 27th February 2014, About 12 years ago
Reply to the comment left by “Adam Alexander” at “26/02/2014 – 20:30“:
oiy! (barge out the way!)…..I’ll ‘ave a couple of those, thanks very much, with that return !!
£550pcm at 60k..that’s over 10% return.
..if you are under water at a 10% return, how is that ?
either the mortgage you have is at 8% or more, or the service charges and other charges are cripling the really good return.
Mark, can you give us a better understanding of why this is a problem for you, I may be interested in taking them off your hands at that return.
On a serious note:
Mark A. has said, “i wouldn’t worry too much”, but I am worried about how it can be the case that you are under water with these properties in the current climate.
Please tell me, how is this ? what has changed since you purchased them, apart from the rent, is it that much different, 600, now 450: you were working on a £50 margin per month, is that right ?
I said what’s changed, but 600 to 450 is quite a lot, but still, were you working on a £50 profit margin ?
Member Since January 2011 - Comments: 12196 - Articles: 1396
7:26 AM, 27th February 2014, About 12 years ago
Reply to the comment left by “Jeremy Smith” at “27/02/2014 – 00:03“:
Hi Jeremy
What the other Mark hasn’t told us is when he purchased the properties, how much he paid for them and how much he borrowed. Maybe he paid £120k in 2008 and borrowed 90% on a 10 year fixed rate?
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Member Since June 2013 - Comments: 8
7:33 AM, 27th February 2014, About 12 years ago
Reply to the comment left by “Mark Alexander” at “27/02/2014 – 07:26“:
What’s changed service charge doubled yes bought for 135k and people now buying for cash 60k then renting out for £450 forcing rents down
Member Since June 2013 - Comments: 8
7:36 AM, 27th February 2014, About 12 years ago
And there used to be a gym in the building and the leaseholder removed it this also forced rents down when we first bought we where getting 600 but it’s ok I’m in for the long hall just thought I would ask you all for some advice
Member Since August 2013 - Comments: 126
7:39 AM, 27th February 2014, About 12 years ago
The biggest mistake many investors make is to hang onto a poorly performing investment in the hope that tomorrow is better. Human nature I should add.
Member Since January 2011 - Comments: 12196 - Articles: 1396
7:39 AM, 27th February 2014, About 12 years ago
Reply to the comment left by “mark walsh” at “27/02/2014 – 07:33“:
Sounds like you bought into what I call a speculators ghetto.
They might well be nice properties but if they were all sold to chancers who bought them using “no money down” techniques this is what happens. They have no stake in the property so as soon as they run into problems they walk away and leave the lenders to pick up the pieces. The more that do this, the more blighted the development becomes. I saw this at London Docklands when it first became over developed, look what’s happened now.
Hold you nerve and if possible buy some more of them now. In 10 years time you will be very glad you did.
Get those service charges looked into by the way – how much did they start at and where are they pitched now?
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