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It's no secret that leveraged property investment has been very lucrative in recent decades, but people have been made bankrupt as well, especially in 2008. I'm trying to get to grips with how people with larger portfolios sleep at night with lots of mortgage debt to their name. Let's say I have one Buy-To-Let worth £200k with £150k debt against it and it's held in an SPV with a 20% personal guarantee (PG). The most I can lose personally is 20% of debt, so £30k. This isn't too scary, unless I've spent all my money it probably won't bankrupt me and it's not an insurmountable amount of money to rebuild. Anyone hoping to grow big though is going to one day end up with much more debt than this, perhaps they will end up with 20 of the same property, worth a total of £4M with £3M debt and the same 20% PG. Now they are personally liable for up to £600k! That's a much scarier amount. I can think of a few ways investors might justify these risks and I'd be interested to get your thoughts. A) prices will never fall more than 25% and so negative equity will never occur, and if the property needs remortaging at this price (which won't be possible without putting new money in because of the new value) then it can be easily sold to cover the debt. B ) before prices get anywhere near dropping by 25%, the government will step in to support the housing market C) The investor has sufficient other assets to cover any insolvency in their property portfolio I get the impression that a lot of people are either not thinking about this risk or thinking of A and B. In my eyes at the moment, only C is really that safe. If the properties are held personally or with a larger PG, then much more is at risk. As an investor grows their portfolio, they might be under the impression that they are unstoppable, but if they keep up a mortgage LTV of 75% across their portfolio, they are no more safe against bankruptcy than someone with a single property, and in fact have more to lose. Please let me know what you think, do you have a way to mitigate against these risks? Am I missing something? Thanks

Hello, I have question for anyone who wants to contribute please.... How do you value a property in a 'hot' or quickly inflating market? For the last year or so, I have found it really challenging to confidently assess the value of residential property in the UK. The normal method I would use, which is mainly Rightmove/Zoopla sold prices for the street and immediately surrounding streets has started to bear very little resemblance to what properties are selling for in the current market. I started to pay more attention to the 'Under Offer' section on Rightmove to get a sense of buyer demand on pricing, but for most properties this is currently significantly higher than sold prices...showing that demand is causing fast inflation in most areas. I would previously usually ignore 'For Sale' prices as these are estate agent valuations, which are generally optimistic and often end up being negotiated down or reduced by the seller. However, it does seem in the current market that there are less properties being reduced in price than in previous years. As the majority of properties are bought with residential mortgages, RICS surveyors are obviously approving the valuations on these properties, even though they are often 10-30% higher than the previous sold prices in that local area. I would really like to get a better understanding of how this calculation is made. Are there certain tools, methods, formulas etc (other than the ones I mention in this post) that can be used to confidently tell that a property is correctly valued when it is priced significantly higher than previous sold prices in that area? I always used to ignore the Zoopla home values estimates https://www.zoopla.co.uk/home-values/ - these are so wide ranging that I felt I couldn't use them to accurately predict what most properties would sell for. However, recently I realised that they presumably include 'under offer' prices and some element of % market inflation into their value calculations...and now I am actually finding that the 'High' estimate in this tool is a closer indication to what most properties are selling for than using Rightmove sold prices. Do you include an element of market forecasting in the valuation, as a way of future proofing the risk? For example, if the Savills residential property forecast for that region shows a predicted 4% increase in the next year...would that be used as a buffer to offset the lack of proof available from sold prices due to the inflated value being paid for the property? It seems that as long as the mortgage deposit (e.g. a minimum of 10% for residential and 25% buy-to-let) is more than the uncertainty or margin of error around the valuation, that lenders are probably not too bothered about inflated values, because they know they could repossess the property and sell it for enough to cover their costs and profit? Obviously this scenario is very bad for the property owner who overpays and then has to sell but unfortunately one of the consequences of a housing crash. Finally, auction guide prices. These would usually be set at least 15-25% below what the same property would achieve on the open market, based on sold prices. However, I have recently looked at some new listings for upcoming auctions and many of the guide prices are higher than Rightmove sold prices for the area. This suggests to me that even the 'discount' end of the market is undergoing such strong inflation that valuing a property is more of a leap of faith than a considered calculation at the moment. How do you know that the prices properties are selling for are not overly inflated and would cause negative equity if the market crashes in the next few years? Obviously choosing high yielding BTL properties with the intention of holding them long term would mitigate this risk to a certain extent...but it would mean you wouldn't be able to remortgage to withdraw funds for further investment for potentially quite a long time. Any feedback and advice would be appreciated please. I am interested from both a BTL and flipping perspective, but also as a home owner. Many thanks, James

Hello, I'm looking for some advice around making offers on properties which may be suitable for conversion. I'm interested in converting commercial properties to residential but I'd also be interested in what people with purely residential development have to say. I've not bought a commercial property before and I'm wondering about the following actions and whether they would normally be conducted before making an offer or after an offer is accepted: - Appointing a planning consultant to advise on permitted development for change of use. - Appointing an architect and having them advise on the potential reconfiguration. - Engaging with contractors/builders for quotes or full tender process. I may be 90% sure that permitted development would be granted, have a good idea of what configuration might work and have a reasonable idea of what the development costs would be, but still not quite be willing to committing to buy it without being more sure about the project's viability. If I did all of the above before offering, that could cost thousands of pounds only to have my offer rejected. If I did all the above after an offer is accepted and it emerges that permitted development is less likely that I thought or the development cost is going to be a lot more than I thought, is it normal for a developer simply to pull out of the deal at that point? Not having done the whole process before, I'm keen to know how people de-risk this process. Looking forward to hearing what you have to say. Thanks in advance!

Dear Community, I'm an international first time investor who put his live savings into Student accommodation project called "Aura Liverpool". Their sales pitch was really attractive, 8% return guarantee for 5 years. My purchase (paying 50% of the value) took place on July 2018 with an intended completion date in September 2019 (and a long stop date on September 2020). Later on, they send a "project update" saying the completion will be on September 2020. And Now, due to a developer issue, they need to refinance the project and the lender is asking for all investors contracts to be revised and to extended the long stop date to another year, hence September 2021. My solicitor is saying that my capital is at risk, and even if i decided not to amend the contract and enforced my refund on the original long stop date, he feels i might not even get that if the project goes bankrupt. I'm seeking some guidance fro some experience investor. What should i do? Does anybody else have invested in this particular project? Thanks.

Hi Maybe I'm being negative, but what are all the downside risks (ways of losing money) from property investing? And the way to manage that risk so you lose as little as possible. Here is my list - please comment/advise! 1. Increased interest rates. Manage by making sure you are still cash flow positive even if they increase by +1% 2. Property market crash. Manage by making sure I wont need the cash that would force me to sell during a crash. 3. Reduction in rent value. Manage by working out what happens if rental income is reduced by 10% and make sure it's still cash flow positive. 4. Government make it even less profitable for private landlords. Not sure! 5. Fire etc. Manage by insurance. 6. Keeping up to date with the rules and regs. What is a good website for that? 7. As a general tool, put the properties in limited companies in my partner's name so if something goes wrong, it doesn't infect the assets in my name.

Hello, I am very new to property investment I am 40 and currently working. I have read a couple of books from Rob D already and I was thinking to implement one of the strategies in his book. Basically I want to start investing by buying 1 property (1 or 2 bed flat in say London) every 1.5 years. I will keep working during those 15 years and I will have the deposit coming from savings I made while working. After 15 years, I will end up with 10 properties and assume that property doubles in price every 9-10 years in London (and this is the big if), on average all 10 properties would have doubled in price (some will be less others more depending when they were bought). I can pay out all of the mortgages by selling just 5 properties and now I end up with 5 properties which I completely own. Now it is time to retire and live exclusively on the rental income of those 5 properties (if in London each 1-2 bedroom flat should rent for more or less £1300, which is a comfortable gross £6500/month income). My question now, does this seem like a reasonable strategy, have I missed something? and most importantly, the whole strategy relies on the fact that property prices will double (in London) in the next 10 years. Is this reasonable to assume and what is the chance for it happening? If not, how can hedge against this risk or what should I add to my strategy to make it more robust to such risks? Thank you for your advice, David