adrian77
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Post by adrian77 on Feb 23, 2018 22:23:50 GMT
I note we have 2 loans both based in Trowbridge - does anybody know if these 2 are related
i.e. the developer has a second charge on his house whilst he has a first and also a second ranking charge on a flat development. I thought both loans were eligible for the smutty stick but if it is the same person he has a serious amount of debt at 30% or whatever...
This developer sure has a better house than I do although I don't need to borrow money at way above bank rates!
Of course these 2 loans may be totally unrelated but it would be interesting to know!
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r00lish67
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Post by r00lish67 on Feb 24, 2018 7:56:03 GMT
I note we have 2 loans both based in Trowbridge - does anybody know if these 2 are related i.e. the developer has a second charge on his house whilst he has a first and also a second ranking charge on a flat development. I thought both loans were eligible for the smutty stick but if it is the same person he has a serious amount of debt at 30% or whatever... This developer sure has a better house than I do although I don't need to borrow money at way above bank rates! Of course these 2 loans may be totally unrelated but it would be interesting to know!
Yes, they are, as I think Mrc pointed out first the other day. The family name in the VR of the 'footballers wives' house is the same as the borrower for the flats.
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adrian77
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Post by adrian77 on Feb 24, 2018 13:40:11 GMT
Thanks - I did look in the DD but must have missed it.
Am I surprised - NO!
Am I glad I hit these 2 with the smutty stick - YES!
This chap may have additional income but as he is borrowing at these relatively sky-high rates for property then I doubt it. I realise he may also have other developments so there may not be a problem here.
Am I being thick here but these figures are puzzling me:
if my quick maths are correct then he owes 743+90 (on the flats) and 270+350 (on his house) = £1.45 million total. If we take 90% of valuation given then that is £1.45m on £2m = a LTV of 72.5% or more importantly if we take interest at 30% that is £36K per month - ouch!
If this chaps sells under 5 flats that won't even repay the capital owing. 5 flats within the next 6 months will leave a bit of profit on the flats development. All 6 flats will give even more profit but even if all 6 sold then it won't cover the capital and interest owing on the main house.
However my figures don't take account of the interest about to be due for the earlier loans so ,to me, this second ranking £90K loan seems like an emergency measure to pay the interest due...
Given the above figures I just can't see how this one makes sense unless the chap is happy for FS to sell his house or he has recourse to further funding. As to a whether I am investing in the second ranking loan - answers on a digital postcard
If I were closer to Trowbridge I would be tempted to offer £150K for one of these flats...
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duck
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Post by duck on Feb 24, 2018 14:32:28 GMT
.. If I were closer to Trowbridge I would be tempted to offer £150K for one of these flats... The flats are not in Trowb...ge they are actually in Bradf..d on A..n. Whilst they are close (4-5 miles) they are totally different markets. I anticipate selling the flats shouldn't be too much of a problem unless you want/need parking. Doesn't change the maths but thought it worth pointing out ..... (yes the title of the thread is misleading 1705531306 should be Trowb....e RD )
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rogerthat
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Post by rogerthat on Feb 24, 2018 14:47:52 GMT
.. If I were closer to Trowbridge I would be tempted to offer £150K for one of these flats... The flats are not in Trowb...ge they are actually in Bradf..d on A..n. Whilst they are close (4-5 miles) they are totally different markets. I anticipate selling the flats shouldn't be too much of a problem unless you want/need parking. Doesn't change the maths but thought it worth pointing out ..... (yes the title of the thread is misleading 1705531306 should be Trowb....e RD ) Misleading thread titles...surely not  ...btw I raised the potential of capital required to make any profit whatsoever on the 'correct' thread..and as adrian77 has now demonstrated what I was too lazy to try and work out..this developer is not on his home run yet..I didn't add to the 14% either..nor have I invested in his personal house..im just hoping the 6 flats sell..btw I also reached the same conclusion in that the £90K is to pay interest charges.
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mikes1531
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Post by mikes1531 on Feb 24, 2018 19:04:07 GMT
if my quick maths are correct then he owes 743+90 (on the flats) and 270+350 (on his house) = £1.45 million total. If we take 90% of valuation given then that is £1.45m on £2m = a LTV of 72.5% or more importantly if we take interest at 30% that is £36K per month - ouch! If this chaps sells under 5 flats that won't even repay the capital owing. 5 flats within the next 6 months will leave a bit of profit on the flats development. All 6 flats will give even more profit but even if all 6 sold then it won't cover the capital and interest owing on the main house. Perhaps I've being misled by my rose-tinted spectacles, but I would have thought that the first charge on the house was an ordinary mortgage taken out when the house was bought a few years ago. As such, it wouldn't be accruing interest at a rate anything like 30%. If the six flats can be sold for about the £1.2M asking prices, that should generate sufficient proceeds to repay all the high-rate FS loans and put the borrower back where they started, with a £270k mortgage on their house. They also still would have the freehold on the flat development to either hold or sell -- and that might be their profit from the development. These figures obviously are rather sensitive to the time taken to sell the flats. If that takes too long, the profit will be eaten up by the accruing FS interest. And that's what makes financing development projects with high-rate FS loans very risky -- for the developer, and also for the FS investor. ISTM that's what happened to the Formby development project.
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adrian77
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Post by adrian77 on Feb 25, 2018 15:37:27 GMT
Agreed but why not increase the original mortgage - maybe because the bank computer said "no"? If I went to my bank and asked to increase my mortgage and at the same time asked to borrow money for one of my developments at around 70- 80% LTV he would close my account!
Personally I would have liked FS to have given a tad more information about lender's finances and the fact he had 2 loans in parallel. The first tranche of £610K is due in under 4 months (15th May) so that will be about £610K + £90K(?) payable = £700K so 4 flats will be needed to cover this ... looks a bit dicey to me (believe me, I have the t-shirt).
As I said this chap may have other income but on the limited information given I am passing on both of these loans.
Interesting one to follow.
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mikes1531
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Post by mikes1531 on Feb 25, 2018 21:02:03 GMT
... why not increase the original mortgage - maybe because the bank computer said "no"? Perhaps. But if it was quick and easy to increase first mortgages, there wouldn't be so many second charge loans made. So I have to conclude that it isn't. In this particular case, if the borrower is convinced that they can pay off the second charge quickly, then it might even make financial sense to have the short-term second charge if the alternative is a higher rate on their first charge for many years to come. Personally I would have liked FS to have given a tad more information about lender's finances and the fact he had 2 loans in parallel. Me too. There have been times when fundingsecure have noted that a loan is to an existing, or former, borrower but there are other times when they haven't. We shouldn't have to try to work this out ourselves -- and most of the time we aren't given enough info to do so even if we tried. I got an unpleasant surprise recently when I discovered that the borrower who took a FS loan against some maritime memorabilia was the same person who had borrowed all those loans against railway models/memorabilia. If I had known about that earlier I would have exited from the maritime loan. Now I can't. And that loan -- surprise, surprise -- is classified by FS as being Defaulted. IMHO, FS have misled me by failing to mention the relationship between those loans. It's a very relevant fact that they didn't disclose.
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adrian77
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Post by adrian77 on Feb 25, 2018 22:38:59 GMT
exactly as FS have a duty of care to disclose valid and relevant information under current legislation
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adrian77
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Post by adrian77 on Feb 25, 2018 22:51:32 GMT
maybe but not it my experience - unless it is very short term and the funds are guaranteed to definitely arrive. Have you ever borrowed large sums of money such at £610K at 30% whilst awaiting sales, me neither as I know that my property business just could not carry it. This looks liker panic borrowing to me as this chap has to service 2 FS debts and ,at best, one mortgage debt. Wonder if this chap will be back. Maybe interested if he has completed on 6 flats within the next 6 months...
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Post by boudicca on Aug 10, 2018 20:35:52 GMT
Notice most of this loan was repaid today, one flat to sell still.
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adrian77
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Post by adrian77 on Aug 10, 2018 20:40:23 GMT
I note this chap is back for a 3rd loan as he has to wait for completion of the last flat
As I said earlier an interesting one:
If my maths are correct he has borrowed £743 + 90K = £833K if we take this sum at 20% per year that is 83K over 6 months so total owing is about £916K. With this latest loan this is £1.16m before interest. Total gross realised will be £1.16m (200+200+195+190+185+185) so why wouldn't this chap repay this latest loan as soon as the latest flat completes - I think FS don't charge a fee for this
Just a thought
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Imothep
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Post by Imothep on Aug 10, 2018 21:44:38 GMT
... why not increase the original mortgage - maybe because the bank computer said "no"? Perhaps. But if it was quick and easy to increase first mortgages, there wouldn't be so many second charge loans made. So I have to conclude that it isn't. In this particular case, if the borrower is convinced that they can pay off the second charge quickly, then it might even make financial sense to have the short-term second charge if the alternative is a higher rate on their first charge for many years to come. Personally I would have liked FS to have given a tad more information about lender's finances and the fact he had 2 loans in parallel. Me too. There have been times when fundingsecure have noted that a loan is to an existing, or former, borrower but there are other times when they haven't. We shouldn't have to try to work this out ourselves -- and most of the time we aren't given enough info to do so even if we tried. I got an unpleasant surprise recently when I discovered that the borrower who took a FS loan against some maritime memorabilia was the same person who had borrowed all those loans against railway models/memorabilia. If I had known about that earlier I would have exited from the maritime loan. Now I can't. And that loan -- surprise, surprise -- is classified by FS as being Defaulted. IMHO, FS have misled me by failing to mention the relationship between those loans. It's a very relevant fact that they didn't disclose. you are right , it’s often not easy for smaller developers to raise funds on principle properties / first charges , mainly on affordability . Most smaller developers don’t want to declare large profits / incurring tax liabilities and then struggle on affordability unless they also have a salaried job and then you need to be earning some serious coin to get big lumps . Therefore , second charges are desirable especially if no affordability has to be met . And i’ve said here before on here and ill say it again, main stream development finance say from al alhi , 1% in, 1% out , base plus 3, so let’s say 6% p.a. , p2p let’s say. 12% , if your deal doesn’t wash its face because of 6% then it’s a  deal...
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...btw I raised the potential of capital required to make any profit whatsoever on the 'correct' thread..and as adrian77 has now demonstrated what I was too lazy to try and work out..this developer is not on his home run yet..I didn't add to the 14% either..nor have I invested in his personal house..im just hoping the 6 flats sell..btw I also reached the same conclusion in that the £90K is to pay interest charges.
deal...