ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on May 9, 2017 20:59:37 GMT
Long time lurker on this board, decided I should finally register an account, so first time poster! Please forgive what may seem a noobish question (been looking at P2P in general for about a month, didn't know it was a thing before then) The stated Security Value - £2,440,000, appears to have been arrived at by combining the following 2 items - Market Value of Projected Freehold Ground Rents £840,000 Market Value of the site with vacant possession (excluding FH Ground Rents) £1,600,000 Why would projected rental income be part of a valuation on what is right now, a building site. Worst case scenario they take the loan money and run? The base asset only has a value of 1.6mil (supposedly) I understand that's a rather cynical view on things, but the more time spent on these boards the more that view seems to hold water! The valuation is always based on the GDV at the end of the project. It is a potential value for investment purposes so includes the residual value of the land calculated by deducting costs from GDV (based on rental yield/sales potential) and the ground rents. A purchaser isnt buying it as piece of land, he is buying the potential return generated when it is a block of student flats earning revenue from sales/rents incl ground rents. The price is not based on how much a random bit of land is worth for its intrinsic land-iness. A piece of arable land is valued based on the value of what can be grown on it, more for wheat than for grass, development land is valued on what can be built on it, more for a block of student flats than a rubbish tip. Cant say it makes a lot of sense buts thats how it done in the Red Book it seems, same everytime. Over to the Aussie Child for the shouty bit OzBoy spits dummy, goes into RICS, "Professionals" and VR rant, and retires hurt to a darkened room to lick wounds.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on May 9, 2017 22:46:18 GMT
One aspect of this Development which might be considered unimportant, and therefore easily overlooked, is absolutely spot on.
Many of these Student Developments are Self Contained bed-sitty type arrangements which Students don't want, and so they're hard to sell.
Students prefer a communal, shared kitchen where they can socialise, so that should make this Development more marketable - "The development will provide a total of 113 cluster en suite bedrooms, each circa 12.5 sq m, serviced by communal kitchens"
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stokeloans
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Post by stokeloans on May 10, 2017 8:34:15 GMT
I have a gut feeling that in time these student accommodation developments will have so many vacancies they will be rented out to the social/lower earner market or sold to 1st time buyers. There's a huge shortfall in accommodation for single people in general
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mikeh
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Post by mikeh on May 10, 2017 9:59:27 GMT
I have a gut feeling that in time these student accommodation developments will have so many vacancies they will be rented out to the social/lower earner market or sold to 1st time buyers. There's a huge shortfall in accommodation for single people in general That's a good backup plan but I shouldn't get too worried. There are over 2m students in the UK - that's 10,000 200-bed blocks worth!
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on May 10, 2017 10:50:52 GMT
I have a gut feeling that in time these student accommodation developments will have so many vacancies they will be rented out to the social/lower earner market or sold to 1st time buyers. There's a huge shortfall in accommodation for single people in general I agree, there are loads of these towers clustered near me, with the Local Council, in their sageness, and affinity for brown envelopes, signing off even more, that are taller. As these buildings deteriorate over time they will probably become no-go zone ghettos. Nothing whatsoever has been learned about squeezing low income human beings into cramped high rise, and what results. "Greed is good."
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justme
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Post by justme on May 10, 2017 13:20:28 GMT
I wonder whether decrease in student population is due.I have doubts to which extent not so good degrees with increased cost are benefitial.
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Post by ydobon on May 10, 2017 13:22:40 GMT
I have a gut feeling that in time these student accommodation developments will have so many vacancies they will be rented out to the social/lower earner market or sold to 1st time buyers. There's a huge shortfall in accommodation for single people in general I don't share your pessimism - in my neck of the woods (Glasgow) - there seems to be massive demand for decent student accommodation. One newspaper article (from 5 years ago!) put the number of students involved in FE/HE at 65,000+ - I doubt numbers have dropped lower. I was initially a bit sneery when these developments started going up around our office (what with the descriptions of all the fancy amenities, it gives the impression that the millennials who will be using them are all very cossetted). On closer inspection, however, they would look to be a pretty decent option vs. renting privately in the city. Basically you're looking at £500/m for a smallish double bedroom with an ensuite, fast broadband and no further bills to consider, with access to shared kitchens and laundry facilities etc. For a lot of students, they also get to enjoy uni being a 5 minute walk away I paid £375/m for my first student flat (a steal) and would have been responsible for council tax, gas and electricity bills and phone line/internet on top of that.
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fp
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Post by fp on May 10, 2017 13:36:48 GMT
I don't think there is a problem with student accommodation, I do however think that when the "guaranteed income" phase runs out that there will be much lower returns for those who own them, thus lowering the value of the units themselves, and then creating a problem for those who own them.
I've no objection to investing in them through the build process, but I wouldn't entertain actually buying one for the reasons mentioned above, the big question is, will demand for these units slide off when they reach a saturation point, or when investors who would normally buy them realise they have bought a donkey which they expected to be able to race at Ascot.
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jonbvn
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Post by jonbvn on May 11, 2017 9:54:35 GMT
What always bugs me about this type of development frequently seen on P2P platforms is that the developer does not seem to have any skin in the game. P2P lenders stump up the initial cash then individual investors purchase separate units. If it goes t*ts-up at any stage the developer loses nothing.
The huge rash of student developments seen in cities across the UK is surely not sustainable. What is the possibility of these developments becoming a blight on the landscape in the future?
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SteveT
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Post by SteveT on May 11, 2017 10:26:41 GMT
Don't worry. I learn this morning that Citizen Corbyn plans to do away with Tuition Fees and reintroduce Maintenance Grants, so student demand should sky-rocket. What can possibly go wrong...?
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ben
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Post by ben on May 11, 2017 10:49:19 GMT
What always bugs me about this type of development frequently seen on P2P platforms is that the developer does not seem to have any skin in the game. P2P lenders stump up the initial cash then individual investors purchase separate units. If it goes t*ts-up at any stage the developer loses nothing. The huge rash of student developments seen in cities across the UK is surely not sustainable. What is the possibility of these developments becoming a blight on the landscape in the future? When you look at most of the offernings at this rate of return on p2p sites, the borrower usually has very little skin in the game (sometimes none and in the odd case has made a profit before doing anything), it is usually the investors taking all the risk.
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elliotn
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Post by elliotn on May 11, 2017 12:29:17 GMT
Don't worry. I learn this morning that Citizen Corbyn plans to do away with Tuition Fees and reintroduce Maintenance Grants, so student demand should sky-rocket. What can possibly go wrong...? Jeremy also wants to significantly increase house building - could that additional supply for our country's first time buyers and lowest earners devalue our development projects?
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Investor
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Post by Investor on May 11, 2017 12:37:28 GMT
Don't worry. I learn this morning that Citizen Corbyn plans to do away with Tuition Fees and reintroduce Maintenance Grants, so student demand should sky-rocket. What can possibly go wrong...? Jeremy also wants to significantly increase house building - could that additional supply for our country's first time buyers and lowest earners devalue our development projects? I think so, and could never vote for someone who could even imagine putting the infrastructure in to support the opportunity for our youth to stand any chance of ever getting a roof over their heads and starting their lives with some semblance of security over the views of us insanely greedy P2P investors looking to make 12% returns by ensuring the property market moves even more swiftly to the next bubble. Average age of first time buyers now 38
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Post by Deleted on May 11, 2017 15:07:37 GMT
Property in the UK will continue to be a favoured place for wealthy Chinese and Russians to place their money away from the merits of their own government. As long as we have a bust pension industry and an aging population houses will generally go up in value and however many properties are built there will always be a shortage, see also property bubbles in Auckland/Vancouver etc etc.
Tinkering at the building edges does not change the inherent basics of the economy. By the time the Labour party starts taxing wealth they will be amazed that assets disappear into companies and companies will not be UK based...oh joy...
Spoke too soon, manifesto is looking at taxing wealth. Do you think they even understand this is a global planet?
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am
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Post by am on May 13, 2017 22:06:21 GMT
This loan is being discussed on the MoneyThing board (ref MTAH367). These seems to be confusion about the difference in valuations. Would a platform representative like to offer an explanation before potential lenders take council of their fears? (I tried to ping Collateral Rep, but it's not obvious how to do this with a space in the handle.)
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