Will Pepper appoint a Receiver?

I thought contracts would be tight on multiple BTLs. The mortgage term is over you would imagine they are aware that they could collect rental income which would be a lot more than what they get from interest only trackers.
 
Your friend should sell them asap. They will eventually appoint receiver and do horrific damage. If all cross secured he is putting everything at risk.

As a PIP I'm dealing with a case where investment property mismanaged Receiver appointed and over 350k still in hole after sale against family home
 
Is that ‘hole’ the cost of the receiver process ?
You mentioned mismanaged. In this case the mortgage payment has never been missed.
 
January25 said:
Is that ‘hole’ the cost of the receiver process ?
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Doesn't your friend already have an unrealised hole in the form of still having to pay CGT, costs and outstanding taxes on rental income even if he sold all properties today and cleared the mortgages?
January25 said:
Properties values are in line with amount due which is well over a million. Owner has to pay CGT on them and has some revenue arrears to settle on rental income. Other costs will be legal and auctioneers.
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Yes I understand there will be costs, although some of these will be covered by rises in valuations. I’m just wondering about the exact cost of potential receivership on a property is it % of the sale ?
 
Your friend is in control now and can maximise prices and minimise costs.

If they appoint a Receiver they will maximise costs and probably minimise prices.
 
January25 said:
Yes I understand there will be costs, although some of these will be covered by rises in valuations. I’m just wondering about the exact cost of potential receivership on a property is it % of the sale ?
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I know in the past going back 16 years very few properties in receivership sold at marker rate even when sold by public auction or at least the people who bought them thought the got good value,
 
January25 said:
Yes I understand there will be costs, although some of these will be covered by rises in valuations.
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I don't see how if, as you said, the property values just cover the outstanding mortgages.
January25 said:
Properties values are in line with amount due which is well over a million.
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But this is probably a side issue given that most commentators above have said that your friend really needs to tackle this issue now rather than letting it drift further and potentially end up much worse off. They really need to engage with the lender.
 
January25 said:
some of these will be covered by rises in valuations
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Unless these are very significant, these are modest. There is no "equity" in BTL on interest only basis - you buy at 100k with a loan of 90k, if the price goes up to 150k you still owe 90k. The point of the model is that your rental income while holding the property is presumed to be more than the interest repayment after tax, and if its not then you're going to be at a loss. It might be a good time to start winding down, before Pepper decides to do it on their terms.

I'm wondering was this the guy at work from 24 years ago who bragged about having 10 rental properties and that his "secret" was interest only loans. He wasn't the brightest either.
 
The properties have risen a fair bit in value. Some would have been bought in the 90s and then refinanced on interest only. So there will be CGT if they are sold. He should have enough in overall gains to hold onto one outright. That is the plan. Maybe it wasn’t smart to begin with but he will hold an asset that will generate an income if it works out. I don’t know the overall accurate figures. The lender appears to be in no hurry to act on matters.
 
lff12 said:
I'm wondering was this the guy at work from 24 years ago who bragged about having 10 rental properties and that his "secret" was interest only loans. He wasn't the brightest either.
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Seems fairly bright to me.

Unless he did something foolish in the meantime he made a fortune.

The rent would have covered the interest and the tax and the other costs in the interim. The capital profit since was significant, maybe x3 and it's all taxed at CGT rates.

Typical price for a 3 bed semi in 2002 120k, price now 360k, profit 240k after tax 160k, times 10. All that would have been possible on a 10% deposit at the time, or possibly less. That's why people are attracted to property
 
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