New Property fund - need help with specifics

  • Thread starter Thread starter DJ85
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Martinghoul said:
100% agree... The upshot for me is that, exactly as you say, the general idea may have merit. As to the specific implementation as described by DJ85, there are definitely some issues and even bigger questions.
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Did you ever get round to backtesting Howard Cohodas' short vol strategy? (slightly off piste, I know)
 
meanreversion said:
Did you ever get round to backtesting Howard Cohodas' short vol strategy? (slightly off piste, I know)
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NP... I didn't, meanie, tbh. It's gotten very hectic in the past couple of weeks. I think (knock on wood, god forbid, etc) HC may end up blowing himself up before I get to backtest his stuff.
 
Just finished "Fooled by randomness" and now working my way through "Lecturing birds on flying". Triana's prose is not nearly as snappy as Taleb's but I'm getting to the good stuff now, namely that BSM is bunk. I keep thinking of HC whilst reading these.
 
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Danny,

Some of the responses have been very aggressive and you only asked a question, so here goes with a considered reply. To be fair if you're in your twenties and trying to set up a business good luck to you.

I think you got off on the wrong track trying to position this as a hedge fund. It's not hedged by anything, it's a very leveraged long position on downmarket residential property. You're simply trying to attract other people to co-invest with you. Nothing wrong with that, but best be upfront about what it is.

Second, for what you're trying to do I can pretty much guarantee that a fund is absolutely not the right structure. I've a friend with a large and well established London residential property business and he's looked seriously at setting up a resi property fund (and had some serious institutional money prepared to come in). Below about £35m invested you simply don't cover the costs of fund administration. You also have massive issues with redemptions, etc.

What I think you want to do is set up a property business either as a partnership or a limited company where you can invite people to co-invest. Investors would then be partners or shareholders which is far more appropriate for this kind of business. The whole fund thing is a red-herring you just don't want to waste time on.

FWIW, I disagree with Black Swan on the sort of property you're exposed to. Low end housing benefit will be largely unchanged, at least unless we're going to make the whole of the north of England homeless, and the sort of yields you're generating should be broadly sustainable - another friend from the north east has been doing what you're doing for a while and now has about 20 properties, all pretty ****ty and occupied by benefit tenants and she's easily yielding double figures - however she's doing it as a long term yield play, selling them wouldn't be easy.
 
DJ85 said:
I certainly am NOT in any negative equity. I am NOT finding a way to dig myself out. If you read the start of the thread, you would have read that all I am looking to do is find out what would be the best way to arranging a fund, what kind of costs would I be looking it and the duration of the process. I don't recall asking people here to invest, and I only mentioned my portfolio when pushed on my knowledge of property. Your assumptions are well off the mark.
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If the investors are paying for the property why should you get anything out of it? It's a way of you offering nothing and getting something for free to pay off your debts.
 
Jack o'Clubs said:
FWIW, I disagree with Black Swan on the sort of property you're exposed to. Low end housing benefit will be largely unchanged, at least unless we're going to make the whole of the north of England homeless, and the sort of yields you're generating should be broadly sustainable - another friend from the north east has been doing what you're doing for a while and now has about 20 properties, all pretty ****ty and occupied by benefit tenants and she's easily yielding double figures - however she's doing it as a long term yield play, selling them wouldn't be easy.
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You're so wrong..but heh, what do I care..extra LOL at the bit in blue...
 
Nothing like property to get the British talking.

But has anyone else noticed the paradox of the property boom which everyone thought so good? It bought about the biggest bust in over 50 years and things aren't getting any better.

Just imagine how good the world would be right now if property had stayed flat (or risen by 1% year-on-year) over the last 10-20 years.....................One advantage to that is we in the UK wouldn't have 10,000,001 property bores 🙂
 
anley said:
Nothing like property to get the British talking.

But has anyone else noticed the paradox of the property boom which everyone thought so good? It bought about the biggest bust in over 50 years and things aren't getting any better.

Just imagine how good the world would be right now if property had stayed flat (or risen by 1% year-on-year) over the last 10-20 years.....................One advantage to that is we in the UK wouldn't have 10,000,001 property bores 🙂
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Mortgage lending, lead creation, commentary on the housing market, micro development in run down areas is what I did in a *former* life.

BOE published mortgage lending figures today, lowest since records began, we're now back to 1980's levels for approvals, ouch, that'll hurt the over leveraged properdee developer if/when he needs to sell.The 80's thing is starting to worry me; Duran Duran and Bob Geldof just released their new tracks, Tory govt, royal wedding, high unemployment, riots, and Kenny Dalglish is the *new* Liverpool manager..If only I could get my 1980's good looks back and be tripping in The Hacienda..:innocent:
 
Black Swan said:
Mortgage lending, lead creation, commentary on the housing market, micro development in run down areas is what I did in a *former* life.

BOE published mortgage lending figures today, lowest since records began, we're now back to 1980's levels for approvals, ouch, that'll hurt the over leveraged properdee developer if/when he needs to sell.The 80's thing is starting to worry me; Duran Duran and Bob Geldof just released their new tracks, Tory govt, royal wedding, high unemployment, riots, and Kenny Dalglish is the *new* Liverpool manager..If only I could get my 1980's good looks back and be tripping in The Hacienda..:innocent:
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Kenny Dalglish is a legend.
 
traderman1 said:
Yes but Liverpool still have no money. And now they have no Torres. Until a rich Russian oligarch comes to the rescue, they will not be contenders for any silverware.
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True. I would sell Torres for 45m though, but Carroll for 35m is a poor decision...
 
Isn't house prices going down a good thing if you are looking to buy houses?! Anyway I get the impression that the emphasis is on rental payments and not buying and selling. And when does rent ever go down?

Anyway, DJ85, lets say you have 20 properties and you rent them all out for £600 p/m, thats £144,000 per year.

What sort of tax do you have to pay on that?

What do you think you would be looking at for the maintenance costs?

Who is going to find the tenants, chase the rental payments, and do all the administrative work?

How will they be paid?

How are you going to make money yourself?

What would happen if there was a fire or natural disaster and the house is ruined - insurance? Cost? Would all the properties be in the same area?

I'm asking these questions under the assumption you are looking for investors, if not please ignore me!
 
megamuel said:
Isn't house prices going down a good thing if you are looking to buy houses?! Anyway I get the impression that the emphasis is on rental payments and not buying and selling. And when does rent ever go down?

Anyway, DJ85, lets say you have 20 properties and you rent them all out for £600 p/m, thats £144,000 per year.

What sort of tax do you have to pay on that?

What do you think you would be looking at for the maintenance costs?

Who is going to find the tenants, chase the rental payments, and do all the administrative work?

How will they be paid?

How are you going to make money yourself?

What would happen if there was a fire or natural disaster and the house is ruined - insurance? Cost? Would all the properties be in the same area?

I'm asking these questions under the assumption you are looking for investors, if not please ignore me!
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It's ok. He has 20 other mates that have defaulted on their mortgage payments and are bankrupt and they will occupy the 20 flats.
 
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