How safe is your pension? Is it something you think about often?…. Maybe it should be

Now, more than ever is the time to be thinking about a SIPP in Investment Property.

Did you know that for the first time in history the number of over 60 year olds in Britain is larger than the number of under 16’s? The reason for this is “The Post World War Two Baby Boom”

Between 1946 and 1964 there was a dramatic change in the planets demographics. There was suddenly a huge increase in the amount of under 16’s.

Average growth in the population aged over state pensionable age between 1981 and 2007 was less than 1% per year. Between 2006 and 2007 the growth rate was 2%! Source: ONS

Because of this the government is going to have a very large increase in state pension payouts.

State pensions are Index linked therefore as long as the economy is in deflation your pension is decreasing in size.

So the outlook is bleak for your pension? Now is the time to change this!

Invest in any of our overseas property to see long term capital gains and great rental yields!

For example: Our most recent overseas opportunity is Dunas Beach Resort in Cape Verde. Now I strongly believe that that this is one location not to be underestimated! In terms of capital appreciation you are likely to see at least a 15% rise per annum during the course of the first two years. With rental yields estimated at 9.4% (Pessimistic) this is a great place to invest.

Not only is Cape Verde receiving massive Foreign Direct Investments but demographically they have an extremely strong population with only 6.7% over the age of 65 this puts Cape Verde in a great position for economic growth.

To see our Blog on Cape Verde click here

To view details of all our overseas investment property click here

Many investors have felt the pinch recently regards their buy to let investments.

In fact, if you aren’t on a tracker mortgage you could be severely stretched.

Now here is the interesting bit….

Did you know the average amount a student will pay per week is £66.48?

Areas and their average rent per week.

City Average Rent Per Week (£) Index*
London – 102.85
Middlesex – 83.97
Cambridge – 82.98
Guildford – 82.37
Surrey – 81.15
Exeter – 77.54
Chester – 77.12
Chichester – 75.00
Oxford – 74.71
Brighton – 73.71
Kent – 72.24
Bournemouth – 71.11
Bristol – 70.84
Warwick – 70.75
Eastbourne – 70.67
Durham – 68.95
Reading – 68.89
Loughborough – 68.81
Hatfield – 68.35
Doncaster – 68.04
Colchester – 66.67
Portsmouth – 66.49
Plymouth – 65.26
Falmouth – 64.76

It makes interesting reading doesn’t it?

The thing to do is look at what you can pick up a typical 4 bedroom house for in these areas.

Now of course some of these areas are fairly affluent so finding the right property at a good price may be harder than you think.

Take a look at the prices you can pick 4 bed houses up in the following locations!

1. Exeter – 77.54 – Price for a 4 bed house £150,000, Yield = 10.75%
2. Chester – 77.12 – Price for a 4 bed house £145,000, Yield = 11.06%
3. Eastbourne – 70.67 – Price for a 4 bed house £160,000, Yield = 9.18%
4. Doncaster – 68.04 – Price for a 4 bed house £100,000, Yield = 14.15%
5. Colchester – 66.67 – Price for a 4 bed house £120,000, Yield = 11.55%
6. Durham – 68.95 – Price for a 4 bed house £110,000, Yield = 13.03%

So yields of between 9% and 13% are possible in some locations.

Demand:

So your traditional b-t-l is up against 30 other investors all who are struggling to let their property out, you thought you bought in a regeneration area but unfortunately due to the economy it hasn’t quite worked out how you wanted it to.

Sound familiar?

Did you know some of the universities in the areas above literally turn away hundreds of students every year because there is nowhere for them to live.

In fact, my local university in Chichester turned away 280 students last year and has talked about leasing property off of major builders in an effort to keep up with demand!

Problems:

Every buy to let investor who has been in the market for more than 5 minutes has probably looked at HMO property, normally they are put off by the various restrictions and the fact that the management of the properties is that much more difficult than a traditional b-t-l.

I don’t think it has to be, by buying smart and doing a bit of work up front you can marginalize a lot of the risk involved.

Also, put a management company in charge, there are good ones available that will look after all aspects for you, they aren’t cheap but they do make your job a lot easier.

Conclusions:

It won’t be for everybody but it’s definitely worth considering and a lot of hmo investors tell me that once you understand the various regulations, it actually provides a great rental income! You can also sleep a lot sounder knowing that your various properties will ALWAYS be in demand!

At Fresh Invest we will provide a sourcing and thorough vetting service to find you the best property for your needs.

www.freshinvest.co.uk

When looking for an overseas investment opportunity Location Location Location really is the most important factor!

If you are looking at an up and coming emerging country that may make massive capital appreciation for you over the coming years i think Cape Verde is the place to be.

When investing myself i normally ask myself who would buy or rent the property i’m purchasing.

Well who would holiday in Cape Verde.

In my mind you have to submit to one of the following:

1. You want winter sun
2. You do not like 9 hour flights
3. Holiday is a rare commodity so you may only be able to take a week at a time
4. Nothing too in your face
5. Value for money

To be honest this has just summed up what i look for in a holiday.

Saying that, i consider myself an “average joe” without wild tastes.

Because of this i believe Cape Verde stands a real chance of taking off over the next few years.

I actually believe that the only reason it has not done so thus far is because of the economic crisis we have found ourselves in.

The reason for this, well do UK holiday makers really have a choice?

Unless you want to go to Egypt, where is close enough to get guaranteed sun in november through to february?

If flight costs continue to increase it’s going to all but price the UK holiday maker out of places such as the Caribbean and U.S.A.

With 1 beds at Dunas Beach Resort going from as little as £74,000 and only a 35% deposit needed it certainly looks inexpensive.

Add to this the fact that you can go for 5 weeks of the year and still command a 9.5% yield worst case, it looks even better.

The compound this with the fact that it’s 2 years off-plan and prices have statistically risen 15% per annum, meaning that in 2 years you may have 30% equity already built in!

Well i’m sold!

Empty rates taxation:

Central government still ignore property industry protestation, about the demolition of perfectly usable premises, to avoid Empty Rate charges.

Non domestic rates are collected by local government, but remitted to central government. This tax has been left in place during one of the world’s worst recessionary periods. Due to this lots of companies have folded and Chartered Surveyors have reported a 65% rise in available floor space.

The government have seen a massive drop in Stamp duty income while the housing market ground to a halt. I guess to recoup some of that lost tax income; they will remove the empty rate exemption for commercial property shooting themselves in the foot. Why?  Many commercial property owners would rather demolish a building with little or no chance of a letting for several years than pay the rates. I expect the government call it “government led rejuvenation” or some such spin.

What this means for the investor:

In reality usable stock is being demolished. Local authority planners should bend over backwards to assist property owners to find alternative uses, before industrial and warehouse estates are raised to the ground, offices are turned to residential units and the High Street looks bombed out.
Residential landlord registration:

The government are considering the compulsory registration for all residential landlords. ARLA (association of residential letting agents) also suggest that to protect landlord’s rents and tenant’s deposits all letting agents should be registered. The scheme is designed to safeguard the tenant’s initial holding deposit and to act to resolve disputes concerning the deposit.

There are a growing number of unregulated letting agents who go out of business with the resultant loss of monies belonging to landlords and tenants. Most older recognised institutions, like the RICS have in place regulations to protect client’s monies.

What this means for the investor:

A more even playing field between regulated and unregulated agents and registered and unregistered landlords can only improve the market and make it more transparent.
If you are the landlord dealing with deposits, you must protect monies that do not belong to you and if you cannot satisfy the prospective tenant that deposit monies are protected, then you may lose a letting.

Tenants will be more inclined to go to the private investor managing his/her own property as they are offered protection for the deposit that will be required and a fair way to resolve disputes that effect the level of returned deposit.

Im amazed at the amount of investors that still look for no money down deals.

Now before anybody comments, im sure there are plenty of investors out there that do look for no money down deals whilst still having the funds to top up or secure a mortgage if need be.

However, i would guess that for every one of these type of investors there are another 5 that are simply trying to get something for nothing.

Why any investor would look to purchase an investment property with what is in essence 100% funding bemuses me.

Have they not seen what has happened over the last year?

By purchasing via a no money down deal you are in essence putting yourself in almost immediate negative equity, all the investor will need is to not be able to rent the property for a few months or a tenant to not pay the rent and the investor is in serious trouble.

For me, property investment will always have a very dominant place in an investment cycle, i wholeheartedly agree with the quote “there is never a bad time to buy property”.

This may seem a stupid quote to a few of you but i take it to mean “there is never a bad time to buy property” (if you are in it for the long term).

This makes much more sense and i believe is true.

If you are purchasing property to hold and rent then putting a certain amount into the mortgage is a must.

It allows you to get onto a competitive rate, does not put added pressure on your earnings and also gives you some equity if you need to utilise it in the future.

If you are looking to invest in the future, put some money in, be part of the solution, not the problem!

Kingsoak, Jennings Homes, Gleeson Homes, Crosby Homes, Bewley Homes, Antler Homes, Barratt Homes, Redrow Homes and last but not least Bellway Homes.

What do all of these developers have in common?

Their year ends are in either june or july!

So why does this make a difference to you and i?

Because most, if not all of these developers have debt to service.

They have share holders that expect a certain return from the compani9es they have chosen to invest with.

If these companies cannot make the necesary sales then there will be no dividend payouts. This will reduce their share price.

So, when May comes around many of the developers that have been telling you throughout the winter that they do not need to make sales, laughing off your offers of 30% discount, will probably take a very different tack!

Now don’t expect discounts to be at the levels that they were at the tail end of last year, they won’t be.

The property market is a strange animal, when the general economy seems to be worse than ever, developers will be telling you that they are doing plenty of sales.

Because of the shoring up of the banks by the Government, many will not be chasing developers at the same rate as they were last year so ultra enormous discounts will probably not be available.

This however may be a blessing, many of the developers have brought their pricing in line with RICS valuations, so although there are not massive discounts, there are real discounts! Hopefully over the next few months a sense of realism will return to the property investment market.

Personally i think that the much reported 40%-50% discount deals are long gone and to be honest, were only done by a handfull of developers selling whole developments on what would probably be classed as a bad site.

Investors should get used to the fact that the no money down deal is by in large gone, and even if they were available, anyone gearing their property at 100% in this market needs a straight jacket, not a property portfolio.

Anyway, lets see what the rest of May holds, im expecting some great opportunities.