Property is back!
Many investors have read the news recently about the increase in property values.
Suddenly property investment is the new hot topic.
If you have any disposable income the chances are it’s in the bank or in shares.
In Shares? Well you’ve probably lost between 15%-40% on them over the last 18 months and can see no end in sight. Even if the market recovers it’s unlikely your shares will return to their previous levels for a few years yet.
In the Bank? Thats even worse, your probably getting a measely 3% interest per annum of which the bank is using your money to invest in various property funds returning 6%-8%.
Many investors do so for the long term, property investors are the same.
That’s not to say that purchasing and re-selling in a short space of time is wrong, in my mind that is a long term investment as you will more than likely use the profits to invest in further property.
If a stock market investor purchases some shares then sells a few weeks later after making a profit, we do not accuse him of investing for the short term. So why is flipping property sometimes frowned upon?
It’s “a means to an end” the “means” is to accrue as much capital as possible, the “end” is a target of a high yielding property portfolio.
Don’t get me wrong, this is not without it’s risks but smart investing in low density developments with proven values can be profitable.
Essentially it’s the same as developing, when you refurb a house you do so as quickly as possible. Why?
Because you want to sell your property in the same market conditions you bought it in.
Let me explain, you buy a 2 bed house that needs work and you have faith that at the time you bought it for a good price and that you can sell for more after some work.
The only way to make sure of that is to sell in the same market, if you wait too long and the market drops, thats eating away at your profit.
This is the same when purchasing property to flip, you want to know that the “bargain” that you bought last week you can sell straight away for a profit.
There’s one problem, have you seen it?
Why would a developer sell you a propeerty for less than he can sell it himself?
It seems unrealistic but it does happen.
The simple truth is that by marketing ALL of their properties at discounted prices they lose the option of returning to their previous prices if the market picks up.
I normally wait until it’s the developers year or half year end, if you can complete quickly and they have stock lying around you will normally get a good deal.
Then after their year end is passed they can carry on selling at market value safe in the knowledge that their units were not marketed at a discount.
This is the reason for the Fresh Invest client login, it allows developers to market certain properties that they do not want advertised to the public.
For further information on developers year ends and investing in property please contact us.
Could you live on £500 a month?
Is your pension working for you?
With the recent drop in shares values, do you know the real value of your pension?
A combined state and private pension amounts to an average monthly income of just £500, so if you don’t want to live your retirement in poverty it’s time to do something about it!
The situation is down to many factors. Few people know exactly how much they need in their pension to achieve a comfortable standard of living.
Pension values have dropped by as much as 40% over the last 2 years, the result of the recession is that many people have not increased their contributions in order to offset this drop. In many cases they have actually scaled back in order to pay for important every day goods.
In order to draw the most basic of incomes we need to accumulate a fund of at least £184,704 which would provide a monthly income of roughly £1,000 gross.
Want to know what the average private pension size is at the moment….just £25,000! That will pay roughly £125 per month. Add state benefit of £90 per week and you have a monthly total of less than £500 gross to live on.
To give you an idea of how little this is, most individuals need a retirement income of two thirds of their pre retirement income after they retire. To calculate what you need take your current monthly income and times it by 0.75. More than £500 isn’t it!
If we take a basic income of £1,000 per month, so £12,000 per year, times this by 25 (the average amount of years we are currently living after retirement) that’s £300,000!
If you aren’t already investing in a pension or you have sat back and ignored this problem, perhaps now is the time to take note and do something about it?
To make up the deficit pension providers normally ask you to divide your age in half and invest that amount of your salary into your pension, so a 40 year old will be expected to invest 20% of his salary into a pension.
So what are your options?
We have already discounted stocks and shares, only the most high risk share dealing we enable you to obtain the funds you need by retirement.
The answer in my opinion is property.
By purchasing a property and putting it in your Sipp you will gain all the advantages of high capital growth and rental income and be able to do so without dipping into your existing savings or re-mortgaging any properties you own.
Our properties on Dunas Beach Resort start at just £82,000, you would need a pension value of about £55,000 to purchase it outright or alternatively you can use part of your pension and top up the rest via cash or a loan.
We have calculated that it would take just 10 years for the value of an £82,000 property at Dunas Beach to increase to over £300,000!
That’s on an initial investment of just £55,000.
This is based on very pessimistic figures including:
- A 10% increase in prices per annum (15% for the last 3 years)
- A room cost of €110 per day (currently €150)
- An occupancy rate of 68% (currently 95% in 5* hotels)
As you can see Dunas Beach offers an incredible opportunity to get the run on your current pension plan and boost it to more realistic figures!
Transferring your pension:
Many of you will have a few pensions with different companies and moving all of these into a SIPP can be a long term project. Our IFA can take care of that for you; all you need to do is fill in some information on your current pension plans and they do the rest!
When this is complete (average time is 6 weeks) you are free to purchase a unit of your choice dependent on money available.
For more information on funding your investment with a SIPP click here.
If you have a pension and are interested in seeing how this works, e-mail us for more information.
Latest Buy to Let News…
Bank of Scotland will cease business from 01/07/2009, thus leaving even fewer lenders to choose from in this challenging market.
After a brief period of lenders lowering their rates last week saw rates rise due to the increase in SWAP rates. BM Solutions raised their but to let rates by up to 0.6% in one move with Platform also increasing by 0.6%.
It has been announced also that Leeds Building Society will no longer lend on new build flats on a buy to let basis. The market is certainly challenging and previous lenders are still showing no signs of re entering the market to ease the pressure.
Please be aware that the remaining current lenders will only lend on a certain percentage of a development and once this exposure limit is reached they will not lend anymore on the site.
Once certain lenders have reached their exposure limits obtaining a mortgage for sites/developments may become extremely difficult or sometimes impossible so please ensure you do not leave it till the last minute to enquire about or to arrange a mortgage.
Discounts drop as new build property runs out
As a property investment company we are uniquely placed to gather real time information on the UK property market.
These are our thoughts.
Well it’s simple supply and demand really.
As the market started to drop last year and various buy to let mortgages disappeared off the market many developers either land banked of sold off previously earmarked developments.
We are now starting to see the impact of this.
Less property coming onto the market means more potential buyers for the property that is left.
This in turn means that a new sense of confidence has appeared in the market.
Before, sellers may have had one or two viewings; they now have ten or twelve.
The only reason we have not seen a massive surge in prices is the remaining problem, which is loan to value rates.
However, this is also due to change.
We have it on good understanding that the Government is due to force a “must lend” initiative on lenders which is due in the next 6 weeks.
When this comes around I think we will see the end of any discounts whatsoever.
Until builders start to build again there simply is not the need for the developers to do deals.
Property Investment companies have always based their success on bulk selling units for a greater discount than an individual will obtain direct.
When the developer simply does not have the units to bulk sell our service becomes obsolete, for the time being anyway.
My Conclusion:
Buy at a discount whilst you can, you may not get another chance for a long while and you can bet that the investors that are prudent will have to take a massive hit on mortgage interest rates in the future, let’s face it, they won’t go down any more!
Property Investment – Do You Now Have a Choice?
Well lets look at the positives.
As my nan always says….you’ve always got your health!
To which i respond …..I’ll need it when I’m sleeping rough!
Seriously though, many people face the very real prospect of having to increase their pensions and savings to the level they were previously at, the only trouble is, they have even less time to do it!
2 Years ago your savings and pension values would most probably be well on their way to keeping you in the style you had become accustomed.
No Longer, you now have to think fairly seriously about increasing the value of your savings, so whats the best way to do that?
As far as i can see, 2 options come to mind.
1. High risk, but potentially high reward share dealing.
2. Property
Let me discredit the first one quickly, if you have never dealt with shares before i wouldn’t recommend such drastic action, if you fancy giving your hard earned to a broker think seriously about the fact it will probably end up with a banker who had a large part to play in losing you that money in the first place!
So we come to property investment.
Hardly surprising as that is what you do for a living i hear you say!
True, it’s also what i know best.
However it also produces returns of between 6-13% along with the capital growth which will undoubtedly occur whilst investing at the bottom of the market.
Look abroad and the yield can sometimes be up to 20% with capital growth upwards of 15% per annum.
In the past, many investors have discounted property because of the “risk” attached.
Unfortunately these same investors now may not have much of a choice!
If you need your pension to return you a decent amount and do not have 40 years in which to grow it you may simply have to look at property as an investment vehicle.
I’m currently looking at property in London that returns 7% and overseas property in Cape Verde that returns 12%.
Similar London property was selling 2 years ago at £400,000, now on the market at £270,000. If we reach the prices of yesteryear there is £130,000 profit for you.
The units in Dunas Beach Resort, Cape Verde look set to return in the region of £10,000 per year; and if capital growth continues in the area, they should only cost me £2,000 to purchase outright!
If the circumstances above sound familiar, we can help. Find me at Fresh Invest Limited.
Or call me freephone on 0800 043 69 56.
Cape Verde – The Caribbean For Europe
How many of us wish we could afford a holiday home abroad? Silly question? It’s probably all of us!
What puts you off?
1. Price
2. Being able to let it out?
3. Security?
4. Flight times?
5. Guaranteed sunshine?
Well all may not be doom and gloom, there are a few overseas developers that have taken the step of building property that is packaged in such a way as to be affordable and relatively “hands off”.
Obviously the most important factor in purchasing an overseas property is price. Our most recent “fresh” investment is in Cape Verde, the units start from £72,000 and any prospective investor will need to find 35% deposit to purchase.
Where this development comes into its own is that you can release money from your existing home to fund the deposit or alternatively source a secured loan. The developer will then pay the interest on this loan for you until completion, at which time the interest will be added to your completion price.
An interesting point to note is that Cape Verde property has been increasing by 15% per annum over the last few years, even bucking the current financial crisis. If this continues you will have made 30% worth of profit on your investment before completion, as this is 2 years off. If you then want to secure a mortgage on your chosen unit, you can do so at 75% ltv of its valued price. Realistically you could find that you actually only need to find 5% deposit, as the other 30% will have been taken care of by the capital appreciation.
As far as letting the unit is concerned, you have the option of opting in or out of a rental pool, if you opt in, all management is taken care of, leaving you free to keep the profit. At the moment 5* hotels in cape verde are running at 95% occupancy, a recent study showed a 9.5% yield based on just a 65% occupancy. Best part, you get 5 weeks personal use per year! So now you have a holiday home that not only makes you significant profit each year but also only conceivably cost you £3,600!
Security? It’s a 5* resort so security will be of a maximum, their will be creche’s for your children and the entire community is gated. Flight times? if your from the UK your there in 5 hours, half the time of most Caribbean destinations! Guaranteed Sunshine? Yes, all year round dropping to 24 centigrade over Christmas! For more details of how we can source you a great investment contact Fresh Invest Ltd.
Cape Verde Looks Set For an Exciting Future – Property Investors Take Note!
So where does Cape Verde fit? With a sunnier climate than the Canary Islands and Half the flight time of the Caribbean, Cape Verde looks set to be injected with massive investment from developers looking for the next “sure thing”. When developing or investing anywhere, the most important factor to consider is “LOCATION”.
If you can find a location that has all the benefits of its competitors but still remains relatively unspoilt, you could be on to a winner. Cape Verde offers exactly that! It’s not rocket science to realise that with increased flight costs and many people being able to take even less holiday the British public is looking for a location to holiday that they can get to quickly, won’t cost them the earth to stay and perhaps most importantly has “Guaranteed sunshine”!
Many well known developers have pinpointed Cape Verde as the Place to Be over the next few years, land and property costs still remain relatively inexpensive with apartments starting from £72,000 and villas from £150,000. If you equate this to the classier parts of Tenerife which it is competition with, they are at least 50% below Tenerife values. Perhaps the best apsect is that this country made up of 10 islands, all of which are relatively unspoilt, the government wants to retain the lush greenery of the Caribbean whilst building up select areas giving the necessary infrastructure to support the holiday trade that looks sure to increase over the coming years.
Some forward thinking property investors have already realised the potential capital growth to be gained by purchasing property in Cape Verde. Property prices have started to increase, the last 2 years capital growth has been at around 15% per annum. Prices have been so strong that they seem to have become recession proof, the predicted slow down in buying has just not happened! If you are in the market for a holiday home or have grand aspirations of retiring abroad one day, why not take a look at the Fresh Invest website. In a climate where we have all seen our pensions probably halve in value, investing in a property that you also get to use and also could give you a return in double figures may be the best thing you ever did!
You don’t need a crystal ball, just look to the past!
Everybody seems to be waiting with baited breath for sure signs that the property market is on the up.
I liken it to being a child just about to take that first jump on your bmx, you spend all day making the jump then all gather at the top of the hill ready to go. Then you all stop, look at each other, daring the other to go first.
This is how i see many of us in the property market.
Nowone wants to be the first, we all need to know that someone has taken that jump before us!
If we take a quick history trip back to the second half of 1992, the market was just beginning to emerge from the doldrums of the late 80′s.
If we use Halifax’s figures, the average price in 1990 was £69,000, by 1992 it was £61,000, however, as we entered the millenium it has climbed to £81,500, a 15% increase.
In London prices has skyrocketed from £76,000 to £142,000!
This explains the recent increase in viewings in the capital.
The other explanation is easily explained if you look at the typical house buyer at the moment.
They fall directly into the middle age, middle class category.
These individuals were either at university or not on good enough wages to take advantage of price increases in the early 90′s. However, since then many have worked hard and are now in a solid job, having regularly paid off their mortgage.
These are the types of people that see an opportunity, they are also the people that are in the best position to take advantage of it.
The downturn in the market has resulted in the North/South divide widening again, where most southerners seem to have a larger amount of equity, this has allowed them to ride out the downturn in relative safety; whislt also paying off massive chunks of their mortgage thanks to the low base rate.
Because of this they are now in the ideal position to pray on an underperforming market.
Lenders are heavily favouring investors with large deposits and good jobs which is exactly the demographic many of these investors fall into.
Whilst i still think the property market has another 10% drop in it, i’m buying, the reasons?
I would rather pick up a high yielding property off a desperate seller in a declining market than a property off a confident seller in a buoyant market.
If you are worried about the 10%, offer 10% below market value, your more likely to get it now and take advantage of low mortgage rates than after the market has turned!
It’s all the NINJAs fault!
As we all sit around wondering why our shares are worth 50% of their initial value and our savings are returning a staggering 2% per annum, i think its time to blame NINJAs, or more importantly, the people that lend them money!
If your thinking, he’s finally lost it, hold on and let me explain.
I’m not talking about the type of NINJAs that wear black pyjamas and lurk in dark places! Im talking about “No Income, No Job, No Assets” N.I.N.J.A.s.
It’s because the lenders lent money to these massively high risk characters that we are in the poaition we are today.
There is a reason NINJAs do not own their own houses and it’s generally because they can’t afford both the deposit and the monthly mortgage payments. With 100% mortgages available many high risk applicants decided the time was ripe to take their first step onto the ladder.
Suddenly all the spare cash that was swilling around at the beginning of the century was quickly used up, much to the lenders delight.
Bankers then took all of these loans, mixed in some better ones and sold them to other banks who found the high interest rates attractive.
The problem arose when these “fixed rate” mortgages came to fruition!
Suddenly Joe Blogs went from paying an affordable rate to one miles outside his comfort zone, they default on their payments and the heavily traded loans that were made are found out to be be worth about the same as the paper they were printed on!
This may have been manageable if their hadn’t been over $1 trillion worth of these loans in the market!
Any lender with a high risk business model eventually came a cropper as banks bit the bullet and decided to stop lending to one another.
From there on i’m sure you all pretty much know the story, banks are “helped out” by the Government and we all eventually suffer.
One point worth noting is that the banks that took these massive gambles that eventually doomed us all were rewarded by being taken over by the Government!
Interesting seeing that if any small business owner made such a colossal cock up we would be on the street before we could say Northern Rock!
Student property…the last bastion of buy to let!
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.
Why Cape Verde is the New Caribbean?
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!
Recent tax and legislation – How it affects the investor?
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.
No money down…..no thanks
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!
Are we in for a Mental May!
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.
Where is everybody putting their savings?
The recent drop in the base rate has had a dramatic impact on peoples pensions and savings, this is a fact..
So what are these people doing to alleviate this problem?
The answer more often that not is nothing.
I think the british public faces a real awakening when they stick their heads up above the sand and look at the state of their pensions/savings.
Now my job is to sell property, that is what i’m good at and that is what makes me money. In this market it should be the easiest sell possible.
My pitch would go somewhat like this….savings making you 2% max, pension value has collapsed and shows no sign or changing, buy a 2 bed flat in a good location and secure between a 5% and 9% yield along with long term capital growth.
Anyone that has ever sold property for an investment knows the challenges we face regards peoples perception of this as an investment. It is widely known as a high risk investment with fantastic gains but also devestating losses.
Now i would argue that if you do not over expose yourself, take a long term view and purchase wisely there is never a bad time to buy property.
The point remains the same, if you want your money in a fairly safe long term investment vehicle, do you really have a choice?
Where have the big discounts gone…
Further to a previous blog, i’m encountering an increasing amount of “hard nosed” developers.
Now if these developers aren’t setting the world alight with their monthly sales figures, and their year ends are looming, why aren’t they accepting the kind of offers they were last year?
Well interestingly the Government has told them not to!
Controversial i know but true in many cases.
I find more and more developers that have had their assets reposessed, now more often than not the banks that have reposessed these assets have been given massive cash injections by the government.
Now you have all these developers that are partly or solely owned by a bank, the bank is owned by the government or has shares in them…
Now this is the interesting bit….The government will not let the banks take a penny loss on their existing debts, so if the land and the build of a scheme stands the developer in at say £10m, any offer under that will automatically be declined.
The result of this is that the property market does exactly what the government injected all of this money into the economy for it not to do! Which is stagnate.
Nobody buys or sells because the market is simply not there.
The Downfall of Exchange Bond
Today one of our investors sent us a very interesting bit of news about theexchangebond.com.
It appears they are going into administration.
This raises some important points for both developers and investors alike.
From an investors point of view, does this now mean that any investor whose off-plan purchase is looking a bit wobbly can now walk away from this purchase?
They have already exchanged contracts but any money paid was to the exchange bond.
The whole point of the exchange bond is that it promised that if on completion the investor was unable to complete, the exchange bond company would pay the deposit for the investor.
The exchange bond company would then persue the investor for the lost monies.
So…if the exchange bond company is no more, who chases the investor?
Does the developer take it upon himself, he should do but does he have a legal right to?
In legal terms the investor has exchanged with the developer so risks losing his deposit if he does not complete….but they didn’t pay a deposit did they!
If i’am correct, then we are likely to see a multitude of developers reducing previously sold units for a quick sale!
What of the developers that have bank funding and have been lent money on the strength of their exchanges, surely this must impact severely on them as well.
I predict interesting times ahead…
“Flipping” property!
Have the days of the short term investor now gone?
Are their still quick profits to be had out of the property market?
I have always been a believer in investing in the property market for the long term but investigating whether a short term profit is available at the same time.
By this i mean, if you go into a purchase knowing that you do not need to sell in the short term, but investigate the option anyway, you are in the position of power.
It occurs to me that all investors with cash in the bank seeing maybe 3% tops from their savings must be looking at an alternative to their investment.
Surely the knowledge that property as an investment has historically always grown in value must lead them to consider this?
Answers on a postcard….
Has the market turned?
With the government warning first time buyers to step onto the property ladder now rather than wait Fresh Invest gives it’s views on the market as a whole and it’s thoughts of a reported market turnaround.
The property market has always been a fairly fast moving animal, where price rises and falls in other markets happen on a weekly basis, the price of a new build flat seems to change on a daily basis at the moment!
We are finding that the massive discount of the last quarter of last year and largely no longer available.
I was just last week given an opportunity by a major developer at 30% discount, 2 days later i put in an offer at 40% discount for a large number of units. I was told that this was double what they were willing to do!
Obviously this confused me somewhat, in the 4 days i had taken to get back to them they had sold a number of units and could therefore be more “bullish” with their prices!
I suppose this shows how quick you need to operate in this market. It must be fairly daunting for a newbie investor, being asked to invest in something worth a few hundred thousand pounds in just a couple of days!
Unfortunately, if you want to invest successfully this is generally the pace you need to work at!
Portfolio Management
Well, interesting news at Fresh Invest.
A while ago we realised that there is a gap in the market for a portfolio management company that not only collects the rentals and conducts rent reviews, but also takes an active interest in the property that is contained in the portfolio.
We found that many investors simply go to a large letting agent and hand their portfolio over in it’s entirety.
Through our relationships with some national letting agents we have managed to agree a significant discount off of their fees.
What we propose is that we let our letting agent take over the day to day management of an investors portfolio whilst we conduct monthly reviews of your property, recommending selling or buying specific property.
As a property investment company we believe we are ideally positioned to take advantage of potential growth areas before they are hit by the investors. We also hear when some areas are overpopulated by investors. Giving our portfolio holders this information can prove invaluable.
Let us know what you think about this idea…
