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.
Economies of scale
One thing you will notice a lot in terms of property investment is the economies of scale that are involved.
What I mean is the bigger the purchase the bigger the discount. So essentially the best discounts are only available to those investors of a high net worth.
However here at Fresh Invest we like to try and please everyone. So we will aim to use the larger purchasing power of our Bulk Investors and filter the discounts obtained through to our investors that are only looking for individual buy to let properties.
So any of our investors can register an interest in our bulk deals, then once a Fund has secured the properties we can start to sell to the single investor on behalf of the fund, this will be at a greatly reduced from list price.
This is good for the bulk buyers, as often they can get an almost instant return on their investment with the added choice of a great profit or an income stream from whichever properties they chose to hold and let privately.
A typical example is one of our current Opportunities in London. The developer is offering these to the single investor at 10% discount. However we have now secured these apartments at a larger discount with the use of a fund and can now offer these to the single investor at a discount of 20% leading to an average saving of around £20,000 to the single investor.
At the moment we have an opportunity in Boscombe. Now if you purchase 3 units in Boscombe and the developer would entertain a 25% discount however for one property the developer would only give a 15% discount. If we can get a bulk buyer to negotiate a very feasible discount of 30% for 10 units then sell back to the individual investor at a rate of 20% or 25% off of list price, the individual investor has saved 5-10%
For more information on this register with fresh invest here
Student Property… Still holding strong!
The student property market has still been relatively unfazed by this recession. The strong returns are still available and it is still a growing market. Student applications rose by 9% for the student year commencing September 2009.
Not only is the student buy to let market growing but did you know about the various grants available to bring your property up to HMO standards accepted by universities and authorities…Yes that’s right the landlord accreditation scheme means that if you buy a property that you intend to let as an HMO it may have to be up to a certain standard e.g. 3 double plug sockets in the living room and even bedrooms of a certain size. Some local authorities will pay half of your refurbishment costs up to the sum of £4,000!!! Not bad hey?
With the traditional buy to let market in dire straits why wouldn’t you look towards this bustling market, and place your property in an area that will always be in demand?
The landlord accreditation scheme:
The landlord accreditation scheme is free to join. It differs from area to area. But here are some advantages of our local Landlord Accreditation Scheme:
- Access to funding to bring your property up to Accredited standard up to £4,000.
- Full property listings on the university’s website and accommodation list.
- Eligibility to join the “Head Leasing Scheme” (Full management service).
- The status of being publicly identified as a good landlord, including formal certification.
- Discounts on goods and services such as property insurance, Mortgages and Loans.
For more details on the landlord accreditation scheme in your chosen area or to use the Fresh Invest Property Sourcing service email us here
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!
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!
Surf’s up… Invest before prices follow suit!
We love offering UK property here at Fresh Invest and none more so than the areas which are local to us. Now everyone wants a high yielding portfolio with great capital gains. The only problem being that often it is a case of the bigger the risk – the bigger the reward. This therefore means investing off plan and overseas.
However our most recent opportunity on the South Coast of the UK has all the makings of a great investment i.e:
- Massive Gentrification.
- A budding tourism scene.
- Large cash injections.
- Great discounts.
- A good rental market with possible very high yields (discussed later)
- Great Sea Front location… Never a bad thing.
Where in the UK is this so called “Investment Haven?”
Boscombe!
Yes that’s right sunny Boscombe close to Bournemouth has been receiving massive cash injections from the local government and is on the up!
Gentrification:
What does that mean? Well put simply it means “going up market” and with this comes increasing property prices and increasing rental prices. Which to you and me means Capital Growth and Rental yields Harry Redknapp has recently bought a flat in the area.
Tourism:
With the majority of the British public strapped for cash due to the current economic climate they will be looking to holiday in the UK. Not to mention the weakness of the pound this is making holidaying abroad a very expensive luxury.
Coupled with this is the development of the UK’s first artificial surf reef! That is sure to bring in some revenue for the surrounding area.
The newly refurbished “Beach Pods” Designed by Wayne Hemmingway (Red or Dead) have just been released for sale and have really bought a modern and vibrant look to the beachfront.
Yields:
One thing with property in holiday locations is that the rents chargeable can become massively inflated in the summer months meaning that if you could secure a long winter let and then regular summer lets you could be on to a property with a very high rental yield!
For more information on our Boscombe opportunity click here
Or freephone on 0800 043 69 56
Are you self invested?
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
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.
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?
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…
