As you saw in last weeks blog, i delved into my top 5 places to invest in property for 2010.

The first 3 were Cape Verde, Barbados and Barcelona.

Below are the last 2, and perhaps the most interesting.

4. Mallorca:

Known to many, invested in by few….

Mallorca is one of the most visited islands in Europe, most of us have been there be it on a lads holiday or a family one!

What many people don’t know is that because of building restrictions prices have not been effected by the global downturn anywehere near as much as their close neighbour Spain.
We have a villa in Puerto Pollensa and in 15 years have not seen it lose money, also long term lets are easy to obtain in the winter, it yields around 11% per year AFTER mortgage payments!

Combine this with an average 3 weeks use per year and it looks like a great investment.
As the cost of far away holidays spiral and many long haul operators upping prices or going under altogether, holidays closer to home tick boxes for many people.

The fact that more and more people are buying second homes in Mallorca combined with laws on future building means that prices are sure to steadily increase in the near future and with a vibrant holiday market rentals will follow suit.

Conclusion:

Risk = Low

Returns = Medium

Yields = Medium

Minimum cost to invest = £30,000

5. The UK

Well you knew it was coming didn’t you!

Ok the returns may not be as much as the countries mentioned earlier BUT many of you will have the market knowledge to know a “good deal” when you see it.

In this market many property investors that do look to invest are loking at minimising their risk as much as possible, for the masses that means not moving out of their comfort zones.

I’ll always tell you that using a property investment company is the way to go, they charge very little, normally get paid by the developer and have market knowledge and contacts that can only be gained by years in the business.

We have seen some really great stock recently, from tenanted apartments in Chorley yielding over 8% to townhouses in Chichester (where we are based) yielding close to 9% when let to students under an HMO license.

Check out our UK property investments for more information.

Conclusion:

Risk = Low

Returns = Medium

Yields = Medium

Minimum cost to invest = £20,000

To Finish……These are my 5 places to invest in 2010, i would hope that by 2011 i will have invested in at least 3 of them. If you have a location you are looking at and a reason why, post it below!

I’ve done it again!

If you remember i blogged in september regarding a lack of supply leading to increased prices, well it seems mortgage solutions agrees……better late than never! See their article here.

I personally i think they missed the biggest point which is the slow down in new build development. But you get the same result.

We still have a few new build developments with discounts available, if you are looking for a property investment click the link!

Another option is to buy a student property, some of our wealthiest investors specialise totally in student accommodation investment. A couple of them have yields close to 20% on massive portfolio’s!

Some investors don’t like the hassle of student property but if you have a management company set up all you need to do is collect the profits!

The UK Government has announced they are looking to implement spending cuts in the region of £350m for the 2010/2011 academic year.

Now many people may think this is a major set back to investors investing in student accommodation, but in actual fact that could not be further from the truth.

What this actually means is that Universities have to concentrate their funding on their core facilities. For instance, up keep of their academic buildings is obviously very important, where as building accommodation for students is secondary.

You may argue that without the accommodation, attendances will drop. Actually this may not be the case.

What the university is hoping for is that third party developers will step in and build for them.

This has always been a much maligned area for Universities because they know that the more accommodation they own, the more revenue they will generate.

Problems arise when spending is cut, they can’t afford to develop so are almost completely reliant on commercial developers.

In short, third party commercial developers have the universities over the proverbial barrel!

Take a look at our Student Property Buyers Guide for more information!

2009 – A year when then the smart investor used their time to set them up for 2010.

I think you will be in the minority if you haven’t suffered some kind of hardship this year, many investors have seen thier dreams of retirement severely set back.

This has not been confined to property, if you had shares or your money in some banks you could be in a worse situation!

So what should this year have taught the average investor?

1. The only way to build a profitable portfolio for the long term is by investing smart.

For me that means keeping at least 20% worth of equity in any property so you build yourself a buffer to combat any drop in values.

Investors have been stung by dropping loan to value rates, an unwillingness by lenders to remortgage on to rates previously offered has seen investors have to increase the equity in their properties, leaving them severely stretched.

Over the last 2 years i have seen investors with portfolio’s worth in excess of £100m go bankrupt, how can this be i hear you say.

What some property investors seem to misunderstand is that if you have a portfolio worth £100m, with lending on it of £90m. You actually have a portfolio worth £10m. If property prices drop 10%, what is the worth of your portfolio…Nothing!

If this happens you are entirely reliant on the income that your portfolio brings in, investors too highly geared normally cannot withstand more than a couple of months of empty properties.

2. Property Investment is not a get rich quick scheme – investors that use it as such usually find they have leveraged too high.

I am one of the biggest exponents of flipping property, i think that if you have the time and the know how it is possible to make decent profit this way but it is entirely dependent on a couple of factors.

Firstly, you need a massive amount of knowledge of the local market, this is not something that can be learnt quickly, so for this reason either keep to one area or find yourself a property specialist that you trust completely.

Secondly, always have another exit strategy, so if you are buying to re-sell, make sure that if worst case you can’t do this immediately, you can let the property out and pay your mortgage that way.

I have refurbed properties for over 6 years and we are also in the middle of developing apartments, i value every property investment opportunity by the number of exit strategies it provides.

3. The good times will come again, use times like these to research the market and decide where the best profits will be made next year and in the future.

If i could focus on the single most important factor i have taken from 2009 it’s that within the next month or so the vast majority of new build developers will completely run out of stock.

At Fresh Invest we are in contact with all major new build developers and 9 months ago all of them decided to stop all build that wasn’t already past footings. This decision was made because the last thing the market needed at that point was more new build stock. They are all building again now but this has created a back log where all finished sites have been sold and the next tranche of stock is still around 6 months away.

We have seen average discounts reduced from 40% 9 months ago, to 15%-20% now, and thats if you can find any stock. We have 2 developments left on our books which are selling at around 2 a day.

The first 6 months of 2010 will see property prices increase due to a lack of supply and increased demand as more confidence seeps back into the market.

I would take the first few months of 2010 to pick up the last pieces of good quality discount property around, there is only 1 way values are going to go in 2010.

New Opportunities through Fresh Invest:

1. We are launching a scheme that should give clients access to lender stock, for property investors looking to pick up great quality buy to let property in a particular area this is the one!

2. We are working hard on some student schemes, these should yield over 8%, have really low interest rates and start at around £80,000. With massive demand and industry professionals flocking to this market this is definitely one for the future!

In a market where many investors have seen rental voids, capital values decrease and Ltv rates decrease, why are many of the UK’s most renowned investors focusing on Student Accommodation?

If you look at the simple economics, student accommodation really does sell itself.

In short, you can purchase a property that will rent at a much higher value to students than an equivalent unit would to a private individual. You also do not have the downfall of rental voids! In fact, many landlords are filling their units 6 months in advance!

Many investors want hands off investments with high returns and no rental voids.

If this is you, look no further.

Demand:

Where rental demand in the residential sector is prone to peaks and troughs, student number have continued to rise from 1.8 million in 1996-97 to approaching 2.4 million in 2009-10*.

Indeed early indications are that the economic conditions have led to even more people looking to higher education.

UCAS data revealed that UK university applicants rose 10% between 2008 and 2009 and overseas applicants rose 13.6% during the same period.

“Overall student numbers are likely to remain stable and in the medium-term there is unlikely to be a substantial uplift in student places as caps remain in place. However, the expectation is that the proportions of both overseas and postgraduate students will continue to grow, underpinning future demand for private professionally managed halls.” Knight Frank

Supply:

Private Student Development is still made up of the 4 main service providers, UNITE, UPP, Opal and Liberty Living. The majority of students have to rely on halls for their accommodation with a small percent benefitting from access to private operated rooms.

Many university run halls are found to be outdated and lacking in necessary facilities. This creates demand for private accommodation but with development finance so hard to come by, this accommodation is nowhere near keeping up with demand.

“Student Numbers are growing at 15 times the rate of new supply in London” Savills

Prospects:

Student accommodation rents have increased by 5% p.a for the last 6 years with growth increasing right into the 2009/10 academic years. Compare this to residential and commercial rents which have both fallen overall during this period and you start to understand what makes this market so appealing.

“Student Housing delivers income during uncertain economic times” Savills

As student accommodation is commercial by class this has also seen an increase in values, this sectors robustness is highly attractive to a growing number of investors who want high capital growth that can be depended on for the long term.

Even in the midst of a global downturn occupation levels for good quality purpose built private accommodation is close to 100% with rental levels for 2010 predicted to increase by at least 5%.

Yields and Values:

Although the rentals gained have not been hit by the credit crunch, one side that has been impacted has been the finance student developers have been able to find. Because of a lack of this many new build schemes have not got off the ground.

If we factor this and the fact that university applications have steadily increased we have a demand/supply scenario which is drastically in the favour of the buy to let investor with student property in their portfolio.

Compound this with the fact that many universities cannot afford to build the necessary accommodation themselves and we have a scenario where these same universities cannot grow to their potential because of this lack of accommodation.

Universities have always relied on private developers to make up the deficit that their own student halls cannot fill.

With many student developers not building because of the lending constrictions, small investors are starting to fill the void with new build 4/5 bedroom houses. These normally comply with the rigorous build accreditations and rent for a lot more than residential lettings.

Through this lack of supply yields have risen steadily and values have followed, we envision this to be the case for the foreseeable future. The student market is continually growing and with many universities operating on shoestrings it falls to the private student developers to build in their place.

How we can help:

You will have seen by previous posts, blogs and emails that Fresh Invest have faith in the student market as a valid buy to let option.

For this reason we are due in the very near future to bring you a selection of landmark student pods which can be bough individually as “completely hands off” investments.

These properties will come already tenanted with high yields and great commercial mortgage options.

Below is an example of a property we are close to agreeing an exclusive for.

Financial Example.
1 bed student pod – First Floor – From £90,000

• Deposit Needed – £31,500
• Rental achievable – £541 (£125 per week)
• Mortgage – £58,500
• Mortgage Payments – £138 pcm (RBS, 65% LTV @ 2.83% Tracker)
• Service Charge and Ground Rent: £70 pcm
• Positive cashflow of £333 pcm!

Register your interest for these opportunities here.

It’s what most of us have been waiting for, the small time frame between lenders relaxing their criteria and property prices increasing.

We all knew that lenders were going to need to increase their loan to value rates, and that when they did it would make a massive difference to the property investment market.

Over the past few months half decent rates had been reserved for investors with 40% deposits. Now i do not condone most no money down deals, i think they lead to more problems than they alleviate.

However! the case for the investor with a healthy 20% deposit should be heard, they have a large amount of equity in their property and should now be relatively safe from negative equity.

It seems the lenders now agree.

What are the new rates like?

Since the BOE base rate reached 0.5% products requiring a 15% deposit have risen from 169 to 231. And the number of products requiring just 10% upfront has gone up from 89 to 105 in the last month alone.

This is certainly a massive difference to a year or even 6 months ago.

Nationwide has already announced a new influx of deals, including some at 85% loan to value and they have also released some of their best rates at 70% ltv, from their previous at 60%.

They have even released a special 90% ltv rate for investors that hold one of their flexaccounts. These start at 4.63% for a 2 year tracker.

The Woolwich have also released details of their new 75% ltv rates, this is the first time the lender has made it to 75% for at least a year. The new mortgages include a lifetime tracker on 2.94% and 2 year fixed on 3.99%.

Abbey also have a new range out, these are exclusively for their current account customers. One of their best is a 90% ltv 3 year fixed rate at 5.99%, their cheapest mortgages are now available at 70% from 60%.

So why the sudden change?

It seems that lenders now believe that the worst is behind us, in short if they are offering 90% ltv mortgage they believe that property prices will not drop more than 10%, in fact they believe that prices will increase in the future, as now being reported in most news channels.

Just last month hsbc pledged to lend an extra £500m at 90% ltv by the end of this year!

Add this to the political pressure being put on lenders by the government, this was summed up by the governments own lending house northern rock as they released some of the best ltv rates seen for over a year!

So should i buy now?

If you are looking at getitng into property investment there has never been a better time to invest, there are still seller under pressure but now there is also the promise of some competitive rates. This means that not only can you buy cheap, you can also borrow cheaply!

We don’t expect this to remain the case for long so why not add or start your portfolio with some discounted property now!

Also check out our UK Buying Guide for handy hints and tips.

I have noticed many of our investors are holding off investing in buy to let property, instead choosing to make doubly sure that the market is on its way to a recovery before jumping in.

Not a bad idea, it certainly mitigates your risk in the property investment market.

But! are you not missing out on the very time when developers are looking to do discounted deals?

Developers are no different from us, they want to make as much profit as possible which means getting the very best price they can.

If you want to sell your car, your only going to discount it if you really need to.

If suddenly all other cars dissapeared and yours was one of the only ones available you would think you were on to a winner and charge top whack!

This is what will happen with new build property soon. The property investment market is recovering and new build property supply is decreasing!

Soon 20% discounts on new build property will only be available in the very worst developments or the largest bulk opportunities.

When this happens it will be no use complaining you have missed the boat, it will have sailed and you will face the choice of not investing at all or paying top prices for buy to let property.

If you have £20,000 spare at the moment you have 3 choices as far as i can see.

1. Leave it in a savings account.

You will probably achieve 3% on your money but it is relatively safe.

2. Invest it in shares.

But what shares? most people have probably seen their share portfolio’s decrease by at least 30% over the last year so do you want to risk it again? even if you do only the very highest risk shares wiull give you the kind of returns that you can expect from a buy to let property.

3. Buy to Let Property Investment.

Just this week we have sold 15 units in 2 different developments, one in Gravesend in Kent, £21,000 into a mortgage gets you a return of 8% and clear profit of £300 per month. One in Salford costs £20,000 into a mortgage and a return of nearly 9% with profit of £330 per month.

Most of these units are already let, one of our bulk purchasers rented 5 apartments in Gravesend in one day. We only offer property in areas where we know there is high demand.

We are seeing more investors buy now than for many years, all of those that are not have to ask themselves why not? Are you perhaps missing out when others are taking advantage of this unique situation?

We know 2 things for definite.

1. The property market will recover at some point.

2. The yields you can achieve today are some of the highest we have ever seen.

These 2 points make it impossible not to at least consider property as an investment strategy.

Quite simply, if you want a good return on your money with little risk and the prospect of high capital growth do you really have a choice?

Sky news has reported that buyers are flooding back to the UK property market. Is it now time for everyone to jump on the band-wagon?

It is no secret that the UK property market has been hit hard by this recession, but with buyers “Flooding” back to the market there is only one way prices can go and that’s UP! Prices have been slowly rising over the past couple of months; as banks lessen the restrictions on their lending patterns and start to let the government’s efforts of quantitative easing, filter through to the consumer.

Sky news reported that last month there was on average 4 house hunters to every house on the market.

Now don’t get me wrong I know, as does everyone else, that the underlying reason for this recession has still not been rectified. The banks still have a lot of bad debt on their balance sheets and unemployment is still rising. But let’s paint one possible picture – The re-emergence of the buyer will see the seller take the opportunity to test the market. Now if these sellers can offload their property quickly enough, they will be able to take advantage of the current low interest rates to make the move that they have been waiting the last 18 months to achieve, for many this will be a movement up the ladder. We need to remember that there is 18 months worth of first time buyers waiting to make that first jump and this could be the fuel to fire the recovery.

If first time buyers do start flooding back to the market and property prices start to stabilise, maybe banks will be able to start lessening their restrictions on the credit driven companies , these may therefore be able to start employing again. If employment starts to rise then mortgage approvals will follow suit. Interest rates will have to rise but if people are in employment they will hopefully still be able to afford their repayments and if this happens in large quantities the banks will be in a much better position to survive this recession.

www.freshinvest.co.uk

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