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!

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?

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.

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

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!

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

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.