Act now or forget your pension
Pensions, Savings, Isa’s….
What do all of these have in common?
Well other than shocking returns, the chances are that over half of you are relying on one of these come retirement.
Forgive my scepticism, I can only talk from past experience, you see I’ve got a share portfolio which I’m looking to for a pension, I’ve had this for 7 years and rather than make me any money, it’s actually fallen 3% in value.
The news is full of programmes investigating the current financial crisis; no avenue of investment seems to be safe.
Panorama recently investigated the vast fees and commissions some pension companies take from their clients, in one case a lady’s net return over 21 years was just 3%…it would have been 4% if she had not been paying various charges!
Now I’m sure that there are other pensions that would return her a larger sum but as she pointed out, how do you know which are any good?
Well the answer is, you really don’t…
Why Property?
For years I have tried to educate clients as to the benefits of investing in property as your pension. Not only do you benefit from any rental returns after mortgage payments but you will also over a number of years, benefit from capital growth.
It has been widely documented that property prices have taken a tumble in many locations, however if you buy smart and at a good price you massively reduce your risk.
The average pension pot in the UK is around £33,000; now for many of you it may not be too late to do something about this.
Below I will show you a simple way to make your money work for you in property.
Let’s take a 35 year old male that wants to retire at 55.
- Purchase a 1 bed apartment for £150,000. (Multiple locations across the south coast)
- Deposit needed £30,000 (20%)
- *Repayment Mortgage over 20 years = £735 pcm (4% interest rate)
- Rent PCM = £750 pcm (average for this price and location)
- Management Cost £75 pcm (10%)
- Additional payments = £60 pcm.
*Remember this is a repayment mortgage, not interest only, the long term goal is to pay this mortgage off over 20 years.
If you look at the £60 as your pension payments, in 20 years time you will have a pension pot worth £150,000, not taking into account any growth; giving you a return of £750 pcm.
Now the chances are that there will be capital growth during this period, if we take it at just 5% per year, your property will be worth £397,995 in 20 years time.
Rental also historically increases over time, if we take 5% here as well, your £750 would be worth £1,990 pcm in 20 years.
In Conclusion:
When investing in stocks and shares, it is extremely hard to get an idea of what they will be worth come retirement time. Brokers and IFA’s will bombard you with figures, but for the most part it’s a shot in the dark.
One thing that not is historical data on property and rental growth, this can be proved, as can the UK’s desperate need for more property and the demand for rental property in certain areas.
Many of you probably own a house and have done for a number of years, cast your mind back 20 years and recall the re-sale and rental values then. See what I mean?
In short:
- £30,000 investment in property now
- £60 pcm top up
Should provide you with…
- An asset worth £397,995 in 20 years time
- Income of £1,990 per month.
The Alternative:
Keep ploughing money into a product you’re not in control of and you probably don’t understand.
For information on how you can make your pension work best for you contact Fresh Invest on 01243 527327 or email info@freshinvest.co.uk.
My top 5 places to invest for 2010 – Part 2!
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!
A good time to invest in property
I was just reading an article by BBC news about how taking investment advice from your bank is a bad idea. I’m sure many people reading this article will have been asked to speak to one of the financial advisors available at their local bank, who will tell them that investing their money in one of the banks medium/high risk funds is a good bet and it will return x% and increase in capital by x%.
One of the ladies in the BBC news article had invested £100,000 into a “Cautious fund” and she quickly lost £40,000… unbelievable! Not only this, but the lady’s money was also decreasing at a faster rate because of the fact it was shrinking against the rate of inflation.
At a time of inflation coupled with low interest rates, ideally you would like to be in a position where you have an asset which is making you money and your borrowings on that asset are also, in real terms, shrinking while inflation is present. Your asset will be making you an increased amount of money with inflation and in comparison to your borrowings against it; the time at which you will have no outstanding finance will approach quickly. I am, of course talking about property.
It is no surprise that property investment has, for a long time, served as the main entry route to the forbes 100 rich list. The process of buying property in the right location at the right time and making sure the rent is going to cover the repayments you have on any borrowings, is just the start of it. The distance you can make your money stretch in property is insurmountable, by refinancing and keeping the cash flow on each property positive every month.
I have seen an article today from a top economic forecaster predicting that interest rates will remain at 0.5% until 2014; you may have also seen that the UK economy grew faster than expected last month inflation is at a rate of around 3% this typically means that the price of most goods and services are increasing at that rate and, ideally, your wage at work, as opposed to your borrowings on your property, which will be shrinking in comparison. Ideally I would be looking to invest in property now, take advantage of very little new build stock, the low interest rates available and use some of the positive cash flow generated every month to reduce my borrowings, so when interest rates do finally rise I am less susceptible to increased repayments.
See some of our UK investment opportunities here
My top 5 places to invest for 2010 – Part 1
The property market in many countries has taken a real hit over the last few years, however this sometimes is not a bad thing.
If your looking at property investment as an alternative to stocks and shares then the time may be ripe to invest.
Below are my top 5 places to invest.
1. Cape Verde:
When looking for an overseas investment opportunity the first thing you should always ask yourself is “would i go there”. If the answer is no, the chances are your not in the minority.
The next question is, if you would go there, why?
For me Cape Verde offers a unique proposition, 360 days worth of sun that you can access via a 5 hour flight.
Combine these 2 points and it narrows the field down considerably; quite honestly the competitors i’ve either been to or i’d never want to.
The reason for this is as follows, not only does Cape Verde have a Caribbean climate but also a laid back lifestyle unlike many of its competitors.
The Prices are still relatively low compared to the likes of Tenerife and some Caribbean islands, this is mainly due to the infancy of the islands that make up Cape Verde.
This will not be the case for long, already some major 5 star hotel operators are building on the islands of Sal and Boavista, this will increase tourism and put more pressure on Airline operators to increase their flights.
One such 5* hotel operator is Sol Melia – the worlds largest hotel resort operator, they are taking over the running of our Dunas Beach Resort investment opportunity.
Conclusion:
Risk = Medium
Returns = High
Yields = High
Minimum cost to invest = £33,640.
2. Barbados:
If you have deeper pockets abd want slightly less risk then Barbados may be for you, offering the true 5* lifestyle with prices to boot.
The reason i think this is a good investment is that even though prices are high, you can still achieve yields in excess of 10%, as witnessed in our opportunity on the West Coast Barbados.
Yields this good along with the knowledge that you are investing in the holiday makers favourite Caribbean island means that occupancy rates should remain strong. Most other Caribbean islands are so far behind that no threat to this crown seems anywhere near appearing.
Demand is Barbados is so high it has become the place for celebrities to have second homes, as proved by a host of premier league footballers, golfers and tv personalities.
Conclusion:
Risk = Low
Returns = Medium
Yields = High
Minimum cost to invest = £64,990.
3. Spain – Barcelona:
I love Barcelona, its my favourite city by a long ways.
Sea, Sun, Football, Great Beaches, Great Nightlife andf now a grand prix! I don’t know another city that offers so much.
I also think its a bit of a hidden gem, 1 bed apartments on the outskirts of Barcelona can be picked up for around €160,000 and if you can rent them for 40 weeks of the year you should be on for close to a 8% yield. Not bad for one of the most cosmopolitan cities in the world.
Demand will always be strong because of the sheer size and climate of Barca.
Combine this with the fact that house prices in Barcelona have hardly been effected by the global financial crisis and you know that values will remain robust in all but the most dire of circumstances.
Conclusion:
Risk = Low
Returns = Medium
Yields = Medium
Minimum cost to invest = £27,111
Too see what numbers 4 and 5 are, click here!
Prices still rising in Cape Verde and we see no reason for it to stop.
Cape Verde property prices have been rising on average by 30% pa over the past 10 years and the occupancy of the only 5* hotel on Sal is currently around 95%.
If these trends were to continue you could put as little as £27,986 into a property on the fantastic Dunas Beach Resort now and on completion you would be able to recoup your £27,986 deposit + £19,579 on top as Cashback! Then to top it off a Net Profit of £8,117 pa from rentals!
Obviously this is the best case scenario but the figures speak for themselves.
Why would these trends continue?
Cape Verde is an archipelago of islands off of the North West coast of Africa it has:
- Year Round Sun (yes 360 days!)
- 107% rise in tourism over the past 5 years.
- No hurricanes.
- Temperatures of 22-30 degrees.
- 1 hour time difference from GMT.
- 5 hour flight from the UK.
- “EU special status” – granted $1.5 billion for infrastructure and tourism upgrades.
- A mostly Christian society.
Why Sal?
- Sal accounts for 69% of Cape Verde’s total rental market.
- It is the home of the new international airport with fantastic connections to the UK flights from Gatwick, Manchester and Birmingham.
- 2 “Ernie Els” golf courses are currently being developed on the island.
- Pristine white beaches.
- Beautiful clear sea.
Why Dunas Beach Resort?
- Dunas Beach Resort is a development of 1135 properties ranging from studios up to 5 bed villas.
- This is a European quality 5* resort with an astronomical build cost of €1,400 psqm (double that of the comparables used in our figures.)
- All properties are eligible for entry into a “self invested personal pension.”
- The resort operator is the fantastic Sol Melia group. Sol Melia are the biggest resort operators in the world and have a turnover of €100 million per month! With 150,000 hits on their reservation systems per day.
- The constructors of the resort are the San Jose constructors; they are the largest construction group in Europe with a turnover of €1.35 billion pa.
- Savills red book valuation on “bare land value” of €46 million.
- Being located on the South West coast of Sal, Dunas Beach Resort is in the best position to capitalize on this islands emergence.
- Completion mortgages readily available from many large banks.
- A cash flow positive developer (most developers handle a €60,000,000 negative cash flow throughout construction.) Phenomenally good performance through pre-sales has put them in this position of strength.
- The developer has an unused facility of €9,000,000 with Banif bank.
As you may well know we try our hardest to offer investments, where the risks are minimized as much as possible. Of course you could lower your risks even further by investing in a country that is already fully developed but at the same time you better also stretch your budget because this will not come cheap!
The best way to invest will be to choose the country that is yet to emerge, whilst ensuring that all risks have been covered and the country is infact emerging… This is exactly what we have done for you.
For more information on Dunas Beach Resort Request the latest brochure here
Lack of property boosts asking prices
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!
Dunas Beach Resort, What our investors say…
For months we have been talking about how great an opportunity Dunas Beach Resort is, it has obviously worked as we were overwhelmed by the amount of interest we have had in this overseas investment opportunity.
We thought prospective investors may like to hear what previous buyers had to say about this investment.
Mrs Carole Winters – Shrewsbury.
“In 2009 we approached Fresh Invest initially looking for a holiday home, we had a budget in mind but were aware that we were stretching ourselves, however we knew that if we did not buy now then we may never have!
Over the next month or so i had various conversations with Dan regarding various properties in various locations. In the end we settled on Cape Verde and Dunas Beach Resort. We loved the idea that we could invest in a good size 1 bed apartment with just £32,000. We were also very interested in the equity release scheme which mean’t that we used £30,000 worth of equity in our home and topped up the £2,000 ourselves!
Seeing as we had set aside money to buy the flat, to know that we could use equity in our house was a massive relief to us.
Dan gave us a financial breakdown on the apartment based on comparables in other developments showing that we should look to make at least £6,000 per year after all costs including mortgage payments. He also showed us what we could mortgage the property for on completion, at the moment it looks as if we should actually be able to pull out all of our deposit on completion!
We have decided to enter into the hotel agreement meaning that Sol Melia will take care of all rentals ensuring we get the best rates for our apartment. We also get 5 weeks use of the apartment for free.
Since then we have found out that Dunas Beach has been upgraded to a 5* resort which was great news.
I have to admit the investment was a little daunting in the first instance but once we got our heads around it the process started to make sense.
Now we are looking forward to a lovely apartment that has cost us £32,000 that we didn’t even know we had and receiving 5 weeks use and £6,000 per year! thanks Fresh Invest!”
….Just one investor that took advantage of the various money saving options on Dunas Beach Resort!
Spending cuts for universities….Great News for investors!
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!
Cape Verde Looks to the Future
Known by many as “The European Caribbean”, Cape Verde is showing signs that it could be Europe’s saviour when it comes to affordable holidays with year round sun or overseas property investment.
With the credit crisis hitting most, holidaymakers are looking closer to home. Spain and the Canary Islands have both seen increases in tourism as well as many locations in the UK. However, if you really want year round sun in a secure location Cape Verde has to be at the top of the list!
Now Cape Verde is looking to boost tourism by implementing a Tourism Strategy Plan which will aim to increase tourism by 500,000 visitors by 2013.
Between the year 2000 and 2008 the total holidaymakers visiting Cape Verde rose by 11.4%!
This plan has been given the green light by ministers and looks set to boost tourism sector employment by as much as 60%!
This will obviously have a knock on effect for holiday apartments and villas, many average builders have fallen by the way side leaving some select developers to take up the baton. None more so than The Resort Group and it’s Dunas Beach Resort, the first developer in Cape Verde to sign up with a 5* developer. Sol Melia is the largest resort hotel group on the planet and their 5* hotels are widely recognised as some of the best in the world.
The best part is that you can purchase an apartment on this select development from just £72,326.
Deposits needed are just 35% so just £27,986 gets you an apartment in a 5* resort in Cape Verde; due to be the best hotel resort on the island! Check out Dunas Beach Resort Now!
Conclusions of 2009 – Opportunities for 2010
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!
Student Property Report 2009-2010
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.
Brazil property… positioned for growth?
When you are looking for an overseas property investment, what are the key points that need addressing before you commit to a viewing, reservation or a purchase?
Capital growth, secure economy, stunning scenery, fantastic prices, rising tourism figures, beautiful climate… How about oil reserves and major sporting events? …Ok those last two may not be as appealing, but trust me they are going to drastically effect the value of your investment property.
An example of a major sporting event’s implications on local property values would be South Africa which is due to host the 2010 World Cup. In 2005 property values in South Africa rose by a staggering 35%, with news of the country’s successful bid from 2004. It isn’t only South Africa seeing their property prices increasing either. Cape Verde just off the coast is seeing similar price increases; this would probably be pinned down to it being a great stop off for anyone travelling to world cup games from western countries. Click for our Cape Verde property.
Belo Horizonte, Brasília, Cuiabá, Curitiba, Fortaleza, Manaus, Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador, São Paulo. These are all “host cities” therefore these are going to be the cities that see the most direct benefit that this prestigious event will bring with it. But it will definitely not stop there, I am sure that all of Brazil is going to see the benefits of the 9.8 billion reias the government has set aside for tourism development of which 63.3% is allocated to infrastructure upgrades.
Brazil’s huge newly discovered oil reserves are sure to act as a magnet for Foreign Direct Investments. With oil reserves around the world dwindling and demand not letting up we are seeing another rise in prices at present. Brazil has positioned itself in a position where it is not overly reliable on oil; therefore it is now in a fantastic position to exploit its reserves.
So you can see where the growth of your investment property is going to come from. Other points I think you have to take into consideration though are: The fact that Brazil is only a 7 hour flight from Europe, it has increasing employment and a massive shortage of first-time homes somewhere between 8-10 million!
Oh Wait! Don’t forget that Brazil is also due to host the Olympic Games in 2016!
Check out our Brazil property
As lending relaxes property investment increases!
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.
With stability grows confidence!
Shopping at the weekend I was amazed at how busy all the shops were, now I know it’s christmas and all that but perhaps this could be the final piece of the puzzle that will lead to us climbing out of recession.
It does seem for the first time in months that the public are not as worried as they were about the economy.
According to the times, people are more optimistic about the economy than at any time over the last 18 months.
What are the reasons for this?
- We have just had the highest october high street sales for 7 years.
- The pound rose to it’s highest level against the dollar.
- The ftse closed up 92.5 points, at a two week high.
- Alistair Darling is looking at cutting business taxes to encourage people to have faith in labour.
What do people think about these facts?
Is this a result of the “quantitive easing” which we (the public) are going to be penalised for after the elections?
or
Is this the start of Britain pulling itself out of recession?
Could the points above be the catalyst that leads to us out of our economic quagmire?
What does this mean for the property investment market?
In my opinion it means that the worst is now firmly behind us, the increased confidence on the high street coupled with the low supply of new build property coming on the market means robust values.
Investors can now take advantage of a unique position in the property investment market. There are still a small amount of reposessed property and good discounted new build units available which if bought now are sure to increase in value over the next year.
Investors purchasing these can then re-mortgage on much better loan to value rates.
The property investment market is ripe at the moment, will investors choose to invest or wait until the moment has passed and lament on a missed opportunity?
As always, we will probably see both.
If you want details of some of our UK Buy to Let Opportunities at the moment please let us know, they are selling fast!
Property Investment – Why you actually have no choice!
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?
Where is Cape Verde anyway?
As someone selling investment property in Cape Verde (Dunas Beach Resort) I welcome this question. This is because it proves to me how undiscovered the country is, and how far it has to come before it reaches the prices of its comparables. As any investor will appreciate buying in a market that has all the right ingredients for growth, but just hasn’t grown yet will be a great investment.
The main reason this is a good question for us to hear and how it relates to our investment is that, our opportunity is to purchase the freehold of an apartment which is run by the top resort operator in the world. Your rental yields will be governed by the occupancy that your resort operator can achieve and in Cape Verde this should lead to some outstanding rental yields.
The yields we have worked out on our investment come in somewhere around 10%, now this is working on a 68% occupancy. However the current on island occupancy is 80% and the only other 5* resort on the island is seeing occupancy levels of 98%. This could mean rental yields of around 20%+ for our investors.
Rental yields are not the only attractive part of this investment. For the last 10 years Cape Verde has seen an average capital growth year on year of 30%. Now if we were to assume only 15% growth pa, we have worked out that upon completion you could have equity in your property whilst still retaining up to a massive £100k cash-back!
Why would this continue? Well here are some points you may or may not know about Cape Verde and the developer of Dunas Beach Resort:
- Cape Verde has EU special status ($1.2 billion investment from the EU for tourist development)
- “It has been weathering the global economic crisis from a position of strength.” IMF
- The number of direct flights is increasing everyday.
- Tourism figures rose 27.5% last year and are still rising with more flights from new countries everyday.
- The resort has double the build cost of any other “on island” development at €1400 psqm.
- Land is fully unencumbered.
- Developers can only build 4 floors high. This means that land available for building on will deplete quickly and therefore it is likely that prices will rise quickly, as supply and demand tips in favour of demand.
- 1 hour time difference to the UK.
- 5 and a half hour flight time from the UK.
- Phenomenal white sand beaches
See our Cape Verde Investment
Want to hear more? e-mail or freephone Fresh Invest on 0800 043 69 56
3 Reasons why you should start investing in property again.
Property Investment….over the last 18 months probably the furthest thing from your mind!
So why start investing now?
1. Mortgage rates are relatively low.
Ok so the ltv rate isn’t great but the actual rates are pretty good and with our economy suffering i believe there is little chance of the boe base rate increasing.
An average 65% ltv mortgage on a new build flat is around 5% with second hand property mortgages available from 75% at 5% rate.
In historical terms the rate is a lot lower than it has been for a long while.
As ever, if you are building a property investment portfolio you need the mortgage rates to remain fairly low to allow you to repay the mortgage loan, another up shot is that when buy to let mortgages recover the ltv rates will increase, allowing you to remortgage.
2. Property supply is at an all time low!
With most new build developers choosing to stop building last year we now face the fact that it will take these housebuilders a year to get new schemes out of the ground.
This will mean that for around a year from now new properties will be some what of a rarity. New build property accounted for a massive part of the property bought last year, without this supply and with increasing demand prices are sure to increase.
UK Property Investment has always relied to a large part on developers willing to discount their property for either bulk sales or quick completions but if they have no stock….
3. It’s cheaper to buy than rent.
Recent research has shown that for the first time in ages it is actually cheaper to buy than rent, well outside of London anyway!
Abbey found the average rent of £434pm compares to a mortgage payment of £382pm (with a 25% deposit). That’s a saving of £52pm. People in Wales and the north west would save on average £90pm. We can also overpay or save whilst interest rates are low.
So for those looking to start in property investment now looks like an ideal time.
I predict it in september, the halifax and sky news predicts it in october!
Looks like my predictions were true, as the halifax reported on october 6th – article.
If you remember i wrote an article last month predicting that with most developers only just starting to build again there will be a massive drop in supply of property.
The Halifax states “a combination of increased demand and a shortage of properties on the market had pushed prices up in recent months”.
Now i think we all know that this increase is definitely due to ease, its supported by a lack in supply but against that you need to show an increase in unemployment and a definite lack of competitive mortgage products.
My further prediciton is that we will see a mini blip in prices followed by a mini crash then probably stability for the future.
My predictions for the next 12-18 months…
Wow, what interesting times we live in! Property Prices seem to be on an elaborate rollercoaster depending on the area that you live.
One day prices are rising, the next falling, i think the property investment market needs some stabilisation so investors can find their legs again!
Personally i think this may be right around the corner.
I believe that for once the government may have actually got the result that they wanted, even if they will achieve it in a way i doubt they could have expected!
What do i mean?
It’s quite simply a matter of demand and supply and it’s one which could impact us all so pay attention!
Around 12-15 months ago the vast amount of new build property developers stopped starting new developments and started land banking. No property developer would start a site that they thought would actually lose them money!
This was fine at the time, there were more than enough new build developments going to keep most property investors happy, in fact if we are honest there were probably too many!
It’s easy to say that the UK needs to build x amount of housing to keep up with demand, but if that housing is mostly luxury apartments in city centres, way out of the price range of joe bloggs then it does not really equate!
What we are now seeing is the end of many large property developers redundant stock, most sites are now finished and developers are just about to start building again.
This will dramatically impact on property investors and property investment companies, how? because for the next 12 months + we will see little to no new build developments being offered.
“What of all the off plan deals” i hear you say.
Well if you put your hand in the fire and it gets burnt, you don’t go back for a second go do you?
If developers start offering off plan opportunities that is exactly what they will be doing!
It is a lose lose situation for a developer.
- They offer the property off plan and the prices continue to rise – Result – they have lost out on potential profit.
- They offer property off plan and prices drop – Result- what seemed a smart bet turns into disaster as property investors decide not to complete as the promised 25% discount has been eradicated by price decreases!
Summary – Developers can’t win!
So we are faced with developer not offering discount on their property until they have completed the site and explored every other selling option!
This has to be at least 12 months from now for even the quickest builders!
So what would i do?
Buy now!! Were on the way to a mini price rise where property investment demand suddenly rockets past supply!
If you can get it right you can grab the last of the good discounts now and sell or remortgage in 12 months time when prices have risen.
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!
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!
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.
