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 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

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, check back next week!

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

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!

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!

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!

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!

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.