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 traditional slowdown in the property market coming up to the election, was not enough to eradicate the increase in housing sales, enquiries and prices that come with the spring season every year.

As the election comes around people traditionally slow their searches for new properties, in a hope to not overexposing themselves to possible new policies, which could leave them struggling once the new government has been decided. One such new policy could be an agreement to hold the interest rates at a current low level, this will of course be beneficial to anyone looking to trade up in the housing market and possibly leverage themselves further against the value of their property, if interest rates were due to increase this could be a problem for would be house buyers as they may struggle to match the repayments.

On the other hand it is normal in Britain for the property market to have somewhat of an upsurge in interest during spring, this can be attributed, partly to the sun making house hunting a more pleasant experience and also, to the budget which is often announced late in March and provides more certainty to market conditions.

It is good to see this news, as now the new government has been decided and are getting to work, we would expect the current trend in new house buyers and a slow increase in house prices to continue, as people are given more certainty in the position they will be in, come the next few months. There are a few interesting policies being taken into government, it will be interesting to see what the Lib-Dems have in store with the new “safe start” mortgage, designed to stop new buyers slipping into negative equity.

News of the increase in prices and sales came from RICS this month, as they published their latest monthly survey of some 245 members of the RICS who work as estate agents.

Fresh Invest is a property investment company with the aim of maximising our investor’s funds whilst minimising their risk. For more information see www.freshinvest.co.uk or phone 0800 043 69 56.

BBC news reported last week that homeowners have been paying off record amounts of their mortgages over the course of the past year. In total UK homeowners paid off £22.3bn last year! We believe this is great news for the housing market and therefore the property investment market.

The reason for this is simple:

When the banks dropped their interest rates, UK home owners on a tracker or variable rate mortgage had 2 choices:

-          Spend their increased discretionary income as they wish living a better lifestyle with luxury goods or,
-          Invest their increased discretionary income back into their property.

Now this piece of news shows that the majority of UK homeowners have chosen to do the latter…

Well done UK! The reason this is so good for us as a nation is that we, and therefore the banks, are now not so heavily leveraged on our properties and when the Bank of England inevitably raises the interest rates, we will still be able to afford the repayments on our now smaller borrowings.

This piece of reassuring news can put your mind at rest that the UK house prices should remain buoyant and we will not see the “dead cat bounce”

Others will argue that the idea of lowering interest rates is to get the UK homeowners to spend their increased discretionary income in the consumer markets, However, I don’t agree.

As interest rates dropped UK homeowners continued to keep the consumer markets ticking over as they paid off their mortgages. It would seem we have got through the hard stage and now we are in a good position to continue spending in the consumer markets, whilst maintaining our now lower mortgage repayments… Either way we see this as good news!

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!

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

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

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

So what should this year have taught the average investor?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New Opportunities through Fresh Invest:

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

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

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

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

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

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

If this is you, look no further.

Demand:

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

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

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

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

Supply:

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

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

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

Prospects:

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

“Student Housing delivers income during uncertain economic times” Savills

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

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

Yields and Values:

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

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

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

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

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

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

How we can help:

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

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

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

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

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

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

Register your interest for these opportunities here.

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

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

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

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

It seems the lenders now agree.

What are the new rates like?

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

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

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

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

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

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

So why the sudden change?

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

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

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

So should i buy now?

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

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

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

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?

1. We have just had the highest october high street sales for 7 years.
2. The pound rose to it’s highest level against the dollar.
3. The ftse closed up 92.5 points, at a two week high.
4. 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!

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?

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.