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Property is back!

23rd July 2009

uncovered property for blogMany investors have read the news recently about the increase in property values.

Suddenly property investment is the new hot topic.

If you have any disposable income the chances are it’s in the bank or in shares.

In Shares? Well you’ve probably lost between 15%-40% on them over the last 18 months and can see no end in sight. Even if the market recovers it’s unlikely your shares will return to their previous levels for a few years yet.

In the Bank? Thats even worse, your probably getting a measely 3% interest per annum of which the bank is using your money to invest in various property funds returning 6%-8%.

Many investors do so for the long term, property investors are the same.

That’s not to say that purchasing and re-selling in a short space of time is wrong, in my mind that is a long term investment as you will more than likely use the profits to invest in further property.

If a stock market investor purchases some shares then sells a few weeks later after making a profit, we do not accuse him of investing for the short term. So why is flipping property sometimes frowned upon?
It’s “a means to an end” the “means” is to accrue as much capital as possible, the “end” is a target of a high yielding property portfolio.

Don’t get me wrong, this is not without it’s risks but smart investing in low density developments with proven values can be profitable.

Essentially it’s the same as developing, when you refurb a house you do so as quickly as possible. Why?
Because you want to sell your property in the same market conditions you bought it in.

Let me explain, you buy a 2 bed house that needs work and you have faith that at the time you bought it for a good price and that you can sell for more after some work.

The only way to make sure of that is to sell in the same market, if you wait too long and the market drops, thats eating away at your profit.

This is the same when purchasing property to flip, you want to know that the “bargain” that you bought last week you can sell straight away for a profit.

There’s one problem, have you seen it?

Why would a developer sell you a propeerty for less than he can sell it himself?

It seems unrealistic but it does happen.

The simple truth is that by marketing ALL of their properties at discounted prices they lose the option of returning to their previous prices if the market picks up.

I normally wait until it’s the developers year or half year end, if you can complete quickly and they have stock lying around you will normally get a good deal.

Then after their year end is passed they can carry on selling at market value safe in the knowledge that their units were not marketed at a discount.

This is the reason for the Fresh Invest client login, it allows developers to market certain properties that they do not want advertised to the public.

For further information on developers year ends and investing in property please contact us.

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