UK Property Investment Blog

Tip 1:

I am constantly amazed by the mistakes made by new developers! Prior organisation and planning will weed out many of the costs that creep up and bite every newbie in the bum?

Here are a few examples of the kind of thing that I am talking about:

1. Did you know that an average condensing boiler will take 1 or 2 days to fit and cost between
£600-£400 (this is for labour only)? The cheapest boilers start at £700, although I would recommend paying slightly more for a well known brand (£800 or more).

Prices will vary depending upon whether you include flues, VAT and/or controls.

2. Well done! You’ve bought that trashed house on the corner of Kings Road and now you’re
ready to clear away the waste. How many of us stop to think of where all this rubbish will be
dumped and at what cost?

3. My locksmith charges my £60 to change the locks on my properties. A new investor can expect to pay up to £150 (depending upon the type and number of locks to be changed).

4. If the property is sold the money from the buyer still won’t appear for another 8 weeks.
Many investors (in my experience) do not budget for the carrying costs during this period.

Tip 2:

I am constantly amazed at my achievements after  I have sat down and written my goals, along with an exact date for their achievement.

Please, please, please take the time to sit down and clearly set out your goals for the coming
week, month, year and even decade. Include dates for the achievements of your goals?

Rewrite your 10 major goals every morning and every night on a piece of paper to remind you of
them.

I promise, you WILL achieve 90% of your goals by using this simple technique!

Tip 3:

When you are using a new solicitor for your conveyancing, pay him or her promptly so that the
searches are sent for and contracts get written up. Most solicitors will expect pre-payment from you if you have not used their firm before.

This simple tip avoids the long delays that inevitably build up when letters are sent back and
forth asking for payment.

FREE for you: exclusive tips worth £297 from Property Mentor!

The latest Nationwide House Price Index revealed house prices rose 1.2% in May, meaning the annual rate of decline has improved to -11.3%.

The findings mean the average UK house price now stands at £154,016 – for me this is a far more affordable level and fits far better with average salaries throughout the UK.

While I don’t suddenly expect prices to jump quickly, I do think the number of distressed sellers that will accept huge discounts will continue to reduce in numbers – already this has happened with the huge drop in interest rates.

Martin Gahbauer, Nationwide’s chief economist, said: “The three-month on three-month rate of change – a smooth indicator of short-term price trends – rose from -3% in April to -0.5% in May and now stands at its highest level since January 2008. “Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively. The improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008.

“The movement of house prices ultimately depends on the balance of demand and supply of houses on the market.”

Rightmove also reported a 2.3% jump in asking prices in May, the biggest jump since 2003. The buyers’ market is certainly over in several ways.

So what we are starting to see is clear – supply of properties is at a low – with people still reluctant to sell unless they need to and new build property at an all time low, so numbers of property coming to the market is very low.

With more buyers keen to get onto the market due to first time buyers having saved their deposits, or people having to move to a larger property, this means demand is growing and with demand outweighing supply in some areas, this is leading to asking prices and actual sale prices increasing in some areas.

With borrowing rates very low – this is a great time for buyers to come onto the market – and I know 3 friends who are currently buying for themselves and perhaps not finding as many bargains as they would like out there….!

So in summary – while prices will not suddenly shoot up, the supply of good value, heavily discounted properties is reducing, and as finance improves further vendors will get more bullish about their asking prices and be less likely to accept a silly offer – not so good for hard nosed property investors!

We are not exaggerating when we say that stacking is a vitally important part of your property investments.

Not only will it help you to ferret out the good properties from the bad, but it will save you money too.

It’s simple – by knowing the rental prices/ tenancy demand of your potential investments before you buy, you can save yourself a lot of future hassle and maximise your return!

More importantly by taking charge of your success at this early stage, you can enjoy the satisfaction of investing solely in properties that you know will consistently generate you a positive cash flow each and every month!

Okay, so how do I learn to stack?

Compared to the average homeowner, your goal is not to live there – no, no, no – your aim is make a positive cash flow that exceeds £300+ a month.

The key is finding multiple properties.

For that reason you cannot research your properties one at a time – that would take forever. The best tip is to research a multitude of properties first, before narrowing this list down to just those which will make you money.

Surely that too would take ages?

Not if you use the right systems, techniques and software.

At Property Mentor we can understand the temptation to invest before you have completed your research, especially when faced with the prospect of having to examine hundred’s of properties by hand.

Yet, this process doesn’t have to be that complicated.

By attending our full weekend workshop we can offer you all of the software, systems and techniques to effectively research your properties; assess their profitability and check out which are the best mortgage rates for you, all at a click of a button.

We want to make your route to becoming a successful property investor easier, and we feel our deal analyser and research software can do just that.

By simply providing it with details of your properties current rental prices and interest rates, our software can judge which of your properties will generate you the best cash flows and allow you to invest in only the most profitable properties.

The interest rate at which banks lend money to one another has fallen to a record low.

Across the US and the UK, mortgage officials have witnessed significant drops in their Libor rates, signaling what they believe to be a positive turn in the lending market.

How does this affect mortgages?

More than you think.

The Libor rate (the London Interbank Offered Rate) helps determine the cost of mortgages, business loans and general household loans, so any fluctuations – up or down – will affect how much banks are willing to lend.

When the financial crisis first hit, the Libor rate shot up as banks perceived lending to one another to be riskier.

However, during the last 3 months, the lending market has taken a turn for the better. Why? Because the Libor rate has dropped to 0.66% in the US and 1.3% in the UK.

With such significant drops in place, better mortgage deals are now appearing on the market.

Why has this happened?

With the government implementing a range of different actions to help get banks lending again, these various acts have helped to bring the Libor rate down. Yet despite this positive move, the Libor rate still has some way to fall before it reaches the same rates it was prior to the credit crisis.

Before the recession, this rate was only a few tenths above the Bank of England’s base rate – which in the current climate is only 0.5%.

Compare this to the above figure of 1.30%, and the Libor rate still has a substantial way to go before it properly collates with the Bank of England’s existing base rate.

How can this information affect you?

Simple. Like any homeowner you are looking for the best mortgage deals for your rental properties, so the better interbank lending is, the more promising their mortgage options will become.

Yet you don’t have to wait for the Libor rate to catch up with the Bank of England to successfully invest.

Encouraging further information out at the weekend on the UK property market.

Analysts said house prices fell by less than one per cent in April – and they have not ruled out a small monthly rise. Meanwhile buyers are coming back to the market-returning at the fastest rate in 10 years. Banks have turned the lending taps back on with mortgage approvals rising. Brokers and bankers were yesterday starting to tear up their gloomy forecasts about the housing market-and now say the meltdown could be over by the end of the year.

Vicky Redwood, UK Economist at Capital Economics, said: “I expect to see a small 0.5 per cent drop in house prices this month, but we could see a rebound.

“The sharp falls in house prices are slowing. It is becoming increasingly clear that the worst for the UK economy is over.”

The upbeat news will be boosted by figures this week showing banks are lending again. Mortgage approvals rose to 29,000 in April, according to statistics from the British Bankers Association which was up from 26,097 in March – and up 62 per cent from the November low of 17,895. Howard Archer, Chief Economist at analysts IHS Global Insight, said: “There is mounting evidence that house price activity has passed its low point and is picking up.”

A spokesman for the Council of Mortgage Lenders said: “There is now a broad consensus that we are at least past the worst in terms of the rate of economic decline.”

And home buyers are back. A report by the Royal Institute of Chartered Surveyors shows they are returning at the fastest rate since 1999. RICS chief economist Simon Rubinson said: “April was the sixth month in a row that buyer inquiries increased, and they rose at their fastest pace since August 1999.”

Cheap mortgages and low interest-rates have also boosted the market. Last week Lloyds launched a new 95 per cent mortgage for first-time buyers, and low interest rates of just 0.5 per cent have helped make mortgages cheaper.

Lloyds, Britain’s biggest lender, has scrapped its old forecast that house prices will drop by 15 per cent this year. Stephen Noakes, commercial director of mortgages at Lloyds, said: “For the first time people are thinking that house prices will increase over the next 12 months.”

So all bodes well – and means if wanting the very best of the bargains – better move quickly!

A week may have passed since Property Watch graced our screens, but the impact of their show is still rippling across the press.

The most significant part being their ICM poll.

Asked whether they wanted to see house prices rise again, 64% of the UK’s population stated that they would prefer for them to either remain the same or continue decreasing, compared to 32% who wanted them to rise again.

What does this mean?

Compare these figures to what is currently playing out across the press and the contrast is quite surprising.

Look in any news article about the property market, and they suggest homeowners are unhappy with their properties depreciating in value.

However, as the ICM poll goes on to prove, the public are far more aware of the benefits which can arise from falling house prices than the press are actually revealing.

The ICM Poll – the results

When asked: “Thinking about your current circumstances, do you want house prices to increase, decrease or stay the same?”, the ICM poll revealed two distinct age groups. Those between 55 to 64 and young professionals:

40% of 55 to 64 year olds wanted prices to rise
21% of 55 to 64 year olds wanted prices to fall

18% of 18 to 24 year olds wanted higher prices
52% if 18 to 24 year olds wanted lower prices

Analysing this data it is not hard to see why these distinctions have developed. With many young professionals struggling to acquire the 10-25% deposits needed to get a mortgage, if house prices continue to fall in value, this will help them to invest more easily.

However, for those nearing retirement, losing further equity from their properties could hinder their pension plans.

What about the country as a whole?

Breaking down their findings across the entire breadth of the UK, the ICM poll suggests the further up the UK you travel the more people want house prices to rise.

In Scotland, 38% of those interviewed wanted prices to rise again, whilst 38% of those interviewed in the West Midlands wanted house prices to continue decreasing.

How can this information affect you?

Simple. As an investor who can take advantage of what these homeowners cannot… falling house prices.

As this poll proves, many homeowners are aware of the perks falling house prices can give them when it comes to buying a property. However, without having access to at least a 10% deposit, they cannot take advantage of it.

Curious how you CAN take advantage of this?!

Tip 1

Obtaining property owner information used to be time consuming and/or costly either involving
applications to Land Registry or an online account.

But, I was recently pleased to see that Land Registry has launched a pilot online property  reports request service.

With recent price reductions at Land Registry anyone can now get instant access to reports for
just £2.00. www.landregisteronline.gov.uk
Tip 2

Any property investor who sees themselves as being full time i.e. not just creating a small  portfolio to replace their pension must seek out investors.

Using other people’s money is absolutely crucial to your growth. But what’s equally important is
always source investors long before you ever need them. This way they look at the deal not you when the time comes. Generally if they are looking at you plus the deal they can’t act quick enough for you.

Start talking to people NOW!

Tip 3

Ensure your solicitor keeps some of your money in his client account equivalent to the approximate cost of a typical property purchase, including stamp duty, searches, legal fees.

Solicitors will often delay doing work until your cheques have cleared or money has been
transferred so this way if you find that bargain or need a fast completion you are one step ahead of other buyers.

Tip 4

There are so many people going into estate agents these days asking for cheap properties, bargains or investment opportunities that you really need to stand out – here’s one way.

Provide estate agents with a single A4 sheet of paper outlining your property requirements. State
your desired area, property type, price range, profit margin, property spec, etc. Be as specific as
possible; down to street level. Don’t just say ‘as much profit as possible’ or ‘anything cheap’; if
you can’t determine the specifics then you need to think about that in more detail.

Add in some general comments too such as funds always available, fast completion, etc. Don’t
forget to add in your contact details ensuring they can get hold of you. If you are at work during the day and can’t take calls don’t include your mobile phone or office number, include your home
number and state you are available between certain hours.

If you can use coloured paper or coloured text all the better but ensure it looks professional, letter heads are ideal.

Then deliver them, in person, to agents in your area – it really does work.

Tip 5

If you decide to use a letting agent to manage your properties there’s a few things you can do to  better your chances of finding a good one in an industry which isn’t particularly well respected.

Firstly, interview several like you would your own member of staff.

When I interviewed agents a friend of mine went into the agents as a prospective tenant. Always
remember – without a tenant you have no rental so see how they treat the tenants too!

Ask for contact details of current landlords and tenants – follow up on references. Drive by some
of their properties that they manage – what condition are they in – what type of properties do
they have – a mix will mean a mix of tenants. If they only deal in inner city cheap properties and
yours is an executive flat, can they get you the right type of tenants?

And remember all letting agents say they need properties; this ensures that they have a good flow
through for their tenants but this doesn’t necessarily mean there is demand so do your due
diligence BEFORE you buy.

Tip 6

Increase your rental!

Tenants are becoming far more discerning than they used to be and rightly so. Therefore, offering
add-ons and incentives can prove beneficial for them and for you. Charging an extra £15-20 per
month for certain items can increase your cashflow nicely. Add-ons could include:-

• Broadband connections
• Electrical appliances
• Power showers
• Gardening and/or cleaning services
• Furnishings
• Garden facilities such as furniture or barbecues

FREE for you: exclusive tips worth £297 from Property Mentor!

Some tenants are facing excess charges of £600+ a month according to Citizens Advice.

Speaking to 1,300 tenants across the UK between August and November of 2008, of those interviewed the vast majority were found to be paying hundreds of pounds to their letting agents for tasks that bore no actual relation to the cost of their service.

What are these extra charges?

The worrying part about this discovery by Citizens Advice was the revelation that many of these extra costs were being charged out to both landlords and tenants:

Non-refundable holding deposit
Deposit administration charges
Administration fees
Check-in/check-out inventory charges…

A part from each of these tasks existing beyond the letting agents actual expected responsibilities, they are vastly over priced.

Take their reference checks. Typically a procedure performed by all letting agents as part of their setup agreement, tenants were expected to pay reference charges of £10-£275 as well as a fee of £12-£200 for renewing their tenancy agreements. Both un-necessary charges.

How can these charges affect tenants?

Whilst the Association of Residential Letting Agents code of practice is designed to ensure letting agents fees are clear and reasonable, this survey by Citizen’s Advice clearly proves that many are doubling their charges in order to increase their profit margins.

The consequence of such charges though is that letting agents are creating a barrier for people on low to average incomes which is preventing them from entering onto the property market.

Luckily with the governments plans to implement registration charges for landlords and letting agents, this shall worm out rogue letting agents and put a stop to these additional charges.

So, how these additional charges can affect your property investments? Click to find out!