WHEN TO INVEST?

The Credit Crunch and World Wide Recession

Being in the middle of a recession is it the right time to be investing in property, or the time to be hiding under the duvet with your cash under the mattress, following months of falling property price from early 2008 we have now seen six consecutive small prices rises, according to the Nationwide, so prices are on then turn.

Well, with property prices at 20-30% lower than at the peak in 2007 and interest rates at just 0.5%, we genuinely believe anyone with funds available and good credit should be making hay right now as the opportunities are better than they have been for 20 years! We are finding properties at up to 50% less than the peak in 2007.

Investors are Buying NOW

Yields are at their highest since the late 90's and there are some genuinely strong investment opportunities everywhere you look! While many people shy away from the markets right now as they have a lack of knowledge, courage or basic understanding of what makes a good investment, the professional investors are descending like vultures and snapping up the bargains that will give them huge returns over the next 5-10 years.

While some less experienced investors may sit on the sidelines waiting because they think prices will drop further, think again, experienced investors are buying now at prices well below today's values - which are around 10% below last year's in many places.

Of course it would be foolish to ignore the doom mongers in the media at this time.  There are obviously serious problems in the world banking sector as a consequence of irresponsible lending by some banks, mainly in the USA. This has led to ‘the credit crunch’ and has affecting confidence in the housing market, which has result in falling property prices at least for the time being. 

One successful investor commented the other day: ''Guys, the time is NOW to fill or boot''  A marvelous, eloquent quote!

See our 'Jargon A-Z' tab link at side of page for an explanation of certain terms we use or click here Link to Jargon

Motivated Sellers

The media love these ‘gloom & doom stories’ they have been itching for 2 or 3 years to report ‘property price crash imminent’.  This may not be the best time to be a property developer in the UK, but as actual housing sales have slowed in many areas and repossessions are rising, plenty of ‘Motivated Seller’ are emerging.  Consequently, fewer buyers are chasing available property. There is now more choice and less competition for available property, but there are signs that things are turning and we may be seeing a recovery if the pundits are correct.

From our sister website www.buy-my-property-fast.co.uk we are sourcing many below market value properties from motivated sellers for our investors.

It’s too easy to talk ourselves into nothing at all when things get a bit tough.  Warren Buffet once said, ‘be fearful when others are greedy and be greedy only when others are fearful.’  There are potentially lots of bargain properties available, so if you’re ready to invest, THIS IS A GREAT TIME TO BE A LANDLORD, and will continue to be so!

Rents are Rising

We can help you to find property that could yield profits of more that 10% per year on your investment.  RENTS ARE STABLE.  During the last quarter of 2007 rentals rose 8%, according to ‘Paragon Mortgages’.  If you take a long term view you will be investing your money into the only investment sector that is certain to grow over time namely PROPERTY.  According to ‘HBOS’ figures since 1984 property prices have risen an incredible 600%.  Massively, outperforming shares and other saving vehicles.

Lending Available

With interest rates dropping to record lows, this is fantastic news instantly for those on tracker and variable rate mortgages. For every 1% reduction in the rate there is a saving of about £83 per month on a £100K mortgage.

Lenders are now offering buy to let rates below 5% again, and we expect them to fall further in 2010.  Rumors of 80% LTV coming in soon for good yielding properties - lenders quite rightly are concentrating on lending against properties that provide a good rental return i.e. can service the debt comfortably.

There may be a smaller number of mortgage products around, but there is money available.   We have lenders who could offer you up to 75% ‘loan to value’ at rates from just 4.99%.

Irrespective of what the media says, we can even find funding for clients with poor credit records although the rates are high at present, 8-10%. Lenders have to lend, they are businesses, generally PLC’s and they have to continually grow their companies to keep shareholders happy and keep people in employment.

No Money Down Deals

By using 'creative financing methods' it is even possible to obtain 100% 'No Money Down' (NMD) mortgages for our clients. This may sound like a risky approach especially if prices fall, but as long as you buy 25-30% 'Below Market Value' and the rental covers 125% of the mortgage payment then we feel that this is a sound strategy to build a portfolio using little of your own money. The most you would have to put into a deal is £4500 to cover all fees for solicitors, valuation & mortgage set up.


Lease Options

In addition to NMD deals we are using 'Lease Options' to acquire properties for our investors for just £1.00!!  This is a very exciting new avenue for property investors.  By negotiating a lease option with a seller, the seller agrees to give you the option to buy the property at an agreed price in the future.  Additionally, it allows you to take control of a property, let it out to a third party, make improvement and eventually assign it to another buyer. Lease options are very flexible; you can agree whatever suits the seller and yourself. We realize this is a pretty hard concept to get your head round and there are many questions you may have.  But we will show you how to buy a property for £1.00.

More Tenants

This is the best reason to get involved now:  With the huge rise in property prices over the past few years more people are renting than ever before.  According to the latest housing statistics from the UK Government, 2.5 million households live in private rental accommodation and the number is climbing.  Renting looks a cheap option for many, compared to house ownership.  In fact tenants now pay about one third less than the mortgage repayments on the same property.

Tenants Waiting

In cities all over the U.K. the student population has risen massively over the past 10 years.  In Nottingham alone there are 30,000 students looking for accommodation every year. Properties aimed at the student market can produce a 15% yield, but requires ‘hands on’ management. We are currently focusing on Mid Wales where we run our own lettings business and there is a good demand for rented property, unlike many other areas in the UK where there is a glut of property to let.

Many young working people cannot afford to buy and in some areas there is serious competing for limited, quality accommodation.  The most recent survey from the ‘National Center for Social Research’ showed that the proportion of people aged 25-34 who are owner occupiers had fallen, with renting becoming more common among this age group.  We can help you find property with excellent rental returns as well as the necessary funding.

Some Economies are Growing

It’s important to research the facts properly and look at every angle. You rarely get a balanced story in the media.  The facts regarding the world economy are that the UK and most of the rest of the World, have seen the longest period of growth ever, over the past 15 years.  Most individuals are substantially better off in real terms than they were 20 years ago. Most Eastern European & Asian economies have seen growing at around 5% per annum over the past years, but every country has suffered in the world downturn.

In the UK, even though unemployment is rising, more people are employed than ever before. 

Although food & fuel prices have obviously been rising, inflation is set to fall in 2009 as the economy slows and is predicted to be around 2% by Winter 09.

Interest rates are now the lowest they have ever been. Currently the base rate is 0.5% (January 2010) unlike the early 1990’s when they hit up to 15%.

Housing Shortfalls

Additionally, there is huge demand for new housing in the UK.  It is predicted that there will be a shortfall for many years to come as our population grows.  Gordon Browns target of building three million new homes by 2020 is most unlikely to be met.  Developers need to build 240,000 homes a year to meet this target; only 170,000 were completed in 2007. 2008/9 will be even worse.  In Eastern European the housing problem is magnified many times.  As these economies continue to grow and a new Middle Class emerges, they will be looking for and will continue to want new, modern housing.  

Rising World Prices

Every week we are offered fantastic deals in emerging Cities and Holiday resorts across the globe where property prices are increasing every year.  Globally prices rose a staggering 8.2% in the 3^rd quarter of 2007 according to ‘Knight Frank’ (the international estate agent). Typically 60-80% mortgages are available in many of these new emerging countries.  With interest rates similar to the UK, rental incomes from year round letting in a local market should easily cover the repayments, as well as see your investment grow in value due to continually rising property prices, once the recover arrives.