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AUGUST 2004
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us Feedback & comments Did you know? Lighten up - Capitalism TRADITIONAL CAPITALISM: AMERICAN CAPITALISM: AN AUSTRALIAN CORPORATION: A FRENCH CORPORATION: A JAPANESE CORPORATION: A GERMAN CORPORATION: A BRITISH CORPORATION: AN ITALIAN CORPORATION: A RUSSIAN CORPORATION: A SWISS CORPORATION: A CHINESE CORPORATION: A NEW ZEALAND CORPORATION: Suggestion
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Property and economic update However, Hometrack report a significant slowdown as interest rate rises appear to be taking their toll. John Wriglesworth, Hometrack's housing economist says "rising interest rates and speculative fears of a housing market crash has resulted in falls in house prices across many parts of the country". Overall, house prices dropped 0.1% during July according to Hometrack's July survey. The falls are focused mainly on London and the South East, with rises still being recorded in the North and more outlying areas of the country. How you currently view the market depends on who you most believe. On one hand we hear that the market is increasing while on the other the we hear that the market is falling. There is one point on which almost everyone agrees however, a housing market crash is very unlikely. More realistically we are likely to see a period of limited house price growth. Either way, those investing in property can only win. Either the market continues to rise and capital growth results in greater profit, or the market falls enabling property to be purchased more cheaply thus taking greater advantage of a return to capital growth. It is a win win situation and it is the reason that the most cautious of all institutions, the banks, continue to lend against investment property. Our advice, there are some great opportunities in the market place at the moment, do your homework, establish the growth areas and go and get them! What's new? We also welcome Ciaran Thoroughgood and Sarah Allen. Ciaran and Sarah will be making sure that we have all of your details up to date so that we can ensure you continue to receive this newsletter, and of course the e-mail property alerts as and when we take on new investment property. Ben, Ciaran and Sarah will help us to further improve the high level of service that you currently receive from 'Property for Life'. Understanding the monthly statistics A local city newspaper recently reported that property prices rose 20% over the preceding 12 months. This seems quite impressive, but in some ways the manner that it was reported in the paper was a little misleading. Not by what was said, but for what was left unexplained. Almost hidden in the article is the word 'median'. For people who don't know, 'median' is a statistical term that means the middle value in a data set. For example, in the data set being [21,22,23,24,25,26,27,28,29] the median would be 25. In property, the median house prices are used instead of the average (or mean) house price because the average price can be adversely manipulated by unusually high or low prices. The median price is a much flatter trend since it is not skewed by value, just the number of sales in any given period. The generally acceptable practice of taking the median house price and then extrapolating it across all properties (ie. from high priced inner city properties to the lower end) is a statistical mistake. It is only appropriate to apply the median house price movement to a property that was similar to the median property as defined in the previous analysis. So what does this show? Well, be very careful about making assumptions that all property has increased by 20%. It is perfectly possible that property at the upper and lower end of the market moved by a completely different percentage. What this also shows is that it is quite possible that certain property types or certain areas increased by a greater percentage. So by running a little research it is feasible to buy into an area that can experience an even greater percentage increase. The key point therefore is that analysis based on median data cannot be accurately used across all elements of the property market but it can be used to derive more information about likely future opportunities. Adapted from an article by Steve McKnight (2002) "I have never been especially impressed by the heroics of people convinced that they are about to change the world, I am more awed by those who struggle to make one small difference after another." Ellen Goodman Journalist "Rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think." Martin Luther King, Jr.1929-1968, Human Rights Activist and Nobel Prize Winner Is now a good time to raise the rent? In this time of rising interest rates and reductions in capital growth many investors are keen to raise rental income on their investment properties in order to maintain their rental cover. But is this a good time to raise rentals? There is no right or wrong answer to this as rental increases are determined by a number of differing factors and most of these will differ depending on such aspects as the type of property and its location. The main points to look at when considering a rental increase are: Of all these aspects the supply and demand of tenants and properties is the biggest factor in the ability to increase rentals. If there is more rental property available compared to tenants looking for them, then raising rents will be difficult. However, if there is a shortage of rental properties, then rents will generally be easy to increase. In a time of rising property prices many first time buyers are forced to rent creating increased rental demand and prices can rise. When considering rental increases you must balance the emotions and reaction of the tenant with maximising your income. In some situations it may not be worth losing a quality tenant for an extra £10.00 per week if there could be a possible vacancy period of a couple of months. So if you are considering raising your rents, be very careful how you do it. "In every adversity there lies the seed of an equivalent advantage. In every defeat is a lesson showing you how to win the victory next time." Robert Collier Writer and Publisher "Far away there in the sunshine are my highest aspirations. I may not reach them, but I can look up and see their beauty, believe in them, and try to follow where they lead." Louisa May Alcott 1832-1888, Author Success is easy, but so is neglect by Jim Rohn People often ask me how I became successful while many of the people I knew did not. The answer is simple: The things I found to be easy to do, they found to be easy not to do. I found it easy to set the goals that could change my life. They found it easy not to. I found it easy to read the books that could affect my thinking and my ideas. They found that easy not to. I found it easy to attend the classes and the seminars, and to get around other successful people. They said it probably really wouldn't matter. If I had to sum it up, I would say what I found to be easy to do, they found to be easy not to do. Six years later, I'm a millionaire and they are all still blaming the economy, the government and company policies, yet they neglected to do the basic, easy things. In fact, the primary reason most people are not doing as well as they could and should, can be summed up in a single word: neglect. It is not the lack of money - banks are full of money. It is not the lack of opportunity - much of the free World continues to offer the most unprecedented and abundant opportunities in the last six thousand years of recorded history. It is not the lack of books - libraries are full of books - and they are free! It is not the schools - the classrooms are full of good teachers. We have plenty of ministers, leaders, counselors and advisors. Everything we would ever need to become rich and powerful and sophisticated is within our reach. The major reason that so few take advantage of all that we have is simply, neglect. Neglect is like an infection. Left unchecked it will spread throughout our entire system of disciplines and eventually lead to a complete breakdown of a potentially joy-filled and prosperous human life. Not doing the things we know we should do causes us to feel guilty and guilt leads to an erosion of self-confidence. As our self-confidence diminishes, so does the level of our activity. And as our activity diminishes, our results inevitably decline. And as our results suffer, our attitude begins to weaken. And as our attitude begins the slow shift from positive to negative, our self-confidence diminishes even more ... and on and on it goes. So my suggestion is that when giving the choice of "easy to" and "easy not to" that you do not neglect to do the simple, basic, "easy"; but potentially life-changing activities and disciplines. © 1994 Jim Rohn International. For more information visit www.jimrohn.com Meet a fellow 'Property for Life' investor Meet Mark Vowles and his partner Rachel Baines. Mark and Rachel have a plan - a plan to develop a sizeable and secure income over the coming years. How do they intend to achieve this? By investing in the property market of course, and they are already well on their way. Early in 2002 Mark and Rachel drew down on some of the equity in their house; they used this to purchase 2 off-plan apartments in Manchester . Working as a development surveyor Mark realised the potential that Manchester offered and felt that the likely capital growth and rental income were a perfect match for their property investment strategy. As these properties grew in value Mark and Rachel decided to draw down some of the equity and purchase another off-plan property. Understanding the importance of spreading risk Mark and Rachel made the decision to buy in a new location and soon decided upon Nottingham - another location that balanced fantastic growth potential with great rental income. Whilst searching for suitable property Mark stumbled across Property for Life. "I felt that Property for Life really knew how to source a great deal so I was very keen to work with them" says Mark. The result was a new purchase in Nottingham city centre. With the portfolio growing rapidly Mark and Rachel continued to expand their portfolio. Further purchases in Leeds and Nottingham have been added to the list and so the purchases continue. With a current value in the region of £950,000 of which approximately 15% is equity Mark and Rachel are well on their way to achieving their goal of a £1.5 - £2 million portfolio over the next 5-7 years. Mark says "I find Property for Life to be a very organized company. They keep us constantly informed of any new opportunities that may be of interest and we will definitely continue working with them in the future". Mark and Rachel have created a sound and sensible portfolio that will provide a very substantial income in time. We wish them well with their on-going venture. What’s available? We currently have the following investment opportunities.
Please go to our website www.propertyforlife.com for full details Recent events July was a busy month for us with seminars running on Saturday the 10 th and Saturday the 24 th . The seminar of the 10 th was based very much around UK off-plan property whilst the 24 th was focused on Spanish off-plan property. We received a great response from this with a considerable number of reservations placed on the day. I would like to thank those of you who attended these events and to those people who purchased, I hope you are happy with your choice, I am sure you'll agree that these properties offer fantastic investment potential. Upcoming events The Property Investor Show, 17 th - 19 th September, Excel, Docklands, London. Look out for us at stand number 610 where we would be delighted to welcome you for a chat and to run through some of our latest investment opportunities. Also, our MD David Austin will be giving several talks as part of the show's seminar programme, so if you are interested in listening in, check the schedule nearer the time to find out when and in which room he will be presenting. The show website is http://www.propertyinvestor.co.uk we look forward to seeing you there. New registrations We would like to extend a big welcome to those people who have registered in the last month. This is your first newsletter, and we hope you enjoy reading it. Remember you can view all of our past issues at www.propertyforlife.com. 'Property for Life' Referral
programme The payments are made on an increasing percentage scale based on the number of purchases. These percentages are as follows:
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