Understand the 4 ways to profit in property

In the UK well located properties tend to have good capital growth but poor cash flow and those properties offering good cash flow, tend to have poor capital growth.

I can understand why many first time investors want to get involved in positive cash flow properties. They are much easier to buy and keep because you don't have to put your hand in your pocket every month. That is all well and good if you want income. But income alone doesn't make you wealthy, it just provides you spending money and after tax there isn't really that much money to spend.

Over the last couple of years we have seen many first time investors rushing out to buy property that shows positive cash flow. Unfortunately, some of these properties will probably create problems for them in the long term.

The problem is that if a large number of investors do this prices can become artificially inflated. This gives investors a false impression that they have bought well, that their properties are performing well and they are becoming rich. However, what most of these investors don't realise is that many of these areas are experiencing no real growth.

We are not saying that positively geared properties are bad. We are just saying be well informed about where you buy and why you buy your property. There are other ways to get money out of property than through rental income.

Investors must understand there are 4 ways to make money out of property investments and most of the time they only look at one or two of these. Let's look at them....

1. Passive Appreciation
This is when the property value goes up in line with the general property market. Generally, the UK property market doubles in value every 9 years on average.

2. Active Appreciation
This is when you add value to your property. For example if you buy at a level below the true market value of the property and then revalue at the correct value, or when you renovate or redevelop your property.

3. Rental Return
Rentals from property provide cash flow, but this is only one component of your overall investment return.

4. Tax Benefits
It has often been said that its not how much money you make that is important, but how much you keep after tax. But investors who own a number of properties and have a "property business" can take advantage of some interesting 'tax loopholes' only available to business owners.

To invest in a top performing property it is best to have a balance of all four of the above elements. Don't focus too strongly on cash flow. This is because well located residential properties are inherently high growth, low yielding investments. You really can't get high growth, high yielding residential properties at the same time, as generally rents lag behind capital growth.

We have come across many investors who have been very successful in the long term with safety and without speculation. These are the ones who bought quality properties in good locations and allowed them to grow in value. They bought them for their strong capital growth and they never or rarely sold their properties. Instead they would refinance their investments as their equity increased.

The lesson one can learn from these successful investors is to buy the best quality properties you can, in the best location you can reasonably afford and never sell them.

You further boost the returns on your investment by purchasing well. Never overpay - buy at or below 'fair market price.'

You can then add even more value to your investment properties by renovating or redeveloping your properties.

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Can I increase the rent

With slowing property price increases many investors are keen to raise the rentals on their investment properties to help keep up their returns. As investors ourselves we understand the importance of rental returns on your investment and for this reason we are constantly monitoring the rental market.

It is important for landlords to understand that they can't just put up the rent when they "feel like it". When negotiating a rent increase it is important to note that there are legislated notice periods that we must adhere to.

Here are a few things that we look at when carrying out a rent increase:

* The current rentals of similar properties
* The supply and demand of tenants and properties in your area
* Council tax increases and interest rate increases
* The location and features of the property such as parking etc

Of all these factors the supply and demand of tenants and properties is the biggest factor in the ability to increase rentals. If there are more rental properties available compared to tenants looking for them, then increasing rents will be difficult. However, if there is a shortage of rental properties, then rents will generally rise.

It is not always as easy as at first appears. When managing rental increases you must balance the emotions and reaction of the tenant with maximising your income. In some situations it may not be worth loosing a quality tenant for an extra £10.00 per week if there could be a possible vacancy period of a couple of weeks.

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"It's the constant and determined effort that breaks down all resistance, sweeps away all obstacles." - Claude M. Bristol, 1891-1951, Author

"I can feel guilty about the past, apprehensive about the future, but only in the present can I act. The ability to be in the present moment is a major component of mental wellness." - Abraham Maslow, 1908-1970, Psychologist

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Ambitiously pursue your own self direction by Jim Rohn

What is the origin of true ambition? There exists really only one place to find true ambition and that is within you - in every thought, in every movement, in every motivation. Your ambition is an expression of who you truly are, your own self-expression.

Isn't self-expression really self-direction? How you think, how you move, how you motivate yourself. Ambition is a result of self-direction and self-direction is one of the six key principles necessary for building ambition. Positive self-direction says, "I know who I am and I know where I want to go. I'm accumulating knowledge and experiences and feelings and philosophies that will help prepare me for opportunities that I know will show up without notice or any help on my part."

Because you know where you want to go, you have already been working on the parts of your personality that will make you better. Working on your attitude, working on your health, working on your time management skills. Putting it all down on paper. And you constantly see yourself in the place you want to be, going in the direction you want to go.

Direction determines destination. So here is a question you must ask yourself, "Are all the disciplines that I'm currently engaged in taking me where I want to go?" What an important question to ask yourself at the beginning of the month, the beginning of the week, the beginning of the day. Because here is what you don't ever want to do - kid yourself. Kid your neighbour, kid me and kid the marketplace, but don't kid yourself - fingers crossed - hoping you will arrive at a good destination when you're not even headed that way.

You have to ask yourself often, AM I? Am I doing the disciplines that are taking me in the direction I want to go? Don't neglect to ask these important questions, questions that help determine your direction, the set of your sail, your destination. Let the power of your own ambition take you where you want to go, to do what you want to do, to create the life you want to live!

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"One of the greatest discoveries a man makes, one of his great surprises, is to find he can do what he was afraid he couldn't do." - Henry Ford 1863-1947, Founder of Ford Motor Company

"I now realize there are millions of self-made millionaires who started with nothing. They dug inside themselves to find the answers and they succeeded. There is nothing anyone else can do that I can't do." - Dean Graziosi Author

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Meet a fellow Property for Life investor

Meet Nige Howarth. Nige has been investing in property since March 2005. He has a clear strategy for creating and maintaining a successful property portfolio which involves careful research and maintaining an active interest in the UK property market. The time he devotes to his portfolio is proving very successful. Nige has acquired 8 properties in 18 months and is in the process of acquiring 2 more. Of the properties he has completed on 7 are in the UK. All of these have rented out and look set to afford Nige the long term return on investment he desires.

Nige decided to realise his property ambition after a change of lifestyle freed up the time he sought to devote to his passion. He Lives in Surrey with his wife Jan and has 2 grown up children. In 2003 he decided to change career direction. His previous high flying corporate role meant that he had to work long unsociable hours. He decided that he wanted a change of pace and to be able to devote more time to his family and interests. Now running his own successful consultancy business he has a better quality of life and the flexibility he was after to start pursuing his property ambitions.

Nige's portfolio is predominantly based in the North of England. He has chosen this particular market for two reasons. Firstly the areas he invested in provided excellent rental coverage and secondly he is happy to let a management agent look after his assets as he watches them appreciate from afar. This is not to say that Nige is a "hands off" investor, his investments in Liverpool and Manchester prompted him and his wife to dabble with interior design after they decided to furnish 2 of their buy to let properties themselves. They provided good quality, stylish furniture with the aim of securing a corporate tenant, this they did and the subsequent rental returns were greatly increased.

Nige is a very conscientious investor. Alongside property he invests in the stock market. He sets his analytical business mind to his investments and with his property portfolio has taken the conscious decision to only purchase in developments where the rental will completely cover the mortgage repayments.

"Before I buy in a development I make sure the numbers stack up. I look at the surrounding area and the actual rentals being achieved. When I am confident that the rental income will match my mortgage repayment I go forward with the deal."

Nige has purchased 4 properties through Property for Life and is in the process of completing on 2 more. He enjoys working alongside the team as it fits in with his 3 pronged strategy providing properties with long term growth, in good rental areas and requiring low money down.

"I use Property for Life as it saves me time and money. They do the initial legwork and research which gives me the grounding I need to look at the market. The properties I have brought through them have been in good rental areas which is something key to my strategy. The way the deals are structured has enabled me to purchase multiple properties with minimum outlay, something I wouldn't have been able to do had I been investing by myself."

Property for Life have been working alongside Nige since the beginning of his portfolio. He registered with us in February 2005 and reserved his first property the following May. The team at Property for Life have enjoyed working with Nige over the last 18 months and look forward to a continued working relationship as he realises his dream of obtaining a property portfolio of .around 20 properties over the coming years.

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What's available?

We currently have the following investment opportunities.

UK property
Fearnleys Mill, Bradley, Huddersfield
Victoria Court, Meersbrook, Sheffield
Rivacre Village (Phase 2), Ellesmere Port


Overseas property
If you are looking for quality overseas property you need look no further. Whether you want discounted French property with guaranteed rental returns, land in central Florida or something a little more exotic we can help. Our overseas property department is growing fast and we are currently offering exceptional opportunities in the following locations:

France – Most regions
Spain – Many regions
Cyprus - Paphos
Florida – Central and Northern
Brazil – North coast
Middle East - Dubai

Please go to www.propertyforlife.com/property/ for full details and look out for more great opportunities coming soon!

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Upcoming events

Over the coming months we will be attending several exhibitions in addition to our ongoing Property Academy programme. If you would like to attend a property academy session please call Laura on our 01252 737575 or email laura@propertyforlife.com stating which session you would like to attend and how many places you require.

27th January 2007 – PFL Property Investor Academy – Cheshunt Marriott Hotel, Cheshunt

24th February 2007 - PFL Property Investment Academy - Coppid Beech Hotel, Bracknell

17th March - PFL Property Investment Academy - Central London

7th April - PFL Property Investment Academy - Kegworth Whitehouse Hotel, East Midlands

For further information regarding the Property Investor Academy Programme please follow the link www.propertyforlife.com/whyinvest/education.html

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Furniture services

We can supply a wide range of furniture to cover even the most demanding furnishing requirements. Whether you are looking to furnish a studio apartment or a four bedroom house, our range of ready to go furniture packs provide all you will need to give your property that special look.

Our furniture is carefully sourced by our in house furniture specialist and offers a stress free and very cost effective method of furnishing your investment property. Studies have shown that a well furnished property will not only rent more easily but could also carry a rental premium, giving you an even better return on your investment.

Most items are held in stock and available for immediate dispatch. Delivery can be arranged for most regions of the United Kingdom.

For further information visit http://www.propertyforlife.com/services/furniture.html or email myra@propertyforlife.com.

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Do you fancy a spending spree at one of the UK's leading department stores?

The new look Property for Life referral programme can offer you just that.

All you need to do is tell an interested friend about Property for Life and you could soon have a minimum of £250 in gift vouchers to spend in any John Lewis or Waitrose store.

Quite simply, for each person introduced by you who then purchases a property through us you will receive a cool £250 in John Lewis gift vouchers. If they purchase more than one property you will receive £250 in gift vouchers for each property they purchase. You could soon be well on your way to that spending spree.

Remember, the more people you introduce the more chance you have of grabbing at least £250. So why not tell your friends and family about Property for Life? Make sure they register on-line at www.propertyforlife.com/register/ and select the recommendation option at the end of the form and include your name in the 'other' box.

Please note that the referral programme is on a per property not a per person basis.

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