Property and economic update
June market reports from the major market commentators show a pretty mixed set of results. The Hometrack survey of house price growth indicates an overall increase of 0.6%, with most of this growth focused on London and the South East of the country. Generally across the country prices remained static during the month.
Interestingly the Halifax house price index reports a slight fall overall of 1.2%. Commenting on the figures Martin Ellis, chief economist at Halifax said: "Sound fundamentals, underpinned by a strengthening economy, high levels of employment and low interest rates, will continue to support housing demand over the second half of 2006, ensuring that the market remains in good health. The annual rate of house price inflation, however, is expected to ease, partly because the corresponding figures last year were strong. Pressure on householders' finances from utility bill and council tax rises, combined with speculation of higher interest rates, are also likely to constrain demand." The index shows an overall annual increase of 9.4%, still a very healthy increase.
On 6th July, the Bank of England Monitory Policy Committee announced that the bank base rate would remain at 4.5%. The last time the interest rate was changed was back in August 2005 when it was reduced by 0.25% to its current rate. Interest rates therefore remain at historically low levels – the result? It's a great time to invest!
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Property or Shares?
So which is the better investment? Imagine you have ?100,000 to invest. Let's look at the different ways of doing it.
If you took your ?100,000 and purchased shares, how many pounds worth of shares would you buy? The answer is ?100,000 worth. Or if you were one of those people who were in the position to borrow against the shares, maybe you could buy a little more, maybe you could buy ?150 - ?160,000 worth of shares. But if you invested the same ?100,000 and bought property, how much could you buy? You could buy ?100,000 worth, or you could borrow against the property you buy and purchase a property worth ?200,000, or even ?1,000,000 and the rental from your property would help pay off the mortgage.
When you bought the shares, how much would they be worth? Well they would be worth ?100,000 because the share market is efficient so that everybody pays the same price for the same shares. But when you bought the let's say ?1,000,000 worth of property with your ?100,000, how much would that be worth? It's possible it would only be worth ?600,000 because you bought poorly, you didn't know your market and you overpaid. But, it is also possible that the ?1,000,000 you spent on property would buy you a property worth ?1,200,000 or even ?1,500,000 because you bought a bargain since you negotiated well or because you found a highly motivated vendor.
If you were to buy shares with ?100,000, what could you personally do to increase the value of your shares? You could pray and hope that the shares went up in value because the share market went in the right direction. Or you could write a little letter to the directors of the company and make some sensible suggestions on how to improve the running of their company. Or maybe you could increase the value of the shares by running out and buying their products, and therefore increasing their profits. In other words, there is very little you can do to influence the value of the price of the shares that you purchased.
On the other hand, if you bought a property, what could you do to increase the value of your property? You could renovate it because an attractive property from the outside will attract tenants and higher rents. Or you could convert the loft into living space or maybe add an extension or conservatory. There are lots of things you could do.
If the price of your shares doubled, to say ?200,000, what would you have to do to reap the benefits? The answer of course is sell them. While if a property doubles in price, how could you reap the benefits from that? Well, you could borrow against your increased equity and purchase another property or more. Further more, a 10% increase in the shares would result in a profit of ?10,000 but a 10% increase in a property portfolio of ?1m would be ?100,000.
So you can see that property is a much more flexible investment than many people give it credit for and in general performs better than shares. When you read in the paper or magazines that shares have increased in value by so much last year and property has increased in value by this much, therefore shares are a better investment; this doesn't take into account the fact that when you purchase property you almost always leverage yourself into the investment getting much more buying power and much more flexibility.
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How do you secure good professional tenants?
Just how do you secure good, professional tenants? Well according to the tenants themselves here are the five most important aspects that they take into account when looking for a property to rent:
- Reasonable rent – This is the number one factor, nobody wants to feel that they are being ripped off. Always remember that the 'real' profit from an investment property comes from capital growth and not rental income. It is vital to ensure that your property remains rented at all times, otherwise you will be paying a mortgage on an empty property. With this in mind, many landlords will actually undercut the rental on other properties in order to ensure renting their own property.
- Unfurnished or minimum of furnishings – Most tenants will bring their own furniture and will only require the minimum to already be in the property (the exception to this is a corporate let). Furniture that is personal to a tenant will make the property feel more like home, white goods such as fridge, washing machine and dishwasher are the exception to this, and the property should be fully fitted with good quality appliances.
- Plain decoration – Not everyone likes fancy wallpaper and fussy curtains so keep the decoration simple. Painted walls rather than papered walls are far preferable. Laminate flooring is cheap, clean, looks great and is more difficult to damage than carpet (think of dinner parties and red wine). Choose neutral paint colours, most furniture will fit with this.
- Clean, clean, clean – Absolutely essential! The property should be spotless, as a grubby property will encourage people to treat it the same way and a dirty property will only attract those messy graduates who were messy students.
- Parking – If there isn't any parking find out if residents permits are available and how they can be obtained, or at the very least how much the nearest car parks cost. Make this information available to prospective tenants.
The important thing is to put yourself in the tenant's position. Look at your property objectively and ask yourself, is this somewhere that you would live? What would you change if you were going to rent it?
Good luck.
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"This one step - choosing a goal and staying to it - changes everything." - Scott Reed, Political Advisor and Speaker
"It is easy to sit up and take notice. What is difficult is getting up and taking action."- Al Batt, Writer and Speaker
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The first step for getting better results
by Jim Rohn
We continue our focus on Jim Rohn's fantastic insights with this great article that shows us that everybody can achieve whatever they want to achieve with a little courage and belief.
How dramatically we can change our results is largely a function of imagination. In 1960, it was a technological impossibility for man to travel into outer space. Within ten years, however, the first man stepped out onto the surface of the moon. The miraculous process of converting the dream into reality began when one voice challenged the scientific community to do whatever was necessary to see to it that America "places a man on the moon by the end of this decade." That challenge awakened the spirit of a nation by planting the seed of possible future achievement into the fertile soil of imagination. With that one bold challenge the impossible became a reality.
- The Same Principle Applies To Every Other Area Of Our Life! -
Can a poor person become wealthy? Of course! The unique combination of desire, planning, effort and perseverance will always work its magic. The question is not whether the formula for success will work, but rather whether the person will work the formula. That is the unknown variable. That is the challenge that confronts us all. We can all go from wherever we are to wherever we want to be. No dream is impossible provided we first have the courage to believe in it.
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"Most of the things worth doing in the world had been declared impossible before they were done." - Louis D. Brandeis 1856-1941, American Judge
"The only person who succeeds is the person who is progressively realising a worthy ideal. That's the person who says, 'I'm going to become this' - and then begins to work toward that goal." - Earl Nightingale 1921-1989, Author of "The Strangest Secret"
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Meet a fellow Property for Life investor
Meet Trevor Hall. Trevor began investing in 2005 after a realisation his pension would not be performing as well as expected. After some careful research into alternate wealth creating strategies, he decided to invest in Property. "With its proven track record in appreciation of value I found investing in property to be most viable method of obtaining a secure prosperous future for my family and I."
A novice to property investing having been based within the Computer Service industry all his life, Trevor was seeking a company in which he could put his trust and help guide him through the investment process. Attracted to the professional outlook of Property for Life he decided to purchase 2 of the 3 investment properties currently in his portfolio through us. "I looked at the website and liked the transparency of the process. I was able to look over past deals and understand the procedure before taking the first step. The website gave a detailed outline of how to invest with little money down which was something I was very interested in."
Trevor has purchased property in Liverpool, Coventry and Bradford and with his first 3 investment properties rented out and appreciating in capital already, he is keen to build on his portfolio, aiming to acquire around 10 properties in the upcoming years. This is something he is happy to do alongside Property for life. "The team at Property for Life are brilliant to deal with. They are easy to contact and extremely helpful with any queries. Of all the companies I looked at I have found them the easiest to deal with. I have recommended them to my friends and hope to have an ongoing relationship with them as my property portfolio expands."
Whilst Trevor admits the process seemed daunting at first, his confidence has grown over the past 9 months as a result of his first hand experience of the investment process. After a few sleepless nights he is now confident that his portfolio will deliver the results needed for a prosperous future. We wish Trevor every success in the future and look forward to working alongside him as he continues to reap the benefits which investing in property affords.
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Need mortgage advice?
Maybe you're thinking of buying an investment property, or you need to release funds tied up as equity in your house. Perhaps you just want to find the best mortgage rate for your own individual circumstances and cut your mortgage payments. Why not call our mortgage department today? Our resident mortgage advisers will give you the best possible advice to suit your requirements. Call them today on 0870 1670996.
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What's new?
Niall Monks joins Property for Life within our property sourcing team. Niall has an extensive property development and finance background and will be ensuring that we can offer a greater choice of high quality investment property. Niall can be contacted on 01252 731047 or at niall@propertyforlife.com
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What's available?
We currently have the following investment opportunities.
UK property
Abernethy Court, Horwich, Bolton, Lancashire
92 Otley Road, Shipley, Bradford, Yorkshire
White Cross Works, Furnace Hill, Sheffield
Alexandra house, St Georges Quarter, Leicester
Queens Hall, Wolverhampton Street, Dudley
Eastside, The Washington Building, Bow, East London
Victoria Place, Pile Marsh, St. George, Bristol
CV One, Lower Ford Street, Coventry
Overseas property
Jasses de Camargue, Southern France
Residence des Arts, Paris
Residence les Ecourts, French Alps
Terrazas de la Torre, Murcia, Costa Calida, Spain
Mar Menor 2, Mar Menor, Costa Calida, Spain
Roda Golf & Beach Resort, Roda, San Havier, Murcia, Spain
Corvera Golf & Country Club, Corvera, Murcia, Spain
Dona Lucia, Estepona, Marbella, Spain
Dona Julia, Costa Del Sol, Spain
Estepona Beach and Country Club, Estepona, Spain
Benatalaya, Marbella, Spain
Punta Perla, Dominican Republic, Caribbean
Sun Palace, 3rd District, Budapest, Hungary
Erkel House, Budapest, Hungary
Orpheus Ski, Bansko, Bulgaria
Florida land packages
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 01252 737575 or email laura@propertyforlife.com stating which session you would like to attend and how many places you require.
Exhibitions
September 15th – 17th – The French Property Exhibition, Olympia 2, London
September 22nd – 24th – Property Investor Show, Excel, London
Academy Dates
September 9th – The Coppid Beech Hotel, Bracknell
October 14th – The Montague Hotel, Central London
November 18th – The Cobham Hilton, Cobham, Surrey
December 2nd - The Cheshunt Marriott Hotel, Near Enfield
For further information regarding the Property Investor Academy Programme please follow the link www.propertyforlife.com/whyinvest/education.html
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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 http://www.propertyforlife.com/register. When registering it is important that they select the recommendation option in the 'How did you hear about us' section 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. Please see http://www.propertyforlife.com/services/referalprogramme.html for further information.
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