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MAY 2005
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Property and economic update April appears to have been a very quiet month for the property market. The Hometrack house price survey for April indicates a negligible drop in house prices of just 0.1%. Of the 58 Hometrack regions 14 recorded increases in house prices, 13 stayed the same and 31 reported falling prices. The figures are minimal though with the strongest growth being in Dorset of 0.5% and the largest fall being Bedfordshire with a drop of just 0.7%. John Wriglesworth, Hometrack's housing economist comments: "Election jitters are not helping the market, but this is only temporary. Post election, whichever party wins, there is likely to be a bounce back in the market, as the economic and political prospects become more certain. Interest rates, which may rise after the election, are expected to remain historically low, as with unemployment. Mortgages are still very affordable and incomes are continually rising. There are no fundamental reasons why the market should not recover, confidence is the key. We continue to predict 3% house price inflation for the year." The Nationwide reports a slightly more optimistic picture with an overall price increase of 0.9%. This more than offsets last months 0.6% fall. Fionnuala Early, Nationwide's housing economist comments: "Volatility in monthly house price changes is not unusual in spring. The trend, however, continues to confirm our view of a gentle slowing in the market. Confidence will be a big factor in how the market moves forward from here and this is driven predominantly by the general macroeconomic background and in particular news about interest rates and employment". Secrets of property investment Buy property at below market value Sounds good doesn't it? You get thousands of pounds of instant equity on each property you buy. Because you have bought below the market your gross rental yield increases…So if you hold your property long term, you'll increase your yield by about 1% to 1½% per annum. That can turn a negative geared property into one that puts ££ into your pocket. Here is how to buy well. Know your market! The asking price is not necessarily the market price. It is almost certainly optimistic. Find out what has sold in the street and area. Be careful to compare like with like. Do your research carefully before hand so that when a deal comes up you can act immediately - because a good deal won't last long. Be Patient Be prepared to wait for the right opportunity, don't rush into the first deal that you find. Having undertaken extensive research you will know exactly what you are looking for, simply wait until it appears. Patience can be the difference between buying a great property or buying a problem property. Make sure you have the funds Speak to finance providers and make sure you can get the required funds. Entering into a deal that you cannot complete on could be a very costly mistake. When the right deal shows itself, you will need to move quickly so make sure that you have the funds in place. Buy in a Good Area If you buy in an area that is in demand you'll find it much easier to rent or sell. Capital growth and rental values will in general be higher in these areas as well. The problem is that good opportunities may be harder to come by, so you will need to act quickly when you find one. Check out the Location. The attributes of a good rental property are:
Build a strong network of professionals Make sure that you have a strong networks of professionals in place, such as solicitors, brokers, agents etc. When you find the right deal you will need these people to act quickly and work together effectively. By putting this 'team' in place early, you will save yourself a lot of time, effort and very often, money. So get to know them and make sure that you can work effectively with them; you do not want to run into problems when the right opportunity presents itself. Make Offers If buying directly from a developer or through an estate agency make an offer. If you never make an offer, you will never know if the seller would have accepted it. Don't be embarrassed. You can't force anyone to accept an offer if they don't want to. Why not make offers 30% below market and see what happens. What do you have to lose? (First be sure of your market price. Some of these are highly inflated). Make lots of offers. The likelihood is you will pick up one at least. If you buy only two of these in a whole year you will do well. You will also know the market very, very well. Key Points to Buying below the Market:
It's up to you by Jim Rohn One of the first things successful people realise is the old adage, "if it is to be, it is up to me." That is, for you, the fact that your success and your course is up to you. This doesn't mean that you do it all alone. It simply means that you take responsibility for your life and your financial abilities. Too many people today look at opportunity and figure it is up to someone else to make sure they get it. They look at financial security and hope that the government will make sure they live safely in retirement or in case of disability. They wait and wait, figuring that it is up to someone else. And then the wait is over, and it is too late to do anything. Their life is over and they are filled with regret. This isn't true for you however. You know that you must take responsibility for your life. It is up to you. The fact is that nobody else is going to do it for you, you must do it yourself. Now, some people may say, "Jim, that's a lot of responsibility." Friends, that is the best news you can ever hear. You get to choose your life. Hundreds of millions of people all around this world would give anything to live in the situation you do, just for the chance to have the opportunity to take control of their destiny. "It's up to you" is a great blessing! Here's why:
Let me ask you a question: Where will you be in 5 years? 10 years? Or 25 years? Do you know? Do you have an idea? Have you ever dreamed about it or set a goal for it? Are you willing to take responsibility and recognise that, "It's up to you?" You will be wherever you decide to be in those timeframes. You decide. It's up to you, and that is very exciting! "When you paint success pictures in your mind, you initiate an inner process whereby your attitudes, hopes, aspirations, and enthusiasm are elevated in response to an image of a more promising future. Every person who aspires must first sell themselves hope, the promise of a better life."
"One way to keep momentum going is to have constantly greater goals."
Students make great tenants When we recommend students as tenants the immediate reaction of many landlords is often one of fear and trepidation. These feelings are probably based on memories of their own years as a student - and all the things that happened back then - wild parties, large groups moving in and out with reckless abandon, more parties, overcrowding, sharing with someone who knows someone, 6 cars parked over the lawn and up the street. For the comfort of landlords, the world has changed. In particular the student accommodation market has changed. Most management companies will now scrutinise every tenancy application, very often including thorough checks on students. Also the market place is also delivering a variety of new tenants - the international student market is growing and demanding a high standard of student accommodation. These overseas students value the exceptionally high level of education they have the opportunity to access here in the United Kingdom, and they are generally highly committed to their studies. They usually have substantial funds for daily living expenses when compared with local students, consequently, they have lifestyle and housing needs which are at a very different level to those of the average student 20 or more years ago. Whilst I am not saying that every student tenant is going to perform perfectly, the scenario has certainly changed, and provided that all normal pre-tenancy checks are performed, students can and do make great tenants. Don't overlook this incredibly lucrative market!
Are there any deals out there? We are always being asked, "Are there any deals out there"? To be quite honest it all depends on whether you are a short-term or long-term investor. If you are looking for short term gain, you will need to look hard to find a deal, but they are starting to re-appear. If you are a long term investor, you are now definitely in a buyers market. What do buyers do in a buyers market? Well the obvious answer is 'buy'…but our experience is very often they don't. Instead they just make excuses for not buying. It goes something like this. Let's look at the last two booms. 1990: "Well the papers say the boom is over and prices are falling." 1994: "I've seen places on the market and they aren't selling." 1996: "I am going to wait until it bottoms." 1997: "I am going to wait until the market shows it is moving again." 1999: "The market is moving but it could be a false start." 2002: read in the paper that prices are moving fast but I need more research." 2003: "Oh! I can't believe the price they got for Smithy's house…are they joking." 2004: "I wouldn't pay that, it's a rip off! I could have bought that a few years ago for half that price." 2005: "They are talking about interest rates going up again, it's not a good time to buy"…Told you interest rates were going up." May 2005: "Well the papers say the boom is over and prices are falling." And round and round we go. About this time the 'Johnny come lately' booms chasers will look at investing in the stock market. You can almost bet they will not tackle the plunge until every man and his dog are in the market. Yes, they are good at picking the tops (they buy in a seller market) but studiously avoid the bottoms (they sell in a buyers market). Don't let this be you! "Any man's life will be filled with constant and unexpected encouragement if he makes up his mind to do his level best each day."
"Never look down to test the ground before taking your next step; only he who keeps his eye fixed on the far horizon will find the right road."
Two mortgages you should definitely get rid of If you haven't reviewed your mortgage recently do it now! If you have one of the following mortgages then you really should consider ditching it in favour of something cheaper: 1. The annual review mortgage If your mortgage has an annual review you should consider doing something about it. Your mortgage lender may have sold you on the idea of the annual review because it provides clarity and certainty about the size of your mortgage payment each month for a full twelve months (basically you pay the same amount every month for a year after which the level of your monthly payment is reassessed). What they won't have mentioned is that it also means they don't need to inform you about interest rate changes except once a year. Bear in mind it costs the average mortgage lender several hundred thousand pounds to administer a rate change (all those letters to send out, all the admin changes etc) and you'll see why some of them rather like annual reviews. However, the estimated 1.5 million borrowers with annual review mortgages may well be in for a rude shock when their annual review comes around - they will have been spared most if not all of last year's rise in interest rates. What this means in reality is that they will have been underpaying their mortgage last year. This year's payment will be adjusted to take account not only of a higher mortgage rate but also that underpayment, an adjustment that could leave you hundreds of pounds a month poorer! In fact by some estimates your monthly payments could be about to rise by as much as a quarter. 2. The mortgage you've had too long but have got used to Has your mortgage turned into the proverbial old boiler/battleaxe/slob/couch potato (delete as appropriate)? You may have fallen in love and got fixed up with your mortgage a couple of years ago when it was slim, trim and incredibly low in interest rates. But, as with all relationships, a couple of years down the track, it will let itself go, slob out and start demanding more interest. Maybe you got a two-year fixed-rate deal two years ago or maybe you got a two-year discount mortgage. What should you do now? Trade it in for this year's model, of course! Remember: a mortgage needs care and attention. What you cannot do is ignore your mortgage. You need to take time to check the mortgage interest rate you are paying and see whether you can find a better deal. We will never tire of telling you that you won't pay the mortgage off by paying a higher interest rate than you need to. That's just a way of redistributing your wealth to somebody who deserves it less (your bank manager)! Take this to heart: the average standard variable interest rate is more than two percentage points higher than the best deals currently available. So if you're on, for example, a standard variable rate of 6.75% you could easily find a re-mortgage for about 4.75% - a substantial saving indeed. You may be facing early repayment charges to get out of an uncompetitive mortgage deal, but you may find it is still worth breaking your existing arrangement to move to a cheaper mortgage. A good mortgage broker can help you decide, but whatever you decide to do with your mortgage, do something!
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 01252 737575.
Upcoming events The entire Property for Life team will once again be at the Property Investor and Homebuyer Show North in June, so if you are attending the show why not drop by stand #454 and say hello. Our MD David Austin will be speaking each day as part of the seminar programme and we will have details of our latest property opportunities available for viewing on the stand. The show runs from June 24th - 26th at the Gmex exhibition centre in Manchester.
What's available? We currently have the following investment opportunities.
Please go to www.propertyforlife.com/discount_prop.php for full details and look out for more great opportunities coming soon!
Make some extra money? The 'Property for Life' referral programme is a great way to make extra money. Take a look at the table below to see just how much. If you know of anyone who is interested in purchasing investment property why not refer them to us. It's simple, if they buy you make money, and the more they buy the more money you make. Take a look at our website for full details www.propertyforlife.com/tellafriend.htm
Back issues Remember, you can read any of our back issues by following this link to our web site www.propertyforlife.com. If you missed one, or you want to read that really interesting article but can't remember where you put it, you will find it all here.
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