Property and economic update

The market continued to cool off during September. All major reports for the month show a distinct slowdown, but by no means a bleak picture. The Hometrack September survey indicates an overall drop in the average house price of -0.3%. Most regions of the country are now experiencing slight falls or stagnation with the South once again leading the way. Some areas of London fell by up to 1%, but as we all know the capital is always the first to recover and is a good indicator of what the rest of the country will experience. 1%, not exactly a crash!

Several areas saw growth last month with the old favourites of Teeside, North Yorkshire and Nottinghamshire leading the way. John Wriglesworth, housing economist for Hometrack comments: ”While prices are now expected to stagnate over the next 18 months, we still expect some months of price rises. Interest rates are still at a historical low, unemployment is also very low and household incomes are rising strongly. This suggests that the present high level of house prices can be maintained. We see no evidence pointing to a housing market crash over the coming year.”

The Nationwide reported an average price rise of just 0.2% for September, with the average property price now 17.8% higher that at this time last year at £153,727. Alex Bannister, group economist for Nationwide comments: “…given the positive outlook for the economy and the jobs market in particular, we expect the market to tread water, involving subdued price growth, rather than experience a sustained widespread slump in prices”.

I think we can all agree that given the evidence, a property price crash is highly unlikely. This makes today a great time to invest. Regardless of when you think the market will pick up, you can only benefit from its fullest growth if you are already on the ladder. Therefore, given this and the fact that it is possible to achieve even greater discount in a flat market, our advice is to keep investing, and maximise your long term capital growth potential.

What's new?

We welcome back Tristan Soames, who after a period of travel has returned refreshed and ready to help you with all aspects of property investment. Tristan has in depth knowledge of the buy to let property market having worked here at Property for Life for quite some time before he embarked on his travels.

Property investment is not about property – it’s about leverage

We will begin with a simple example for those who are new to investment. You can be any of the 3 investors listed in the table below- they all start with the same capital, and purchase the same asset, the only difference is the leverage .

From the above table you can see that the higher the leverage, the higher the return on your investment. The question is what type of investment is suitable for higher leverage yet with minimal risk for both the investors and lenders.

With all the possible investments that you could get involved with, property happens to be the best at providing high leverage with manageable risk. The underlying growth and yield of property itself is not always better than other investments such as shares, but the leverage you would be able to get from property is a lot higher, hence the return on your investment is much greater. The Median price of UK property doubles every 7.2 years on average, so even if you are semi-experienced in selecting properties, you can still do better than other asset classes as long as you use an effective finance strategy.

Obviously good property selection will accelerate the value of your investment portfolio; that is only after you have effective finance strategies in place first. We have seen so many investors that have managed to select some great properties over the years, but still have a very low performing investment portfolio because they did not start their investment with the right finance strategy. After all, the success of any investment portfolio is measured by how much money you make with the lowest possible risk in the shortest possible time frame. It is not measured by how much your asset has grown in value alone.

Remember, finance is the main reason you invest in properties, property is merely a vehicle to obtain finance, yet most property investors do not quite understand the importance of a finance strategy:

• A finance strategy is NOT about obtaining the lowest interest rate!
• A finance strategy is NOT about borrowing capacity!
• A finance strategy is NOT about the application fee!
• A finance strategy is NOT about the monthly fee!
• A finance strategy is NOT about the transaction fee!

A finance strategy is a strategy for making money.

A good finance strategy should deliver you the highest possible return on your resources with the lowest possible risk within the shortest possible time frame.  A finance strategy does not sit still as your personal requirement changes through time.

"If you always put limit on everything you do, physical or anything else. It will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee 1940-1973, Martial Artist and Actor

"I've missed over 9,000 shots in my career. I've lost almost 300 games. 26 times I've been trusted to take the game-winning shot...and missed. I've failed over and over and over again in my life. And that is why I succeed." - Michael Jordan Professional Basketball Player

How to build your wealth adapted from an article by Loral Langemeier

Just as you follow a recipe in a very certain way, there's a very specific process that you must follow to become wealthy. You must build a solid foundation one step at a time. The seven components of my specific wealth building strategy are:

1. Your financial conditioning - how you think and act in regards to wealth and success.
2. Your financial baseline - where are you financially at this moment in time?
3. Your freedom day - the month, day, and year you will be financially worry-free.
4. Managing your lifestyle cycle - how is your lifestyle sabotaging your ability to be free of financial worries?
5. Building a wealth cycle foundation - creating a plan to support your financial foundation.
6. Wealth acceleration - using advanced strategies to explode your wealth.
7. Leadership of your wealth team - Building and Leading the team that will support your success.

In this article I am going to give you an introduction to these seven components. My goal is to spark your imagination and show you what is possible. So let's begin talking about each of these components.

Your financial conditioning

Your financial conditioning is how you think about yourself in regards to success and wealth, how that thinking shows up in your actions, and more importantly how it impacts your results. It is something that you will need to be aware of and correct. When I say correct, it may be a little misleading, as your financial conditioning is something that you will need to self-manage for the rest of your life. It isn't something that you can tick the box and say, "I'm done”. Your financial conditioning is so much a part of who you are at a cellular level, the more sophisticated you become the more you'll be able to rationalise your current position even though you know it's not where you want to be right now.

Your financial baseline

As you look at your financial baseline I want you to think about where you are. This is critical, because in order to improve your finances and even begin wealth creation you have to know exactly where you are. How much money do you make? How much do you spend? Are you in debt? Do you have any savings? These are all important things to know in order to make educated decisions about what actions to take moving forward.

Your financial baseline is a reflection of your past financial awareness. Not good, not bad, not right, not wrong, it's just what happened. Once we combine this piece with our wealth strategy we can change your course direction and start marching you towards the wealth and the life that you really want.

Your freedom day

This is the day that you declare your vision. It's where you want to ultimately end up financially. You need to design this as specifically as you can from this moment forward.

Let's just say you're going to start with 5,000 a month passive income. Do you want to be a millionaire? Do you want to be worth two, five, ten, a hundred million? What's your net worth going to be when you have freedom day? How old will you be when you get it? What I like to do is have you put a day, month, and a year. I said that before I'm 35 I want to be a millionaire I created it June 12th the year that I turned 34.

Writing down goals enables what you want to stay in front of you. It needs to be something that's motivating, has some reality in it, and you know that you can achieve it. Pick what feels good, and has some reality in it, then go with it. You can always modify it later.

Managing your lifestyle cycle

Your lifestyle cycle is most easily described as how you live your life and how it directly affects your ability to get where you want to be financially. One of the quotes that I always use in our programs is that you have to build your assets then build your lifestyle. And I believe that we, as an entire society, have that upside down.

To me, a lifestyle cycle is wrong when your liabilities are really the engine driving your wealth machine. Your assets need to be the engine. If you look at this, all the liabilities that you have -- your total credit card debt, your total student loan debt, and the new car that you had to have, all of those create and increase your monthly expenses. This is what I believe is the "rat race." That's the continuation of liabilities, expenses, liabilities, expenses, liabilities, expenses. What doesn't happen is building a wealth cycle which is assets to income, assets to income. Managing your lifestyle cycle is where you begin to make educated choices about your lifestyle.

Building a wealth cycle foundation

Creating a wealth cycle is a foundational strategy that ensures that money will be automatically allocated into your asset column and that your wealth plan stays activated. This is where you structure your wealth plan such that your foundation is handled automatically. Your kids' college tuition is taken care of. Your retirement money is handled. Your insurance needs are met. It's a financial foundation but it is not an acceleration of wealth.

Very few people set up a wealth cycle and are treating their wealth creation as a one-time transaction. See, I don't believe that wealth creation or investing is a one-time transaction. I believe that you will lead and sustain your wealth over time. Again, you don't have to do it. You have to lead it.

Acceleration of your wealth cycles

This is when you really begin to leverage your assets to generate more wealth and passive income. It is about learning and using high end investment strategies, tax benefits, and entity structuring.

Here are a few options for investing strategies. Cash and cash equivalents, bonds, stocks, real estate, international securities, precious metals, natural resources, commodities, and collectables. In stocks there's large cap versus small cap. Commodities - you can do options and futures. Natural resources - you can do minerals, oil and gas. Precious metals - you can do gold, silver, or platinum.

I give you this list not to overwhelm you but to let you know that there are many options available to you. With the proper education and support along with a high level of creativity, you can leverage these options to accelerate your wealth.

Leadership of your wealth team

The creation and leadership of your wealth team is one of the most important, yet one of the most under-discussed areas of leading your wealth. No-one that we know has ever gotten wealthy doing it alone. They've done it through the use of teams. No matter how dedicated, motivated, talented you are, you will not be able to realise this vision on your own. You will need a team behind you. A bookkeeper, an attorney, a financial planner, any number of these people will become essential to your success. Your ability to strategically decide what team members you will need, and then choose and lead them, will mean the difference between realising your vision next year, in five years or never at all.

So don't wait, go out there and make money!

“Keep on going and the chances are you will stumble on something, perhaps when you are least expecting it. I have never heard of anyone stumbling on something sitting down.” Charles F. Kettering 1876-1958, Engineer and Inventor

"Look at a day when you are supremely satisfied at the end. It's not a day when you lounge around doing nothing; it's when you've had everything to do, and you've done it." Margaret Thatcher Former British Prime Minister

Mortgage mind
The financial services section

Buy-to-let remains Britain 's top investment

Despite reports of a slowdown in British house price growth, property is still viewed as the best long term and short term investment choice. A recent poll published in the Mortgage magazine by mortgage lender GMAC-RFC indicates that nearly half of us consider property to be the best investment vehicle in today's financial climate. They ranked property investment well above other investments such as stocks and shares. The poll showed that two thirds of those questioned think that property will yield the best return over 25 years. It also showed that if people received an unexpected windfall, most would invest it in property.

Jeff Knight, head of marketing services at GMAC-RFC said: “Within the industry we have seen a continued increase in property investment, via buy-to-let. Many people are investing for the first time, whilst those with investment property are adding to their portfolios. There are different motives for investing in property, for example people are using property to supplement their income and other investment classes now or in retirement. Whatever the reason for property investment, I expect this trend to continue.”

The research also showed that remarkably few people take full advantage of competitive interest rates. Knight continued:”our research reveals how attitudes have altered from traditional methods of investment. The results highlight how equitable people believe property can be, both over the long and short term, despite talk of a property crash. Property is now used as an investment in many diverse ways, from those with several properties or buy to let mortgages to those who simply invest in their own home.”

At Property for Life, we couldn't agree more. British residential property is without doubt the best long term investment available. Imagine if you had purchased a property in 1990 (the worst possible time), how much would it be worth today? There is no such thing as a bad time to buy!

10 money saving Mortgage tips

Want to take years off your mortgage? Doesn't everyone? Yet, surveys show that we're lazy when it comes to getting the best deal for our mortgage money. Here's 10 ways to reduce your monthly payments:

Get a better deal – Check with us to find out who is offering the best deals this week. Remember, long gone are the days when a borrower stays with the same lender for the full term of the mortgage.

Pay off your capital early - If you have an interest-only mortgage, such as an endowment or ISA mortgage, you could pay off your loan early by making regular additional repayments against the interest.

Get a cheaper standard variable rate - Mortgages usually revert to these rates once a discounted or fixed period has expired. As with mortgages in general, they can vary from lender to lender so it is worth shopping around for the best deal.

Change your interest calculation - Daily interest calculation has been established for a while in other parts of the world but more and more lenders over here are switching to it. Basically, the advantage of switching to this calculation is that if you make a repayment it immediately impacts on the interest accruing on your mortgage.

Remortgage for a smaller loan to value - Chances are your property has increased in value since you took out your original loan. Therefore, the percentage of the loan to the value of your property will have decreased as well. So it could be well worth investigating whether you can get a better deal - many lenders offer significantly better terms for people borrowing less than 75% LTV. Make sure you have your property valued properly though, and shop around for a lender that will cover your valuation fee.

Reduce your mortgage term - If you feel you can afford to pay out extra each month, you can reduce the term of your mortgage, which will save you on interest.

Don't take out a Mortgage Indemnity Guarantee (MIG) - MIGs are now usually only charged on loans of 85% to value or more and there is a campaign to have them scrapped altogether. A MIG is a one-off payment made to the lender that protects them if you fail to keep up your repayments and your home is repossessed. If you can avoid paying for one, do, it will save you money.

Get cheaper household insurance - One of the easiest ways to reduce your household outgoings is to shop around for your buildings and contents insurance. It's all too easy to buy from your lender as it's convenient to have everything tied up with the one company. But search the market and you could save a packet.

Check your mortgage payments are correct - It may seem stupid but auditors MortgageChek say there's a one in ten chance you could be paying more than you should. Do the maths.

Ensure you review your mortgage regularly - Perhaps it isn't the way you'd choose to spend your free time but regular reviews and possibly remortgaging will ultimately ensure you pay as little as possible in interest.

Need advice?

Maybe you're thinking of buying an investment property, or you need to release funds tied up 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.

What’s available?

We currently have the following investment opportunities.

• Waterfield Mill, Cleckheaton, Yorkshire
• Bow Central, Bow, London E3
• The GM Building, Fore Hamlet, Ipswich
• Samana Cay, Eastbourne
• Issa Quay, Manchester

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

Meet a fellow ‘Property for Life' investor

Meet Tim and Kerri Self. Following the success of their property portfolio Tim and Kerri now treat investment property as a full time job, and all in the space of just 4 years.

In 2000 Tim decided to release an amount of money from his share holdings and reinvest in a safer, more controllable manner whilst generating greater returns. Property seemed the perfect investment and so in December 2000 they purchased a 2 bedroom cottage in Hartlepool for just £20,000. This proved so successful that Tim released more money from his shares and reinvested it into a further 10 cottages.

In 2003 Tim and Kerri discovered ‘Property for Life' and the benefits of buying off plan. They purchased 2 apartments in Nottingham and another 2 in Leicester . “It made sense to spread risk by purchasing different property styles in different geographical locations, and off-plan seemed a great way to buy them” says Tim. “Property for Life was so professional and kept us constantly informed of progress as well as bringing new opportunities to our attention. The whole process has been very easy and at no point did we experience any pressure to buy, just helpful advice and guidance. ‘Property for Life' was a pleasure to work with and we look forward to a continued working relationship”.

Tim and Kerri now have a portfolio with a value in excess of £1million and equity exceeding £500,000, they are currently investigating buying a number of overseas properties to introduce more diversity to the portfolio and further reduce risk.

Tim and Kerri have truly achieved financial independence and we wish them the best of luck with their expanding investment portfolio.

Recent events

If you went to the Property Investor Show at London 's Excel exhibition centre last month, the chances are you would have seen us. We had an extraordinarily successful show, with many people registering their interest in us. Our managing director David Austin made a number of talks as part of the show's seminar programme, each time to a packed seminar room. One thing is certain, huge numbers of people are still buying investment property, and why not? Now is a great time to buy.

From right to left - David Austin, Franco Pullano, Adam Woolley, Peter Forsythe, Tristan Soames.

Upcoming events

We have a number of special workshop events planned for the coming months.

You will learn how to invest in property using the quickest, cheapest and easiest strategies whilst still maximising your return.

You will hear from some 'Property for Life' members who have already achieved this.

We will look at relevant issues such as tax, property management, how best to deal with developers and the best way to finance your investment.

We will then take you by bus to see property that our members have actually purchased, and we will also look at some new developments which we have available in the area. The dates and locations are:

23rd October - Leicester
13th November - Leeds
4th December - Nottingham

If you are interested in attending one of these events, please e-mail me adam@propertyforlife.com , placing the date of the event in the subject line and how many places you require in the message text. If you are bringing guests could you let me know their names?

New registrations

Wow, what can I say? So many of you registered at the Property Investor Show in London that we still haven't managed to speak to each of you personally, but rest assured that you will receive a phone call from us soon. We would just like to say thank-you for joining us and our investors. You are now registered with one of the most trusted property investment consultancies in the country.

Latest completions – Nottingham and Canary Wharf , London

Congratulations to those investors who have completed on their properties in the above developments during September. As well as getting a 15% discounts off market value and putting in low deposits upon exchange, many of these investors have benefited from fantastic capital growth over the build time giving them a return of investment of over 100%. Many are now renting their properties as demand for rental accommodation is expanding with first time buyers preferring to rent rather than buy.

'Property for Life' Referral programme

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 http://www.propertyforlife.com/tellafriend.htm .

Next edition

The next edition of ‘News & Views' will be delivered right to your mailbox around the 10 th of November, so look out for it.

Back issues

Remember, you can read any of our back issues by following this link to our web site http://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.