Advice from any Successful Property Investors Please!

[timsk]

I started a thread early last month which explained how my trading last year hadn't gone quite according to plan and that, as a consequence, I would revert to trading around a full time job. So, I've been searching in earnest for said job. Not really the best time right now, unless I want to be a cleaner, clear up old peoples poo and sick (care work) or get into commission only sales. None of those options appeal particularly (although hats off to all the cleaners and care workers out there), so I'm looking at some kind of training course. I've been toying with the idea of getting into property but, beyond the experience of buying and selling my own homes - four to date - I can't claim to know a great deal about it. Not a problem I thought, there's bound to be some reputable companies out there that'll tell me all I need to know. Companies, yes. Reputable, I'm not so sure about. Mindful of what many fellow T2W members have to say about trading course vendors, I'm proceeding with caution. I did quite like the look of this site:
Free Property Investment Course - Beat the UK Credit Crunch
However, I couldn't find the cost of the main course (after attending their free two hour taster course), so I e-mailed them to enquire . . .
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It's only £5k for a two day course!!! So I e-mailed them again asking if I could have a £4.5k discount if I skipped the delicious sounding Beluga Caviar sandwiches offered for lunch. The reply had a rather terse tone to it: "In actual fact Tim, the price went up to £5,497 at the beginning of the year, I was giving you it at the old rate!
Excellent value, nothings cheap in life, you get what you pay for, pay peanuts as the saying goes!
If its not for you, all the very best, wish you luck. PF."
How generous they are and how ungrateful am I! So, all of this brings me to the point of this thread. About time too, I know. Are any of you actively building a property portfolio and do the current market conditions represent an unparalleled opportunity or a time to firmly button down the hatches? I'm an ethical sort of chap (boring of me, isn't it), so I'm loathed to take advantage of the misfortune of others. Any thoughts on this, as well as any good books, courses or websites that you could recommend would be much appreciated.
Thanks folks,
Tim.

 

[hornblower]

unless you can get 8% return on your investment , and get capital growth, its not worth doing
a few years ago there was only a few places to let ,
today on a ride around town there are more places to let then are for sale
so now is not the time to buy , only when the market has mopped up all these places to let will i think about buying again

As the battle of Waterloo was going on Rothchild was asked when is the best time to buy ?
he replied When there is blood on the streets
and thats not just yet !

 

[MrGecko]

what about abroad?

I bet there are some very distressed expat sellers in Spain, for example...

 

[ian]

so I'm loathed to take advantage of the misfortune of others. Any thoughts on this would be much appreciated.
Thanks folks,
Tim.

Do you prefer to wait until they've been kicked out?

Seriously, property is a double edged sword as many deluded property 'experts' are now finding out.

Buy to let residential property is something I've tried but I didn't like the rent collecting bit, I have commercial properties and found this was an easier property option than letting out flats.
Buying plots of land is also a good idea.

If you have sold a few houses of your own then that is all you need to know about the property market so do not waste any money, especially several thousand pounds, on any guru crap because that kind of money could be used as a deposit on a property don't waste it on on sweet F.A.

A friend of mine has been involved in the property game for 25 years and he cites good luck and simple common sense as being a big part in his success.

 

[TomTom]

Long time no see timsk,
Rebember about what we spoke about late last year re propery ?
I can let you in what they are all about, and that is buying property at elow market value with tennants all ready in the house.
buy for minus 25% so your deposit is there on the property, charge the tennant rent to cover mortgage, pay insurance and repairs insurance.
It will be by year 3 you will get an income from the deal, no income will be untill year 3 and that will only be may be £100 per property.
If you do one a month, after 3 yrs you will have say 30 on your books returning £100 each or £3K per month.

What the propert mentor dose is hard ruthless business tackticks, they promise to buy some hard up families house for say £90k when it is really woth £125k get the deal done for £90k from the mortage company and at the last minunite lower there offer to £85-88K so that you actually make £2-3K instantly from the deal. And the family who have put faith in you to look after them through these times loose out. It dose work, however if you can sleep with this on your mind sign up for the course.
Property Mentor talks alot about stacking up ( if the deal is financialy viable ) tools like that software can be purchased on EBAY for about £20.

Never never buy a property with out a sitting tenant, as this is what the first time round buy to let investors did, then they bought at market or above market value, fixed deals closed, property prices clapsed.

I have learnt from there mistakes and do buy at below market value, my only income from this business will be when the rents on the properties rise, however if intrest rates go higher I will have to obsorb thouse costs. At the moment I take £2K per month over and above mortages and insurances, all income goes back into the business.

After year 5 and property prices start to rise I see this business generating £12K per month pluss the increase of equity.

As it stands now I have property worth £1,700,000 ( going lower ) with mortages of £,1,400,000 so still got £300,000 equity to go into another business.

I hope things work out well for you .

Tom

 

[Hoggums]

timsk - I really advise you NOT to get into property at the moment. You couldn't have picked a worst time.

Lending criteria on BTL means that you cannot buy unless you have a 25% deposit these days.

There is an oversupply of rental property at present which is pushing rents lower. Please who can't sell at the price they need are renting out their properties until the prices rise again. Once the recession really kicks in some landlords/banks will be forced to dump BTL properties on the market at any price which will push prices lower. Once prices ARE lower - those renters will start buying leaving even more voids in the market.

At present property prices have not returned to a level where BTL makes financial sense. You should budget for 2 months a year of void which means that 10 months need to cover the mortgage plus bills. Ideally you should look at a yield of 1% a month on the property value - so a place that's yielding £600pm should be valued at 60K. Any more than that and you risk rental not covering mortgage if/when interest rates rocket in a few years time to bring inflation down.

How many £600pm properties do you know that are worth 60K - none at the moment -but it will happen soon enough.

My advice is just leave your money in cash, wait until the FTSE has dropped below 3000 and then buy a diversed portfolio of shares - a few at a time every month for 2-3 years and reinvest the divis. That way you'll average out at roughly the bottom of the market and enjoy watching the share prices rise as the recovery kicks in.

 

[timsk]

What the propert mentor dose is hard ruthless business tackticks, they promise to buy some hard up families house for say £90k when it is really woth £125k get the deal done for £90k from the mortage company and at the last minunite lower there offer to £85-88K so that you actually make £2-3K instantly from the deal. And the family who have put faith in you to look after them through these times loose out. It dose work, however if you can sleep with this on your mind sign up for the course.

Hi Tom,
No, I wouldn't sleep at night! If this is the only way of securing property at below the true market value, then it's not for me.
Thanks for the input!
Tim.

 

[TomTom]

Yes I do agree, however I do buy propert at below market value.
I give them a fair price with fixed rent for 3 yrs pluss an option to buy back after 3 years at a pre determined price no mattor what the market prices are.

Many cow boys out there M8 , we opperate good , honest, fair business practises, we make zero from the initial purchase, we only make income from the mortages, which at the moment is very good but still only £2k per month when rates were higher nothing was gained.

Lots of oppertunity out there timsk, just got to look for it.

 

[TomTom]

good thought hoggs M8, remember lots of money is to be made during a ressession, i have the acumin and time & cash to pursue.
So far property has been ok, but then again I do buy at blmv

 

[shadowninja]

Buying property ("It's cheap!", "It can only go up!") is like picking bottoms in trading, and we all know what happens when you do that... unless you have a Spanish stop.

 

[anley]

I think the time to invest in property will be when you're at a dinner party and ‘property’ comes up and somebody literally has to leave the room to puke.

Basically the exact opposite to how property was discussed t dinner parties of the past. You know, when everyone bragged and gossiped about how much they've made or how much their house went up last week.

The potential puking scenario should come in about 12-24 months, assuming the economy keeps going down the pan.

 

[shadowninja]

Being a bit of a loud mouth ****, when ever someone does the "I've made £50k on their house in 3 months", I always ask something along the lines of, "So you sold it and moved to a shed in Cumbria? No? Didn't think so."

Not been to a dinner party in months...

 

[Hoggums]

Buying property ("It's cheap!", "It can only go up!") is like picking bottoms in trading, and we all know what happens when you do that... unless you have a Spanish stop.

Yes and there are now stories about some banks issuing margin calls on their loans when the LTV exceeds the maximum.

 

[The Baptist]

unless you can get 8% return on your investment , and get capital growth, its not worth doing
a few years ago there was only a few places to let ,
today on a ride around town there are more places to let then are for sale
so now is not the time to buy , only when the market has mopped up all these places to let will i think about buying again

As the battle of Waterloo was going on Rothchild was asked when is the best time to buy ?
he replied When there is blood on the streets
and thats not just yet !

Agreed - a full unemployment cycle needs to run its course, This = more firesale units and more displaced people needing lets or council lets. This equals further depressed prices and improved yield due to both extra rental demand and forced sales.

 

[arabianights]

Great how slow the market is though, eh? Looks like child's play to bottom pick.

In 2011 I shall buy Yorkshire.

 

[timsk]

Have you ever tried to light a fire that doesn't really get going and peters out? And then, without you doing anything, it suddenly does a Peter Frampton and comes alive! This thread's a bit like that. Well, thanks for your various comments chaps - which I take on board. I'll give you an update as to the current thinking . . .

I can't remember if I mentioned it earlier in this thread or elsewhere, so forgive me if I repeat myself. Mrs. timsk is a Town Planning Consultant with tons of experience, having worked for various local authorities before going down the private consultancy route. A year or two back, she got a referral from a local estate agent whose client owned a property with a large chunk of land attached. Previous owners had, in the dim and distant past, applied for PP to build two dwellings on the land which got refused. They wondered if it was worth another try. Well, my wife did about two hours work, for which she charged the princely sum of £100 and her client got PP for two detached 4 bed' properties. (Being of a local government mentality, she's not comfortable with the concept of a 'success fee'.) Anyway, as you can imagine, said client was rather pleased and asked Mrs. timsk if she could recommend an architect, which she did. Well, said architect designed the houses and a builder built the first house and an agent was engaged to sell it. (The idea being that some of the profits from house one pay for the build of house two.) Now, you might think that given the current climate, this is where this little tale has an unhappy ending. Not a bit of it. The agent had three buyers queuing up to buy the house. The first one tried to be clever and take advantage of the poor market conditions and reduced their offer at the last moment. The vendor blew them out instantly. The second prospective buyer stepped in straight away and the deal went through very quickly at the asking price. The third person in the queue then approached the architect and said that he'd got £800k burning a hole in his pocket if a suitable site could be found. So, said architect has approached my wife with the idea of offering a property finding service with a twist. The twist is that there are few good sites available to build from scratch (in Devon, anyway), so the new business finds crap properties in great locations and my wife deals with all the planning issues involved re. demolition and re-building. The architect designs a new house and, between them, they project manage the build if the client wants them to. In a nutshell, that's it. Their 'edge' is great architect designed houses in a location to match. Any thoughts on the merits or otherwise of the idea would, as ever, be appreciated. Oh, just in case you're wondering where I fit into the great scheme of things - I make the tea!
:cheesy:
Tim.

 

[MrGecko]

Tim, can you clarify your business model a bit?


Is it:

Client approaches Architect looking for a new build... then Client + Arch. + Wife go through the whole process together (which is probably easier, but with it comes less revenue)

-or-

Arch. + Wife scour the country for suitable sites, work together to build a plan of a building with "pitch" for Planning permission included... (can you apply for planning permission on a site that you don't own? Obviously you cant BUILD on it, but can you ask?)

... then take Site + Building plans + Pitch and wrap it all together as an "off the rack" bespoke property... (i mean, you cant add an extra floor in, but you can swap the kitchen with the Dining room for a better view if you wanted).

I mean - does the client come to you with the sale ( "I want a 3 bed bungalo in Norwich, what can you do for me?)... or do you package the whole deal up "on paper", build an inventory, and sell them on to whoever you can find.

(for the record, I know next to nothing about investing in property)

 

[normbeef]

Sounds like you are offering what is called "Design and Build" its not a new thing, many companies offer this...
Or.. are you buying the land and financing the whole thing in hope that you bespoke design / land position would draw buyers of One off properties ???

I am sure your Wife + Architect will know that building anything bespoke usually has the following problems :

Planning issues / aesthetic's (i.e. the appearance of somthing different in the neighborhood)
Cost : Anything different will cost you a massive premium..
Time : Anything different will cost you a massive premium..

This is why most house builders will build the same house over and over again using the same quants and materials etc...

I would tread very carfully in this housing market.... My personal opinion is that this will be a 50% correction as Unemployment kicks in... I dont think the market will turn around for at least another 3 - 4 years...

And I do have experience in property and construction... I am not buying land in the UK at the moment unless its being GIVEN away...

 

[Trader333]

Yes and there are now stories about some banks issuing margin calls on their loans when the LTV exceeds the maximum.

How does that work as this is not trading but long term investing and that is if investing at all ? I can see it happen if loan payments are not being met. But to try and get the ordinary house owner to cough up when the banks "perceive" that the value is below the loan rate is counter to government advised policy. Also it was only 18 months ago that loans of 125% were being given which meant that the LTV was way above the assets.


Paul

 

[timsk]

Hi MrGecko and normbeef,
The business model hasn't advanced beyond a couple of throw away comments at the end of a phone conversation between my wife and the architect. They're already something of a double act, referring their respective clients to one another. Hence the idea of teaming up to offer a bespoke service that utilises their respective skills.

They aim to provide a bespoke solution to a specific problem experienced by some very wealthy people who want to either retire to the south west or want a second home here. But not just any home, they are most particular about what they want and have the money to pay for it. These are people relatively unaffected by the recession. In fact, to them, the recession is an opportunity as there's less competition. They register with estate agents and, invariably, two things happen:
1. The agent has a great property at the right price, but in a terrible location.
2. The agent has a great location with an okay property (by any normal standards) but one that falls short of the spec' of the wealthy client. It's not quite right, but way too good to warrant demolition and re-building.

So, the idea is to find clients who fit this description and are struggling to find that very elusive mix of the right property in the right location. With the client in place, (like the 3rd person mentioned in the queue in my last post) the new business sets about finding the ideal location that matches the client's spec'. This would either be a vacant plot (next to impossible to find) or, more likely, a plot with a low grade, poorly maintained existing dwelling - making demolition and re-building a viable option. The primary focus is on locating the plot which won't be easy and, those that are found, may or may not be on the market! If it is, it's easy. If not, then approaches would be made to the owner to see if they were keen to sell. If they agree, then Mrs. timsk goes into overdrive to get the client PP to build their beautiful, award winning (to be), architect designed house. And yes, you can apply for PP to build on land you don't own. I could apply to demolish your house and build a sky scraper in its place if I wanted to!

To summarize, the emphasis would be on finding suitable plots (with or without existing dwellings) and regardless of whether or not they're on the market, for clients wanting an architect designed home built from scratch. Unlike a conventional property finder (e.g. Phil Spencer and Kirstie Allsop from the TV prog. Location, Location, Location) it's much more specialized and the service extends beyond just finding a property (or site) that fits the client's spec'.
Hope that's clear!
Tim.