Saturday, Mar 24, 2007
property will continue to produce far greater returns than other forms of investments such as pension funds and the stock market
Landlord Expert: UK property: To buy or not to buy?
Please read the article, it is a true gem!
There are statements like "maximising the power of gearing (but without overstretching yourself)" and "property will continue to produce far greater returns than other forms of investments such as pension funds and the stock market"
Posted by confused76 @ 09:52 AM (237 views) Add Comment
21 Comments
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1. Headmelter said...
"For instance using an Armchair Investor Bridging Finance Product – it is possible to do this using none of your own money - if you are getting at least 15%+ genuine discount off market value."
What is and who determines 'genuine' market value?
" Even without using a specialist investment product such as bridging finance or deposit bonds, the deposits required on a residential mortgage are low so it is possible to buy a 100,000 pounds property with just a 5000 pounds deposit. If that property doubles in value over the next 8 years, you will have made 100,000 pounds for an investment of just 5,000 pounds – an ROI of 2000%. "
If auntie Agnes had balls she would be your uncle Albert.
"The UK market may be at the top of the growth cycle but if you are smart and buy property at 15 - 20% BMV (Below Market Value) you are in effect buying at the bottom of the market. Even if there is no further capital growth you can still sell for a profit."
This boy knows his stuff, I think I'll just go out and buy a couple of properties which are priced 20% below market value.........it's too easy and sure if they double in value over the next eight years sure it's like printing my own money.
2. headmelter said...
"For instance using an Armchair Investor Bridging Finance Product – it is possible to do this using none of your own money - if you are getting at least 15%+ genuine discount off market value."
What is and who determines 'genuine' market value?
" Even without using a specialist investment product such as bridging finance or deposit bonds, the deposits required on a residential mortgage are low so it is possible to buy a 100,000 pounds property with just a 5000 pounds deposit. If that property doubles in value over the next 8 years, you will have made 100,000 pounds for an investment of just 5,000 pounds – an ROI of 2000%. "
If auntie Agnes had balls she would be your uncle Albert.
"The UK market may be at the top of the growth cycle but if you are smart and buy property at 15 - 20% BMV (Below Market Value) you are in effect buying at the bottom of the market. Even if there is no further capital growth you can still sell for a profit."
This boy knows his stuff, I think I'll just go out and buy a couple of properties which are priced 20% below market value.........it's too easy and sure if they double in value over the next eight years sure it's like printing my own money.
3. Deadspider said...
Strangely enough , the author of the report , a Frazer Fearnhead , runs a company selling offplan property called armchairpropertyinvestor.co.uk .
4. The Baldman said...
Buy cheap and sell high. If only!!!
5. inbreda said...
Don't be unfair guys! He clearly has a very valid point. For example, if I go out and buy ten thousand pounds worth of garden shrubbery for just £20, then I can sell it for more and make a huge profit! See? it's genius.
Now - all I need to do is to find someone so incredibly stupid that they are selling something at far less than it is worth.
In fact, expanding on his genius, maybe we could all just go to an estate agent, ask them which houses we can buy for less than they are worth, and then just ask the vendor to sell them for AMV (Actual Market Value) and give us the difference between the AMV and the BMV price. Thus, we could use none of our own money, do no work whatsoever, take no risk, and make a mint.
Now, where do I find a house seller willing to just hand over thousands of pounds to a stranger for no apparent reason?
6. Landlord Expert said...
This news piece highlights a genuine opportunity. Frazer Fearnhead is a well respected expert in his field. The fact that he owns a business relating to his area of expertise is not suprising nor a point of contention. It certaintly doesn't make his advise the target of redicule.
Armchair property is an award winning company. Frazer Fearnhead is Managing Director and a well respected person in his industry.
Dean Evans
Landlord
7. geed said...
We my scoff and laugh at such tripe but gone are the days when you had to be shrewed, astute or even remotely intelligent to make successfull investments.
All one has to do is buy a house, thats it. Buy a house and watch it shoot up in value and outperform cash, stocks and shares, bonds. Its easy, in fact we should stop trying to be clever and informed and just get out there and "debt it up", its the future people, dumb is the new clever.
8. Deadspider said...
Landlord Expert : Frazer has only been into property for 10 years ie started around 1996 so only has experience of selling and making a profit in a rising market , during the biggest boom in the history of mankind . How differcult can that really be . His company formed in 2005 so let's all see whether it/he can survive . Many didn't last time and he hasn't experienced a major downturn so shouldn't be considered an "expert" as yet . Imo .
9. Boz said...
"Even without using a specialist investment product such as bridging finance or deposit bonds, the deposits required on a residential mortgage are low so it is possible to buy a 100,000 pounds property with just a 5000 pounds deposit. If that property doubles in value over the next 8 years, you will have made 100,000 pounds for an investment of just 5,000 pounds – an ROI of 2000%".
Has this moron not heard of paying interest? That ROI figure is complete BS.
10. Davros said...
Well Dean, you're in for a shock.
Have you ever heard the phrase 'if something seems too good to be true then it is'?
Do you know how long his company has been in existence? 2 Years. According to his bio, he's been in property investment for 10 years. Yep, about the same time as the current boom has been running it's course. Is it any wonder he thinks property is a great investment?
Personally, I'd take my advice from the IMF than a public schoolboy with a vested interest in the property market.
11. Frazer Fearnhead said...
Dear Boz et al
thank you for your kind comments. As regards me being a moron ..not something I''ve ever been called before - to my face at least. Not surprising as I got a First at University and finished 3rd in my class at law school.
Yes I have heard of paying interest - but apparently you have not heard of tenants paying rent. I wonder who the real moron is.
I find it highly amusing that people such as yourself have so much time to waste writing to forums such as this to ridicule people who are actually out there doing something successfully. I'm curious - what do you do that's so much better?
Dear Inbreda -
FYI there are plenty of opportunities to buy property (and even shubbery) at below market value. Why don't you get off your arse and try and find some. On Friday for example whilst you were busy writing your sarcastic comments I bought a house for £275,000 that was valued by the Halifax at £340,000. My bank manager gladly gives me an overdraft to do this provided I have a remortgage offfer in place - so in fact I used none of my own money to do it. I should make at least £40k from the deal after all costs but STOP oh no I might have to pay some interest on the money ..better not do it then.
Buying below market vallue is something I and lots of other people do regularly. Perhaps you should try and stop overcomplicating things, stop wasting your time criticising other people and do something with your life
I made over £500,000 last year - not bad for a "moron" I think you'll agree. Frankly, there are plenty of people who do what I do and invest in the same way and do very well from it. I really dont have any more time to waste debating with idiots.
Have a nice (if somewhat impoverished) life. I'll be thinking of you as I drive my Aston Martin.
12. Frazer Fearnhead said...
BTW apologies to readers for my comments above. I appreciate I sound like an arrogant tosser, but some people just bring the worst out of me.
13. Deadspider said...
It sounds like a Halifax repo which they tried to sell for £340k at auction , failed to get a buyer , so sell post-auction for £275k (to get their mewed money back maybe) and then you find a buyer due to the "trust" your customers place in you . Which means the market value is in fact £275k and an unsuspecting sucker will pay more .
14. Davros said...
Any fool could have made money in the last 10 years, you're not unique in that. I have friends how bought at flat for 35K in 1995 and now own a £450K 4 bedroom house, however this was through luck and timing rather than any financial insight. As such, they don't see fit to offer advice about the future of the market by cherry picking headlines and statistics. Lets see you make money when the inevitable slowdown comes. Oh sorry, there won't be a slowdown will there?
> Have a nice (if somewhat impoverished) life. I'll be thinking of you as I drive my Aston Martin.
What a winner!
15. Landlord Expert said...
Well said Fraser - for some reason these guys seem to be very angry....I am struggling to find the motive.
Nobody said your article was explaining rocket science and I have no idea why it is generating so much spite.
If someone gave me their educated opinions I would respect it and be thankful. I certainly would not feel a need to belittle you and your credentials in some unprevoked and scathing attack.
By the way - thank you for helping me make £50k profit last year - your 'moronic' behaviour has caused me to buy myself a new car! You must be ashamed!
Damien Francis - Director of Members for The Landlord Association - a successful investor and lead help for over 15,000 buy-to-let investors.
16. Davros said...
I quote :
"To a large extent it depends on what your buy to let strategy is. If you follow the strategy that we advocate, which is to build a portfolio at a steady pace, maximising the power of gearing (but without overstretching yourself) and hold the properties for 10 years or more, we believe that there is plenty of room for both capital and income growth and you will have no cause to regret choosing to rely on property for your future retirement."
OK, tell me this. By all measures, affordability is at a historic low, with house price to earnings over 6 to 1 at the current moment in time. If in 10 years, by some miracle we're still seeing lending at it's current stretched level, all that would have happened is that house prices have increased in line with earnings. Also, with more people entering adding to their buy to let portfolio, why should rents rise? Mine hasn't increased for 5 years. Where's this 'plenty of growth' in capital and income you promise coming from? It's all very well extolling the virtues of gearing, however it's a double edged sword. If you believe we're not going to see (at best) houseprice growth in line with inflation or a drop in prices in the next 10 years, then you're being very naive.
17. Boz said...
Frazer,
I suppose calling you a moron was a bit harsh. Still, are you seriously saying in your example that rent will cover interest, management fees, ground rent, stamp duty, building up-keep etc? I maintain your ROI figure is pure fiction.
I won't go on about what I do that's so good but will say that that while I do own property in London and Sydney I think it would be a brave gambler who throws the dice and purchases BTL in the UK during the current climate. Good luck.
As for the rest of your rant on what you did at university, how much you make, and what car you drive I think you summed yourself up pretty well with that second posting.
18. Davros said...
No-one is angry, well I'm certainly not. We just arn't going to be spoon fed 'educated opinions', without questioning them.
I think it's a little sad that you both need to tell everyone exactly how much money you've made over the last year or what car you're driving. It seem that in many ways your investment in property has left you a little poorer.
Incidentally, are you going to answer my second point?
19. Landlord Expert said...
To Davros and Boz,
Calling myself or Frazer 'sad' is hypocritical in every sense - I am merely responding to an article I supplied and subsequently traced to this location.
It seems your comments are not fuelled by a need to 'question' but an intent to be offensive to the author. Your opinions could be considered as valid as you both have equally sound opinions on the subject.
However, your spiteful tones and unrelented attack does not stand well with anyone and if you were gentlemen of any calibre you would appreciate the bad way in which you have been received. Needless to say, if anyone could be accused of being sad it would be those types of people who loiter with spiteful intent in such forums. I must question whether your opinions truely have any importance and your credentials upstanding condering you fit the description of 'forum monster' quite well.
My publishing of my profits last year were to add a defence against the presecution of a good person and business man (irrelevant of how long his company has been in business and an example of the spitefulness I am refering to).
I would like to welcome either of you to write your own news piece (which will be published on our site www.landlordexpert.co.uk) so that our readers and those here can benefit from the better knowledge you both claim to have. You both seem to have plently to say so this gives you the perfect opportunity to provide a reasonable and decent response.
I look forward to hearing from either or both of you - info[at]landlordexpert.co.uk
Regards,
Damien Francis
Director of Members
20. Davros said...
I think Boz summed it up quite nicely with his last post. I don't think there's anything else to add.
21. Davros said...
Maybe you can publish this?
FF: The government commissioned Barker Review estimated that by 2020, the UK will have to cater for an extra 6 million households. This means that:
· Based on the current rate of building homes, we would need to build an extra 120,000 houses a year to keep up with demand!
A : Research for insurer NHBC showed that 185,000 homes were built during 2006, a figure not seen since the housing boom of the 1980s and approaching the target of 200,000. (06 Mar 2007)
FF: The Halifax recently stated: the housing shortages are exacerbated by average annual rises in the population of 5% over the past 20 years
A: The UK population is projected to continue to grow. Until the mid-1990s, this growth was mainly due to natural increase as the number of births exceeded the number of deaths. Future projections show the UK population increasing gradually to 64.8 million by 2031. Longer-term projections suggest the population will peak around 2050 at over 65 million and then gradually start to fall. 7% over next 25 years. (Economic & Social Research Council)
FF: Due to land use restrictions and a lack of skilled craftsmen, the house building industry has no chance of keeping up and increasing the supply of property.
A: "House builders are clearly rising to the challenge laid down by government to deliver 200,000 new homes a year in England," Imtiaz Farookhi of NHBC told Housefund." Research for insurer NHBC (2007).
FF: Each year there is a large shortfall and by 2020 it is estimated there will be a shortfall of around 500,000 properties.
A: At odds with 120,000 a year stated above. This figure gives 33,000 a year.
FF: The average growth for the next few years may only be predicted at 4-8% (depending on which forecast you read) but it’s fairly easy to beat those averages and get a much better return simply by applying your knowledge about the property market. For example, buying in regeneration areas or other areas where certain triggers such as new industries, mean that demand will grow.
A :
Prof David Smith of the University of Derby, the chairman of the "shadow" monetary policy committee - Predicted another year of rising house prices, but warned that as borrowing costs become too great for many families, the market will slow dramatically, before going into reverse in 2009.
International Monetary Fund - A sharp rise in interest rates could trigger a slump in house prices, which are overvalued by "any conventional measure".
David Miles, chief UK economist for investment bank Morgan Stanley - 'A sharp fall in real house prices is likely at some point in the relatively near future.'
It should also be remembered that it is impossible for houseprices or rents to outstrip earnings in the long run. At best, an annual growth of 2-4% is possible over the long term, without a market correction.
FF: Even without using a specialist investment product such as bridging finance or deposit bonds, the deposits required on a residential mortgage are low so it is possible to buy a 100,000 pounds property with just a 5000 pounds deposit. If that property doubles in value over the next 8 years, you will have made 100,000 pounds for an investment of just 5,000 pounds – an ROI of 2000%.
A: If house prices were to lose 50% over 8 years, you'd lose £100,000. The last crash knocked off 35%, not taking into account wage inflation. Losses would be multiplied with property portfolio.
FF: With regard to off plan property the deposits required to buy off plan in the UK are generally lower than overseas so again you can gain the benefit of capital growth with less capital expenditure.
Or loss. Like any investment, the value can go up or down
FF: The UK market may be at the top of the growth cycle but if you are smart and buy property at 15 - 20% BMV (Below Market Value) you are in effect buying at the bottom of the market. Even if there is no further capital growth you can still sell for a profit. As Robert Kiyosaki says in Rich Dad Poor Dad “a wise investor will make his profit when he buys the property not hope to make it when he sells”
A: House hunters are fuelling a new boom in prices as they rush to move up the property ladder. There are eight buyers chasing every house for sale, with huge demand from families looking for bigger homes. Hamptons Estate Agents (03/07)
FF: Housing remains affordable despite the high price tags. The RICS forecast 2006 states: “Furthermore, house prices are sustainable at present levels as mortgage interest payments still account for 8.9% of households’ disposable income, compared with the long run average of 9.2%.”
A: The Daily Telegraph/Lombard Street Research Housing Affordability Index shows that they are more overvalued than at any time since 1991 — when prices were plunging after the last major slide.
Affordability has fallen by three per cent in the past nine months, and almost a fifth in only four years. Telegraph (03/07)
FF: Rents and yields are increasing in many areas so profits from rents will increase steadily over time. Historically rent increases average out at 5% a year.
A: During 2006, banks, building societies and other lenders handed out 330,000 buy-to-let loans worth a total of £38.4bn.
The Council of Mortgage Lenders (CML) said the figure represented a 48% increase in volume and a 57% increase in value over 2005 levels. Guardian (02/07)
With supply increasing greater than demand, rents can only fall.
FF: Finally, for many people investing in a UK property is a less risky proposition than an overseas investment. It may not have the potential rewards of investing in India, China or Brazil but it is a solid investment and one they feel more comfortable making. There is no point giving yourself sleepless nights when you can make a very good return from investing in the UK.
A: WAS a solid investment.