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10 Golden Rules Of Property Investment

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http://www.landlordexpert.co.uk/index.php?news=1717

The time has never been better to review the 10 Golden Rules of Property Investment and here, Young Group’s COO, and winner of the Bradford & Bingley Property Woman of the Year 2008 award for London, Sylvana Young, shares her top 10 do’s and don’ts for sound property investment.

The Do’s

1. Research, research, research – know the area you are buying into, regeneration plans and new tube stations are great indicators of up and coming areas and capital appreciation. Apply the 10 minute rule for access to transport links, bars & restaurants and local amenities.

2. Location – consider who your ideal tenants will be. To attract quality tenants you need quality locations.

3. Buy well – consider both price & content. Research prices in the area and look for comparables. Can white goods, flooring or furnishing be included in the purchase?

4. Make sure the numbers work – most wealth is created through capital appreciation, so buy a property that supports this type of growth. Ensure you include all costs in your financial projections (such as legal fees, stamp duty, service charges, ground rent, contingency to accommodate void periods between tenants etc). These costs are all too often ignored leading to negative monthly cash flows.

5. Appoint the right advisors – trusting your mortgage advisor is imperative. A regulated advisor can secure the best deals free from fees and aligned to your investment strategy. Good letting agents will minimise void periods. Remember that not all solicitors are off-plan specialists.

The Don’ts

6. Don’t expect to ‘get rich quick’ – property investment should be approached with a long-term view. It is an asset class that in the medium to long-term has outperformed all other asset classes and I would encourage people to build a sustainable, appropriately geared portfolio over a number of years.

7. Never ignore the basics of supply and demand – speak to local agents to find out what’s needed in your chosen area. The markets for 1 bedroom flats and 4 bedroom houses do not follow the same patterns.

8. Don’t be influenced by your emotions – you’re not living in your investment so decorate and furnish at an appropriate level of quality. Speak to local agents to understand what quality is required. Don’t be tempted to furnish cheaply if you want to retain quality tenants.

9. Never be swayed by gimmicks – be wary of incentives, particularly ‘no money down’ deals, get rich quick schemes or developments where you are under pressure to sign up quickly to secure the ‘deal of the day’, and never buy an off plan / new property without the guarantee of either an NHBC or Zurich 10 year warranty.

10. Never pay over the odds - avoid paying finders fees, commissions or subscriptions to agents or advisors, particularly prior to completion. If the investment proposition is a sound one there should be no reason to pay up front fees.

Finally, remember anyone can buy property; your aim is to buy an investment that will generate long-term wealth. Chosen appropriately, there are plenty of solid investment opportunities out there for which suitable finance is readily available

I hope those of you HPC users will benefit from her knowledge & experience! make use of it as they usually charge a couple of grand for this info when you go to property seminars. It is free & all yours :lol::lol:

What a load of rubbish!

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http://www.landlordexpert.co.uk/index.php?news=1717

I hope those of you HPC users will benefit from her knowledge & experience! make use of it as they usually charge a couple of grand for this info when you go to property seminars. It is free & all yours :lol::lol:

What a load of rubbish!

The thing is, if the BTL brigade had stuck to these golden rules, the property market would have crashed in 2005. All those that didn't... well, they are about to discover the wealth destroying power of leveraged malinvestment.

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I can't see precisely why it's a load of rubbish. Sure, if you belong to the "Armageddon is round the corner, stock up on tinned pilchards and shotguns" school it is, but if you have decided that property is a reasonable long-term investment (and please note, I mean 15 -25 years long-term) I can't fault her advice, except the remark that property in the medium to long-term has outperformed all other classes of asset. I'm prepared to stand corrected, but I think the Stock Market hasoutperformed property (but has had some vertiginous drops on the way!)

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10. Never pay over the odds - avoid paying finders fees, commissions or subscriptions to agents or advisors, particularly prior to completion. If the investment proposition is a sound one there should be no reason to pay up front fees.

For a perfect explanation of the BTL bubble, see above.

Advice to "never pay over the odds", which mentions lots of trivial lil' costs, and totally fails to mention the cost of the property. Presumably their idea of a practical family car is Bentley with Hankook tyres... mustn't overspend on the tyres...

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I can't see precisely why it's a load of rubbish. Sure, if you belong to the "Armageddon is round the corner, stock up on tinned pilchards and shotguns" school it is, but if you have decided that property is a reasonable long-term investment (and please note, I mean 15 -25 years long-term) I can't fault her advice

Maybe Paddles's comment can help you to see precisely why it's a load of rubbish. Do you think today's landlords are buying low? The reality is these amateurs have typically paid way over the odds for their investments, and are in many cases having to subsidize their tenants. I won't even mention the fact that most of today's landlords have IO mortgage that means they will still owe what they owe today in years to come so I can't see how & why you can't fault her advice.

Number 11 - buy low, sell high.

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Maybe Paddles's comment can help you to see precisely why it's a load of rubbish. Do you think today's landlords are buying low? The reality is these amateurs have typically paid way over the odds for their investments, and are in many cases having to subsidize their tenants. I won't even mention the fact that most of today's landlords have IO mortgage that means they will still owe what they owe today in years to come so I can't see how & why you can't fault her advice.

I would have thought it was implicit within points 1 & 4. There are places one should never touch with a bargepole - Middlesbrough? Doncaster? Bradford, anyone? - and properties which simply don't cover their costs because they are ridiculously overpriced. There are others which still work because of their location /layout /price. I'm looking at one now - only "worth" £230K according to the EA because it's a bit tatty and has a rather jerrybuilt and ugly extension.

But it's slap in the middle of a student area, has 6 letting bedrooms on only 2 floors so no HMO licensing problems , 2 bathrooms and plenty of communal space and garden. Will let for 15K to 16K over a 42 week year, compared to 230@6% = 13,800.

The only downside is if the local Uni decide to build a whole load of their own housing, but a bit of local research reveals (a) that they got their fingers burnt recently and had to cancel some and {b} the students do NOT like having to pay £90 pw for them.

I'm certainly not saying that BTL is to be approached with anything except the utmost caution at present; just that if you do want to make it work the points she raises are perfectly valid ones.

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Will let for 15K to 16K over a 42 week year, compared to 230@6% = 13,800.

And what about that year you can't let out? You know, the year everyone is broke and students fall in numbers?

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And what about that year you can't let out? You know, the year everyone is broke and students fall in numbers?

Extremely unlikely if you let room by room. Over the last 10 years we've averaged a bit less less than one room void per year on 26 letting bedrooms. Yes, we do watch the numbers like hawks, check the Uni's expansion plans etc. If it gets to the beginning of October you drop the price a bit.

If people are broke / unemployed their student offspring get higher loans / grants. Higher tuition fees haven't (yet) hit the market. I don't say there won't be downturns in some places - Huddersfield? South Bank? East London? but in the comfortable patch of Southern England we're in the punters seem to be mostly the offspring of middle-class Home Counties types who would have liked their kids to go to Exeter but they didn't get the grades. That's why we picked this area to invest in 10 years ago. and yes, we've done well out of it, and yes, times are going to get tougher. Doesn't mean there are no opportunities, just they are fewer on the ground.

The point of my post was simply that that the advice given was, as far as it went, sound. I more BTL landlords had followed it there would [a] be fewer of them and fewer would be heading for problems now.

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Extremely unlikely if you let room by room. Over the last 10 years we've averaged a bit less less than one room void per year on 26 letting bedrooms. Yes, we do watch the numbers like hawks, check the Uni's expansion plans etc. If it gets to the beginning of October you drop the price a bit.

If people are broke / unemployed their student offspring get higher loans / grants. Higher tuition fees haven't (yet) hit the market. I don't say there won't be downturns in some places - Huddersfield? South Bank? East London? but in the comfortable patch of Southern England we're in the punters seem to be mostly the offspring of middle-class Home Counties types who would have liked their kids to go to Exeter but they didn't get the grades. That's why we picked this area to invest in 10 years ago. and yes, we've done well out of it, and yes, times are going to get tougher. Doesn't mean there are no opportunities, just they are fewer on the ground.

The point of my post was simply that that the advice given was, as far as it went, sound. I more BTL landlords had followed it there would [a] be fewer of them and fewer would be heading for problems now.

Whereabouts are you doing student lets then? We have around 14 places in Canterbury, and that seems much as you describe here.

Lots of demand (Canterbury has three universities, and it is quite a small town). We let all of ours bar one for next academic year back in December! The big houses seem to go best - students tend to want to live with loads of their mates.

Little chance of anyone building masses of purpose-built accommodation - Canterbury is too small and "historic" to find room for it. And those places, where I have seen them, charge LOADS more than the "going rate".

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Whereabouts are you doing student lets then? We have around 14 places in Canterbury, and that seems much as you describe here.

Lots of demand (Canterbury has three universities, and it is quite a small town). We let all of ours bar one for next academic year back in December! The big houses seem to go best - students tend to want to live with loads of their mates.

Little chance of anyone building masses of purpose-built accommodation - Canterbury is too small and "historic" to find room for it. And those places, where I have seen them, charge LOADS more than the "going rate".

Bournemouth. Lots of big 2-storey 4bed 3 recept Edwardian houses. We did look at Canterbury, but on discovering that something like 50% of the population is student ( is it?) we felt a bit uneasy about such an exposure.

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I can't see precisely why it's a load of rubbish. Sure, if you belong to the "Armageddon is round the corner, stock up on tinned pilchards and shotguns" school it is, but if you have decided that property is a reasonable long-term investment (and please note, I mean 15 -25 years long-term) I can't fault her advice, except the remark that property in the medium to long-term has outperformed all other classes of asset. I'm prepared to stand corrected, but I think the Stock Market hasoutperformed property (but has had some vertiginous drops on the way!)

It most certainly has....and yes property still has a long way fall...with shares you can buy and sell instantly and can spread your risks and still get a return...if you believe armageddon is around the corner, both property and stocks will be worthless...so yes hedging your bets on a few pilchards and a shotgun can't be a bad idea. ;)

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It most certainly has....and yes property still has a long way fall...with shares you can buy and sell instantly and can spread your risks and still get a return...if you believe armageddon is around the corner, both property and stocks will be worthless...so yes hedging your bets on a few pilchards and a shotgun can't be a bad idea. ;)

On reflection, if I had to face 5 years living on tinned pilchards, perhaps I'd prefer NOT to be one of the survivors :ph34r:

Edited by cartimandua51

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They missed 5a from the Dos:

DO keep a loaded handgun and a bottle of scotch in your bottom drawer for the moment your investment loses 40% of it's value and leaves you penniless and in negative equity.

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  • 296 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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