A tale of sweet teeth

When I was a child in the mid seventies, I remember being given 5p a day to buy sweets from the corner shop on my way home from school. And oh the choice was overwhelming! A packet of Spangles or Chewits? 2oz of Rhubarb and custard or a handful of blackjacks? If I saved up for a couple of days I could even afford a whole pack of Opal Fruits (remember them) or a Texan bar! The stressful existence of an eight year old consisted of these tough daily decisions which I must say I handled with aplomb and mastery. Unfortunately for me, my dentist has since been able to retire early to Florida because of all those personal challenges I faced in Cecil Road's sweet shop.

Now, you can't even buy half-penny chews. The 1/2p coin was taken out of circulation in 1984 because it was worthless. Soon I expect pennies will be history and 2ps - well! Those large circular brownish and oft terribly grubby tender will no doubt soon be relegated to the pages of Wikipedia history.

And why? All because of that nasty invisible force that we struggle to control (no not self discipline at the sweet counter) - INFLATION. Remember what 10p bought you 40 years ago (ok 20 or even ten if you insist on reminding me how young you are to my aged experience). Prices have risen, costs have increased = all because the pound is not worth today what it was a few years ago.

Recent discussions about UK debt and rising house prices all highlight the tremendous amount of public (and personal) debt that we as a nation now owe. (http://www.debtbombshell.com/ , http://www.ukpublicspending.co.uk/uk_national_debt_chart.html)

However, there is less discussion about the underlying rate of inflation, and the effects of QE which are bound at some point to filter through (even if right now much of that money is being held in banks to capitalise their assets).  For those of us involved in property, understanding the effects of inflation long term are significant. In fact they are mind blowing!

I went to a property investing seminar recently which examined the long term effects of inflation on house prices and mortgages, and the powerful correlation between holding property long term, and having debt secured against it (i.e. in the form of a mortgage).  So, just as you can no longer buy a 10p packet of chews, you can no longer buy an average property in the UK for £100,000. In fact, in 1984 if you bought a property for £100,000 it would now be worth a staggering £272,000. It would have grown by 2.5 times (and that's calculated simply on inflation figures - it does not take into count the overall market effects).

What if you had taken out an interest-only mortgage of say £90,000 then? Well, you would have paid monthly amounts to maintain the interest payments, but in comparison to the value of the house, the debt would now be 33% of the value of the property as opposed to 90% of the value as it was then. Give it some more time and 90k will be an average annual salary - it wont seem like the mind-bending sum of money it felt like when the mortgage was taken out in 1984.

Interestingly, house prices rise despite inflation, and the following graph shows REAL house price growth with the effects of inflation removed:

But although the value has risen, the debt has remained constant. And of course, over time, the debt effectively loses value (George Osborne knows this and is keeping very quiet about it). The fear is that as inflation rises, so too does interest rates. THAT's another story for another time.

The conclusion is, had I stockpiled my penny chews and perhaps taken out a small loan from a willing joint venture partner to fund the undertaking, not only could I have made a small fortune from the rising price of vintage confectionery, I could have profited handsomely because of the inflation on the debt reducing year by year.

And how might I spend that money? Well, just ask my dentist (when I saw his fees I did think I'd chosen the wrong profession).

That's what I call SWEET!

A VERY useful list of websites

A few weeks ago I posted the beginnings of a list of useful websites ... (and no, I don't mean Next Directory or Facebook)...I'm talking about property related ones. The very forward-thinking guys at Progressive Property have done me a great favour and produced a list of their own which I have reproduced here for your reading pleasure!

Sold Prices
Simply enter a post-code in the above & see what properties sold and for what, and you can even narrow the search by house age, style and see a map.
www.nethouseprices.com

Similar to the above, but instead gives coloured-coded Google maps which highlights the streets that fetch the most. Great for 'getting the spread' & finding cheap properties on good streets.
www.houseprices.co.uk

Most on-line portals go back as far as 2000-ish but Ourproperty stretches back to 1995. It's free but you need to register.
www.ourproperty.co.uk

Match Sold Prices to Property Ads

Zoopla's powerful tool matches up sold prices with old property ads, including photos, description & asking prices. Hit the Values section, search for an area & click the red H's for historic listings.
www.zoopla.co.uk

Search for a price comp report on RM to see sold prices & details of how many beds. You may be able to unearth the full listings by Googling the road name, as many sites scrape RM's data & leave it up for years.
www.rightmove.com

Want to get an overview of your goldmine area?
The following tools will help show you how many properties are changing hands in your area & how much for.
Land registry [LR]
LR collects official house price data on real sales, recording every residence sold. It's HPI gives average prices by country & region, breaking them down into different property types. Be careful as the data is three months out of date, but a very useful tool.
You can download national and regional price data for different property types since 1952, as well as more detailed analysis.

Ballpark house price valuations
There are several free online tools to value a property. Mark says they can be a long way off; for official valuations, speak with agents & use LR sold prices.
Zoopla – for a bespoke valuation Type in a post-code & it will give you a rough indication of sales prices for that area. Select a property in a street & get a bespoke online valuation based on previous sales & market climate.

For a more detailed second opinion Slightly quicker & easier to work through & asks fewer questions. You can get an upper & lower valuation for a given property, but Mark say's PPA is more likely to over-value properties.
www.propertypriceadvice.co.uk

Want an estimated price range? This simply asks for your postcode & no of bedrooms so it is hardly a conclusive study! A nice addition is Google Earth snap of the property. You can pay for a detailed valuation, but as the accuracy is still questionable, stick with the freebies!
www.mouseprice.com

Nationwide – Find a home's value based on its sale price This tool is designed for people to put in their property's price when they bought it & work out what it's worth now. This tool is useful in it can give an idea of how house price fluctuations affect value. BTW Mark says "Take the results with a shovel of salt. Don't just rely on the figures given – treat it as a fun investigation, nothing more."
www.nationwide.co.uk

Monitor house price trends
Housepricecrash -Get a feel on housing market forecasts
Check out what the pundits predict. This site has a pro-property agenda. It collects stats from LR, the Financial Times & Hometrack to number crunch house price trends.

Find local asking prices
Rightmove [RM]
The godfather of home sites -RM is the best place to compare homes on the market. With a plethora of props up for grabs, it plots listings on Google map for ease 

For best results, turbo charge RM with Property-bee, which is an ingenious Firefox add-on, [on steroids] to see how sellers have altered listings & dropped prices.

This site includes reams of data alongside the listings, including how the asking price compares with others in the town & postcode.
A great way to compare gross yields. It also allows you to click on homes' 'price histories' to see how the asking price has shifted.
www.home.co.uk

Monitor house prices on the go
Rightmove
Iphone App This uses GPS technology to pinpoint houses for sale & even where you are standing. Click 'get my current location' & it shows a list of pads up for grabs! Finding the spread just got easier 
Search Rightmove in an APP search

Uncover Rightmove ads' secret histories
This free add on for web browser Firefox is super-fast! It works with property listings on RM to show you how sellers alter their listings, crucially, price cuts. It allows you to see when the seller put the property up for sale; each time they cut the price & by how much; & if it was taken off the market & put back on. These are all useful bargaining chips in purchase negotiations.
www.property-bee.com

Monitor dropped asking prices
This shows which properties in an area have recently dropped their asking prices & by how much. Simply type in a postcode to see who's have having trouble offloading their house & what percentage they've trimmed the price by.
www.propertysnake.co.uk

Look for repo'd properties
Ei Group
It is very possible to pick up a repo or distressed-sale properties at up to 30% below market value. For those willing to put in the work on research & repairs, these can most certainly, represent some of the best buys on the market.
 

PINs and needles

The other night I attended our local PIN meeting where we listened to an inspiring presentation by Kevin Wright. He was illuminating the benefits and strategies of using bridging finance to develop properties. It was all fascinating and mind-blowing as is quite usual at PIN meetings, where you learn of the amazing and incredible stories of other people and their achievements with property.

Something I can only hope to emulate in time...

I can't believe it is over a month since I wrote the above paragraph! Since then I have attended another PIN meeting when some equally inspiring stories were told. It has made me reflect that much of the success in developing property comes when you have mind over matter - that is to say, if you don't mind, it don't matter.

Of course saying to yourself 'it don't matter' is not easy when you are down to your last tenner, cos all of your hard earned cash is flowing into the latest property project. Nor is it easy to say 'it don't matter' when you have a sudden turnaround in tenants; or when you've been so busy dealing with the day to day that you've lost an eye on the bigger picture. And yes all of the above has happened to me!

I love the quote that Rob Moore (founder of Progressive Property) uses in his book 'Multiple Streams of Property Income' : "You have to work hard to get rich enough not to have to work hard" (Richard Templar)

I sat down last night and re-wrote my goals for 2014 with regard to property development. If I am going to achieve them (some were pretty stretching let me tell you) I know I am going to have to have 'mind over matter'! For me, that is 80% of the work of property investing. Having a mindset that enables you to look above the day to day disasters, problems and issues and know that in the long run, you will be building something of worth, something that brings a residual income and ultimately freedom. Of course, it also means working really hard - but for a short sustained burst of time. Once I have reached my first goal (that is to enable both myself and my DH to be free from the need for external employment) then I will ease up a bit - well for a while anyway.

So the formula seems to include 1) HARD WORK FOR A PERIOD OF TIME, 2) KEEP FOCUSED ON YOUR GOALS 3) PERSIST EVEN WHEN YOU WANT TO GIVE UP 4) NEVER GIVE UP.

And if that IS the magic formula, only one of them relates to what you DO - the other four are all about what you THINK.

But it feels like walking on PINS and NEEDLES sometimes...

Standing on the shoulders of giants

please don't lego me just yet ...

Just noticed on one of my weekly property internet trawls that Direct Line have launched a 'Landlord Knowledge Centre'. Having clicked through to it, there are a number of options from which to choose such as 'rental trends'; 'staying in control' and 'maximising income'. Yup, interesting and useful AND quite wide-ranging too. So far, so good.

The two articles I have downloaded are written by the same woman, Kate Faulkner, who seems to know her stuff on property, except that in her article 'Invest Alone or via a Property Investment Company' she states

'BEWARE
- ‘Below market value’ deals rarely stack up
- Many strategies are not tried and tested under the law
- Some might even be considered mortgage fraud'

yet in her article 'Where do you find BMV deals?' she concludes with a list of suggestions as to HOW to find and BUY BMV deals :

'• Be prepared to dedicate time to finding BMVs
• Build a good local network of property professionals to secure below market value ‘leads’
• Set up a system so you can analyse quickly whether a property will ‘stack up’ as an investment
• Always be respectful of people’s circumstances – they’re only selling at a discount because they HAVE to
• Be ethical – don’t take excessive advantage
• Never buy without a good RICS surveyor who will work with you'

So Ms Faulkner, which is it? I must admit, I sense a dilemma for Direct Line here! They want to reach out to the property investor who is prepared to use creative and unusual (and TOTALLY LEGAL) strategies to help sellers. But they also want to make the inexperienced investor highly wary and fearful of this way of doing business using an unknown company through which to get the deals.

The problem is, there are lots of different views out there about risk. Only YOU can decide what kinds of risk you are prepared to take, with how much of your own money, using strategies that you are willing to implement. Getting direct advice is always a good idea when it comes to property, but think about WHO is giving it to you. WHAT is their motivation, and HOW their approach has influenced them. If you are not convinced by their experience, expertise or proof, and you feel that their approach will not achieve what you want, then AVOID.

Remember what Isaac Newton said 'If I have seen a little further it is by standing on the shoulders of Giants'. 

Stand on the shoulders of property giants - watch, read, listen learn. Take direct advice, but take it direct from someone you trust and whose experience and achievements speak for themselves. 

Property Investors Do It Diligently

When considering buying a house that's not in a place you know really well, it's important that you do what's called due diligence - checking out all the statistics, information and facts about the property before you take the plunge and buy it. As well as the usual external and internal housing checklists, you also need to find out a whole load of other details about the property such as facts about the local area, the rental market and certain housing statistics.

What are the local crime stats? What are other properties selling (or sold) for? What is a realistic rental income for the area? What are the local industries? What kind of tenants am I likely to find renting round here? (All these facts feed into the speed at which you'll rent the house, the amount you can charge, and the type of tenant you'll attract).

If you're planning on buying a property to rent to families, are there schools in the vicinity? If you want to rent to young commuters, are there good public transport options available locally? Finding out the answers to many of these questions takes a significant amount of research time, although desk research using the internet is pretty accurate and extremely easy. Sadly, the wonderfully named' UpMyStreet.co.uk' is no more ('UpYours.co.uk has replaced it).

So what are the tools to use if you need to carry out due diligence? I find that Google's streetview is invaluable when assessing the real look of a house from the outside. MOST of the UK seems to have been photographed now, except for the odd Welsh Methodist Chapel that has fallen into disrepair and is situated 3 miles up a dirt track atop a hill.

The benefit of streetview is that you are not seeing the property from an estate agent's rose-tinted camera lens, which is able to make even a 2-bed backstreet slum-like dive appear to have 'loads of character' and 'vintage qualities' on the details. Ironically those Methodist chapels really do have loads of character and vintage qualities. Just that they're too far up the vertical incline for the google cameraman to reach, and they are rarely on the open market as estate agents tend to send them straight to auction.

Zoopla is also a great website for researching sold house prices. A good way of comparing whether the asking price of the property you're interested in is realistic. And if you're interested (ok take that as a polite way of saying nosey) in finding out what local problems might be in that neck of the woods, try Fix My Street - a really delightfully amusing website at which you can while away the hours reading the plights and complaints of local residents. As an example of just how serious things have become in the town in which I live, the top two complaints in order of magnitude are listed as 'Pothole Hell' and 'Doggy Doo'.  Definitely first world problems.

Another site which claims to be 'the only site that helps with property planning to enable you plan your property purchase from end to end with all the relevant information sources in one convenient place' is Property Notepad. It lists many of the most useful websites you'll need, to find a property, assess its potential, and sort out your finances.

Of course there are MANY MORE sites too - let me know which ones you find the most useful and I'll post them here!

So duly do your diligence and you'll find that the results of your investigations will massively help you make the right decisions about property.

System addict

Man realising what his business has been missing

Do you remember that Five Star song 'System Addict'  from the eighties?! (Showing my age aren't I?) I used to think they were saying 'Systematic'. And it's this phrase that is now beginning to regularly run round my mind when I consider what I need to do to create a business that will work smoothly and cost-effectively.

If you look at any well-run business, there is a system in place. It may be hamburgers, clothes, cars or paint - whatever the product, if the business is to be successful, you must develop a system to ensure the fastest and most effective way of getting the product into the customers hands, and getting the customer's money into your hands!

Although property is not exactly a commodity, nor is it a product, I still consider what I'm doing to be developing a business. There is a transaction between myself and the tenants; there is a contract; there are responsibilities on either side. If I am professional, organised, law-abiding, ethical and also nice (a four-letter word not often used by tenants) then I know that I am presenting the business in the right way. After all, in sales you learn that 'people buy people first'. Right now, I am the face of my business. So I need tenants to 'buy me' first.

After that though, there needs to be a system to underpin all that I'm doing. Otherwise paperwork will get lost, deposits won't be filed on time and in the right place (the DPS) and I won't know when rents are due and tenancies have elapsed. Without these important pieces of information logged and routinised (is that a word?) I could easily miss vital actions such as chasing rent arrears or repaying deposits.

I am NOT someone who a) enjoys creating systems (nor is very good at it either - probably because I don't like it) and b) is very good at sticking to systems (it all seems so repetitive and frankly, dull). But I know that right now, just like cleaning my teeth twice a day, I have to develop workable and effective systems to make this business effective. So, Five Star - I doubt I'll ever be a SYSTEM ADDICT - but perhaps I can be a bit more SYSTEMATIC.

(Another helpful article can be found here: http://www.boxtheorygold.com/blog/bid/18628/Six-Qualities-of-Highly-Effective-Business-Systems)

Comparing estate agents in your area

A natty little piece of information that might save you quite a bit of time if you are trying to compare local estate agents, can be found on www.home.co.uk

If you go to the website you will see at the bottom of the front page a link that takes you to a
'Directory of Estate Agents'.

This link takes you to another page that allows you to search by local area, county and town. You will then be presented with a list of agents in your area. This is a search for agents in Crewe:

You can then click on any estate agent and it will give you an overview of the activity of that agent. In order to drill down even further, scroll down to the bottom of the individual estate agent's page and you will see a link to Estate Agent Portfolio Analysis for *name of estate agent. If you click on this link you will then be taken to a page full of wonderful charts and statistics about that estate agent. Here is one for Bridgfords in Crewe:

Estate Agent Portfolio Analysis for Bridgfords (Crewe) (full page)


This is a screen shot of the page (-by the way, this is only half the information as I had to do a screen shot and couldn't fit it all on the screen)!

 A VERY useful tool!