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Anticipating the terrain

25th August 2018

There are only two ways to make money in property.  One is in the increase in price, where you make the bulk of the money; and the other is on the yield.  The general principle is, as you get closer to central London the growth is skewed more on the capital growth side, and as you head up north the growth is not so strong, but you can be assured of a solid yield, often double digits.

This is not set in stone, however, as many areas go through cycles.  For example, recently many areas in Birmingham have experienced the highest growth in the UK.  Luton has had its spurt of growth due to its proximity to King Cross by rail.  This was an area which was voted as the worst borough in the UK, much to the protest of the then Mayor.

We had purchased several properties there, during the pre credit crunch years.  This had been driven by the no money down deals we were getting, along with the cash positive income the properties were generating.  However, the tenants the properties were attracting left much to be desired.  So, we ended up selling the small portfolio we had acquired.

In retrospect, perhaps this wasn’t the best decision.  However, in property it’s best to keep your gaze firmly on the present terrain and anticipating the future.  The number of times I have had investors lamenting on whats ifs is countless.

In short, property investment is like standing half way on a hill.  If you look back you will realise how much the market has increased and where you would be if you had invested earlier on.  However, there is no point in looking behind, as time travels only forwards.  Better to see what opportunities you are currently missing, and where the market is going to go in the future.  This is the vision required to make money.  Not a retrospective lamentation.

Currently, the market is uncertain, people cite Brexit.  But, I’m not sure if it has any real impact on the property prices apart from the one in their heads.  Don’t get me wrong, I understand, and know of HNIs who have taken a break from doing business in the UK until the negotiations have been concluded.  However, I’m unsure how exactly this affects a £500k BTL investment.

One reason quoted, is the demand from the European immigrants will decrease, and therefore, the market for rentals and purchase will decrease.  Given the variegated demand for housing I don’t feel there’s much substance to this claim.

Regardless of whether real or imagined, we are in an unstable market.  Therefore, it’s a good time to invest; assuming the price you come in at is severely discounted from the market value.

We are currently accessing a stream of probate properties, which intrinsically have a discount attached to them.  The prices we are getting these at are exceptionally cheap, so do get in touch soon if you are interested.

Suresh Vagjiani

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