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Posts Tagged ‘property investment’

Is It Spring Time For Property Investment?

Posted on: April 4th, 2013

It is worth bearing in mind that, despite the property market being in the doldrums for the last 5 years, property investment as with all other markets, goes in cycles.

If you think of the property investment cycle as seasons in the year, we have been in winter for the last few years. But the daffodils are starting to bloom and it looks like we may now be in spring – at least in terms of property investment. It may still be chilly, but it’s definitely getting warmer.

Pent up demand from first time buyers, low interest rates on savings and the banking crisis in Cyprus mean more people are turning to property as a safe haven. And this is particularly true of the British property market.

Britain is one of the most established property markets in the world, especially in terms of property investment financing. It is very different in terms of property supply and demand from other countries such as USA, Cyprus, Bulgaria and Dubai where the property prices were inflated because of demand caused by the perceived profits to be made (greed) and the sudden availability of easier borrowing rather than actual demand for accommodation to live in.

The UK market is very different. I do not think there is any doubt more housing is required for the UK population. Without boring you with stats, for well over a decade, every survey I’ve seen has reported there is a massive shortfall in the amount of housing required to keep up with demand. Further, the rate at which new houses are being built falls far, far short of predicted requirements. So the gap is widening every year.

It is interesting to note that every time The House Crowd buys a property – typically for about £50,000 – the rebuild costs for insurance purposes are upwards of £80,000 and often closer to £120,000. What that tells me is that if the cost of building new property is considerably more than existing stock (land values aren’t even taken into account in the example above). Common sense suggests that few people will buy a new build property, when they can get a similar sized property for half the amount. It is equally clear that developers aren’t going to build property unless they believe people will buy what they have to sell. And just to reiterate it: there is a shortage of housing which increases demand for available property.

It’s a complex relationship and there are differing viewpoints on how it works, but I believe that fairly soon builders will start building again in earnest. Once they start doing so, the price of old stock will be pulled up by the price of new builds as sellers realize they can achieve higher selling prices whilst still pricing their property competitively against new builds.

There are tentative signs that the property market is already beginning to warm up – you may well have seen the news headlines about average property prices now increasing at £25 a day. One factor for this is new investors putting their money into property as they are tired of the woeful returns provided by the banks and pension companies. We have noticed buy to let lending is becoming more readily accessible in the last 6 months.

But that is nothing compared to what will happen next year when the new government incentives kick in, giving buyers the ability to get on the housing ladder without raising a 20% deposit.

One thing I have learned throughout my time in property is not so much the price of a property but the affordability factor that is the biggest influence. People’s income, the deposit required, the ratio income to borrowing permitted and interest rates all play a much bigger role than the actual price tag.

The government incentives coupled with low interest rates will have a massive affect and greatly increase the demand for property pushing prices higher (although salary levels will keep the increase in check to a degree)

That may be good bad or dangerous depending on your point of view. Some argue that it will create another bubble – and they may well be right. But in terms of achieving capital growth over a relatively short space of time (say the next 5 years), I believe 2013 will prove to be the ideal time to invest into property. So get your sun cream and your sunglasses out. A bright hot summer for property investment is on its way… Shame we can’t say the same for the British weather.

Higher or Lower – Getting your asking price right

Posted on: October 18th, 2012

There are various factors influencing the value of a property, from location, age and size, through to things like heating, windows and appliances. In short, it is fair to say each property is wholly individual. With this in mind, the valuation system used by Estate Agents, usually calculated from recent sale prices of similar properties in the area, is not an exact science and can also be subject to Estate Agent “inflation”.

Sellers, who genuinely believe their property has been incorrectly valued, at either end of the scale, should consider the following points before approaching their estate agent:

- The recent sale prices of similar properties in your area don’t always tell the full story. Your property may be on a corner with a bigger garden, have newer double-glazing or more modern appliances within, equally, the recently sold properties may have these advantages. Ask yourself objectively, does the current value give a fair assessment of these factors?

- If you believe your property is undervalued, as is quite often the case, consider that sometimes beginning with a below market price could generate more interest and result in a higher sale price, than if the asking price was higher to begin with.

- It is widely speculated that setting your property price just below a round number will attract more potential buyers than setting the asking price at the round number itself. Think £199,950, instead of £200,000, this may explain an Estate Agents valuation of your property.

- Costs involved with buying a property include Chartered Surveyor fees and stamp duty fees amongst others. Bear in mind the percentage of stamp duty that must be paid increases with property prices, so you may attract more buyers by setting your asking price below a stamp duty threshold – for example at £249,950 rather than £250,000.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit www.thehousecrowd.com/how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their investments (for more information about us, visit www.thehousecrowd.com/about/our-manifesto/). If you’ve read enough and want to invest now, visit www.thehousecrowd.com/invest-in-property/).

Property Investment Project Update 003

Posted on: September 20th, 2012

If you’re a member, you will have already received our latest property investment information announcing that House Crowd Project 003, on Old Lane, Little Hulton is on the market for sale. Hooray!!!

The property was purchased this year in May for £39,000 and after £15,000 of refurbishment costs, a great deal of blood, sweat and tears – Ok, maybe not the ‘blood’ part, and some major issues (all resolved now!) it has been given a new lease of life and is currently on the market and expected to sell for £72,000, an estimated 25% ROI after costs. Not bad hey!

When dealing with property – especially with repossessed property – there are plenty of problems and setbacks. Of course, if it was easy, everyone would be doing it, and that’s why we are here – to deal with the problems that inevitably arise and let you get on with your life free of the hassle.

You can see before and after pictures of Old Lane on our Facebook page – We’ve also added a few snaps of our very own Managing Director, Frazer Fearnhead, sleeves rolled up, getting his hands dirty, applying the finishing touches to the house.

If you don’t have a Facebook account, you can see before and after images for HCP003 here.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit www.thehousecrowd.com/how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their investments (for more information about us, visitwww.thehousecrowd.com/about/our-manifesto/). If you’ve read enough and want to invest now, visit www.thehousecrowd.com/invest-in-property/).

Tips for successfully gaining planning permission – part II

Posted on: September 14th, 2012

Following on from our previous post, here is the second instalment of our top tips for maximising your chances of gaining planning permission for alterations to residential property:

It pays to be realistic. Applying for planning permission for modifications that will make your property stick out like a sore-thumb is almost guaranteed to be rejected. Take a good look at properties in your area that have had extensions and renovations in the past couple of years and use this as an approximate gauge for what is acceptable.
Making highly disruptive modifications without consulting your nearby neighbours is not only impolite, it can also hamper the work you are carrying out if they choose to launch an objection with your local council. A trip over the fence (sweet treats optional) to explain the work you are planning and how long it will take is common courtesy and should help negate future objections.
Never try to cheat the planning system, regardless of how frustrating it gets. Penalties for breaching planning rules include fines of up to £20,000 and the possibility of jail. Councils also have the right to send workmen to your home to, quite literally, tear down unauthorised alterations at your expense!

Green properties – the sensible option

Posted on: September 5th, 2012

Recent figures released by the National Landlords Association suggest that over half of Britain’s landlords plan to install energy-saving technologies at their properties as part of the government’s Green Deal initiative.

The Green Deal, which is now scheduled to come into effect as of January 2013, is designed to entice business and home owners to retrofit their outdated and inadequately insulated properties, with no upfront costs and simple, transparent repayments attached to energy bills.

Introduction of the scheme is an acknowledgement that Britain has some of the oldest housing stock in Europe which requires mass modification to ensure energy bills don’t spiral out of control. The real crux of the Green Deal for homeowners is that all retrofit works must be pre-assessed to ensure financial savings are equal to or greater than the costs being attached to the energy bill.

Here at The House Crowd we think the Green Deal will provide a great incentive for landlords to upgrade their property portfolio, but to be a complete success, it is important a common sense approach is taken with the scheme’s criteria and payments. This initiative has potential to be a real boon for both property owners and Britain’s environmental credentials.

The value of property revival

Posted on: August 31st, 2012

At a time when high-street shops are struggling more than ever, it is a welcoming relief to learn that the Government, following on from Mary Portas’s High Street Review, will be implementing a number of high street ‘Town Team pilots across England to further support regeneration.

Earlier this summer it was announced that twenty-seven town centres across the country, including Morecambe and Stockport, would receive a slice of a £2.7million budget and a tailored package of support for rejuvenation from both the Housing Minister and celebrity retail guru, Mary Portas, as part of the ‘Portas Pilots’.

Towns which missed out on the Portas Pilot competition are still able to apply for a new package of support, which includes multi-million pound financial incentives from the Government and access to advice and support from leading retail experts. In addition, those towns which succeed in regenerating their high streets can apply to be considered for the Future High Street X-Fund and potentially win a share of the £1million prize on offer.

The value of such initiatives cannot be underestimated from a property perspective. Breathing life back into rundown town centres not only increases the aesthetic appeal of an area, but also attracts further development, transport investment and leisure facilities – all of which are central to property value. Here’s hoping the numerous incentives on offer for an entrepreneurial approach to town centre rejuvenation can be the turning point in fortunes for high streets across the country.

At The House Crowd we use our expertise to look beyond the current state of a rundown property and consider what it can become with our investment. Informed property selection, followed by shrewd refurbishment, allows us to offer investors a typical return of 12%-14% in approximately 6 months on our short term develop and sell projects.

UK mortgage lending famine harms worse off the most

Posted on: August 29th, 2012

Figures from the price comparison website Moneysupermarket have revealed the number of mortgages available to borrowers with a 10% deposit is down by more than a quarter in the last year, whilst bank loans supporting buyers with a 5% deposit have dropped by a third in the last six months.

Moneysupermarket’s findings make for uncomfortable reading as stagnant salaries and a lack of job opportunities for those starting out mean more and more people are struggling to save a significant deposit.

It is conceivable that first-time buyers with a 5% deposit may be forced to completely put off the thought of buying until they have at least a 10% deposit saved – or secured parental assistance. There are currently only 28 loan options available to those with a 5% deposit and, in truth, many of these will carry unrealistic qualification criteria. This desperate situation has arisen despite the government and banks recently introducing an £80 billion ‘Funding for Lending Scheme’, designed to boost lending to households and businesses.

The House Crowd offers an alternative solution for first-time buyers struggling to raise a deposit for their first home. For as little as £1000, our straightforward and transparent crowdfunding property investment model provides a typical 12 – 14% return – ideal for growing your deposit in order to take your first step onto the property ladder.

The draw of the crowds

Posted on: August 23rd, 2012

We came across an intriguing read amongst the pile of predictions and analysis of the Premier League kick off last weekend.

A study by Halifax has discovered that property prices near Premier League football clubs have increased much faster than average over the past decade. Whilst this statistic may at first suggest devoted fandom, it is worth noting that four of the five Premier League postal districts with the biggest house price increases are home to stadiums built in the last 15 years.

Property prices close to current Premier League champions Manchester City’s home, the former 2002 Commonwealth Games arena, soared by an average of 271 per cent – far beyond that of any other stadium. For those familiar with the Commonwealth Games Sportcity complex in the Medlock Valley, Manchester, this steep rise in house prices won’t come as a huge surprise. A long-term plan for environmental improvements, community programmes and easy links from city to stadium has evidently now come to fruition.

Whilst the recent success of the blue side of Manchester will have no doubt driven more crowds and trade to the Sportcity complex, a housing expert will tell you it is the well-planned development of local services that are the prevailing reason for such a significant jump in house prices.

At the House Crowd, we take great care when investing in a property to evaluate all we can about the local area – from earmarked developments to local schools, transport infrastructure and historical trends. By taking an all encompassing approach, we hope to gauge the rise in value a property may experience and maximise the return for our investors.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit http://www.thehousecrowd.com/how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their property investments (for more information about us, visit http://www.thehousecrowd.com/about/our-manifesto/). If you’ve read enough and want to invest now, visit http://www.thehousecrowd.com/invest-in-property/).

Why ‘Sophistication’ Isn’t Needed For Crowdfunded Investments

Posted on: August 14th, 2012

“Risky and complex”; is how the FSA described crowdfunding this week. It has released new information which informs consumers that most crowdfunded investment opportunities are unregulated, adding that while many offer higher returns than mainstream investments, the rarity of dividends and a lack of a secondary market, can make them risky and complex options.

According to the document, crowdfunding should be reserved for sophisticated investors, those who understand the apparent risks associated with crowdfunding and who accept they may lose their money if the business they helped to fund fails.

Let me preface my comments by stating that I realize there are unethical companies who are happy take money from people who do not understand what they are investing in or the risks associated with it. They may even be intentionally deceitful. The law clearly has a role in preventing dishonesty and fraud.

But, whether the law has any role to play in deciding whether you are sophisticated or intelligent enough to make your own decisions about what you invest in is a matter for debate. I know where I firmly stand.

Firstly, I don’t believe the law has any place (though it doesn’t stop it constantly interfering) in what people choose of their own free will to do to themselves or with their possessions, provided it does not cause others harm. I have never understood the arrogance of government to think they know (better than you) what’s best for you. I believe in a person’s right to decide for him/herself and I do not underestimate their ability to do so. Yes, we all make bad decisions from time to time – including those in government – but it doesn’t mean I want to abdicate my rights and let someone else have that power. In short, I don’t need or want a nanny.

Many of our members have never invested before but they can spot a good opportunity when they see one. We make everything as transparent and simple as possible, taking pains to outline the risks and drawbacks as well as the positives. And, yes of course, there are risks involved in any investment – even “safe” and low returning bank accounts and pensions. If you do not understand or accept those risks then steer clear.

Which leads me to my second point, if, as the FSA suggested crowdfunding should be the preserve of sophisticated and more experienced investors, then that negates the very reasons the concept exists – to give those people with less to invest (by default, usually less experienced investors), the opportunity to access better performing investments, and ‘dip their toe into the investment pool.’ Wealthy, sophisticated investors already have a range of investment products available to them (which cannot be accessed by the ordinary man on the street) and have little need for crowdfunding.

Yes, of course, as with any investment, reward is often determined by the amount of risk taken, however, certainly when it comes to The House Crowd, this risk is minimised in a number of ways (see our FAQs).

So whilst we wholeheartedly agree it is important for the FSA to ensure consumers are protected from fraud and are made fully aware of the risks, ultimately it should be the individual’s choice. Do your due diligence, ask questions, compile the evidence and make your own judgement as to what to do with your hard earned money. You don’t need to be a sophisticated investor to do that.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit www.thehousecrowd.com/how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their investments (for more information about us, visitwww.thehousecrowd.com/about/our-manifesto/). If you’ve read enough and want to invest now, visit www.thehousecrowd.com/invest-in-property/).

Crowdfunding hits Dubai as the worldwide phenomenon continues to spread

Posted on: July 30th, 2012

An article in Arabian Business on Sunday , had us enthralled as we read of further international growth of crowdfunding. Click here to read the article.

According to the report, in the last month alone, two Dubai-based crowdfunding firms, Eureeca and Aflamnah, have launched. In the week following its launch, Eureeca received more than 65 enquiries from companies seeking investment and as many from investors looking to fund. So, what might this mean for the crowdfunding world? We’re think it’s safe to say that this is yet another example of the influence crowdfunding is having on a global scale.

Indeed, research firm Massolution forecasts that crowdfunding will raise $2bn worldwide this year, up from just $530m in 2009. In addition, it also expects the amount of crowdfunding platforms to increase to 530 by the end of the year, up from 452 in April.

As always, there are critics for the crowdfunding approach to raising capital but statistics rarely lie, and the figures being produced and the results being achieved internationally by crowdfunding is enough to convince us (why else would we have set up our own property investment company based on this model?).

Of course, the proof is in the pudding and as our first project heads towards its final phase, we will be reporting back on our own results and what was achieved by the sale of the UK’s first crowdfunded property purchase.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit www.thehousecrowd.com/how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their investments (for more information about us, visit www.thehousecrowd.com/about/our-manifesto/). If you’ve read enough and want to invest now, visit www.thehousecrowd.com/invest-in-property/)

Posts Tagged ‘property investment’

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