Establishing Your Own Investment Criteria

Establishing Your Own Investment Criteria

This is an excerpt from Chapter 4, ‘Establishing Your Own Investment Criteria’, of Frazer’s upcoming book, The Alternative Guide To Property Investment. You can register your interest in pre-ordering the book by clicking on the button at the bottom of this post.

We held a dinner for our top-20 investors recently and I think it’s fair to say that just about everybody had different reasons for investing and slightly different criteria for choosing what to invest in.

Before investing any money, you need to consider what you want to achieve. Do you want to sit back and let your investment grow in value (e.g. stamps or wine or a pension fund, if you still think that’s a good idea) or do you want to generate an income (e.g. shares or property)?

Or perhaps a mix of the two?

Do you solely want to provide for your retirement and reinvest any income generated or do you need to earn an immediate income from your investments?

Are you prepared to risk all your capital on the same sort of investment or do you want to make some ultra-safe investments and speculate with a certain portion of your money on riskier but potentially more lucrative investments?

These are just a few of the questions you should ask yourself as the answers will help formulate your own investment criteria. If you have decided that you want to invest some of your capital into property, then the two most significant decisions you need to make are whether you want the emphasis to be on capital growth or cash flow and whether you want to make commercial or residential property investments.


To read more about establishing your own investment criteria, you can click below to register your interest in the book. Fill in your details, and once the book is released, we will send you more information.

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Why Property Is the Best Vehicle to Supplement Your Pension

Why Property Is the Best Vehicle to Supplement Your Pension

This is an excerpt from Chapter 3, ‘Why Property Is the Best Vehicle to Supplement Your Pension’ of Frazer’s upcoming book, The Alternative Guide To Property Investment. You can register your interest in pre-ordering the book by clicking on the button at the bottom of this post.

Research from Saga Investment Services (amongst various others that reached the same conclusions) has found that the UK’s over-50s population needs to double the number of pension contributions they are making, if they are to stand any chance of a decent income through their retirement.

The research found that the majority of those over-50s surveyed believed they’d need an average annual income of £15,200 to get them through their retirement (personally I cannot imagine trying to subsist on such an amount in my old age – especially given inflationary factors).

The people surveyed estimated that they could generate this from a pension pot of £143,830 on average. Their estimated figures fall shockingly short of reality.

A pension pot of this size would actually generate just £7,940 guaranteed income a year (for a healthy 65-year-old) for life. That’s nearly a 50% shortfall. Basically, they need double the size of their pension just to make ends meet.

To have a comfortable life, which respondents identified as being defined by holidays, dining out, socialising, and hobbies, it was calculated that they’d need at least £21,630 (clearly they are less profligate than me). That would require a pension pot of nearly £400,000 – double the respondents’ estimate of £194,000 (which would generate just £10,170 guaranteed income a year).

On their estimated required sum, their pension fund would be exhausted within 12 years.

Poor returns, excessive fees and inconsistent annuity rates: a pension sure ain’t what it used to be. It’s no surprise, then, that people are starting to look for alternative ways of generating money for their retirement. Research suggests that property investment is turning out to be twice as popular as any other form of investment with the over-50s.

The younger generation, too, is turning down traditional pension plans, focusing instead on property investments (and now crowdfunding as a means to access the asset class). As mentioned previously, the number of people choosing – or being forced – to rent, due to the difficulty of getting into the property market, or simply because it’s more convenient in many ways, is rising rapidly.

A pension also has the disadvantages of limited (and badly publicised) choice of annuity provider and the fact the money is inaccessible.

When it comes to cashing in, holders are often disappointed to find that they are unable to access their lump sum when they wish to without severe financial penalties. And despite recent changes, one can only access 25% of one’s pension pot without incurring punitive taxation.

Not only that, as far as I know, the benefits of a pension end when the holder dies. That means you could have saved £400,000 in your pension, purchased an annuity with that, at age 65, and receive £21,000 a year thereafter. But if you were to pass away within a few years your spouse and heirs would receive nothing. The pension company keeps everything.

Clearly, this is not the case if you buy a property, which can be inherited; though the Treasury will, no doubt, steal as much of it as they can. Did I say ‘steal’ – how outrageous, that I should accuse our esteemed government of ‘stealing’ money that has already had tax paid on it at least once before – in the form of income tax, stamp duty, tax on savings interest, dividend tax, etc.

I do apologise. Clearly, it’s perfectly fair for them to take whatever they feel like.

Whilst it is important to start saving for retirement as early in life as possible, the younger generations are waiting later and later before considering their retirement planning. This may be in part due to high living costs and stagnating real earnings amongst the young … or, perhaps, their preference for electronic gadgets, dining out, designer clothes and foreign holidays over prudent saving … Just saying!


To read more about supplementing your pension with property, you can click below to register your interest in the book. Fill in your details, and once the book is released, we will send you more information.

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Performance Statistics: March 2017

Performance Statistics: March 2017

The figures are now in for our performance statistics from last month. You will see below our summary figures from the dividend, interest and capital payments made in March 2017. You can also see our total cumulative returns from 2013, which you may also find helpful to know.

March 2017

  • Projects paid out against = 20
  • Total value of dividends and interest paid = £217,583.03
  • Total value of capital repaid = £2,015,907.39 (1 x development capital, 1 x bridging loan)
  • Total number of investors paid = 694

Total for 2017 So Far

  • Projects paid out against = 64
  • Total value of dividends and interest paid = £374,095.83
  • Total value of capital repaid = £2,881,907.39
  • Total number of investors paid = 1,714

Cumulative (from January 2013)

  • Project paid out against = 498
  • Total value of dividends and interest paid = £1,509,720.83
  • Total value of capital repaid = £7,887,627.39
  • Total number of investors paid = 10,212

To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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How Much Diversification Is Sensible?

How Much Diversification Is Sensible?

This is an excerpt from Chapter Two, ‘How Much Diversification Is Sensible?’ of Frazer’s upcoming book, ‘The Alternative Guide To Property Investment‘. You can register your interest in pre-ordering the book by clicking on the button at the bottom of this post.

In the previous chapter, I mentioned that I go against traditional wisdom as I am not particularly convinced about diversification across different asset classes as one cannot possibly be knowledgeable about all of them and therefore must seek to rely on third-party advisers. If you have no time or inclination to look after your own money this is probably sage advice.

I accept that for most people there are good reasons to do so but, for me, I would point to the fact that one of the wealthiest people I have ever met invests all his money in property. But not just in any property, and not just in one particular area, but in one particular street (in central London). He won’t even consider buying properties on adjoining streets. As far as he is concerned, they are outside his area of expertise. Clearly, specialisation can have its advantages.

Therefore, I am not giving advice, just telling you what I personally think. The consensus of opinion about diversification may be generally sensible for most people but may not be right for everyone, especially for those who are experts in their field. That’s a matter for you to decide.

What I do think is sensible for most people is to diversify and spread your risk (within reason) so all your eggs are not in one basket.

And one reason I believe property crowdfunding is such a beneficial concept is that it allows you to spread whatever available capital you have over a number of different properties so, if a disaster befalls one, you don’t have all your money tied up in it and you still have others to fall back on.

Within the asset class ‘property’ itself, you could, if you wish, diversify your portfolio in a number of different ways. It could include traditional buy-to-let properties, new-build apartments, commercial investments, HMOs (houses in multiple occupation) and ‘fixer-uppers’.

Secured lending and development finance are other options that fall within the property investment umbrella, as you lend out sums to property developers and business owners who own property they can use as security.

Diversification also means a selection of risk profiles. Of course, you should take into account your personal circumstances and lifestyle requirements, as well as your own attitude to risk. Typically, higher risk investments come with the prospect of higher rewards, whilst a safer investment may yield lesser gains.

Buy-to-let has been the most popular option for property investment. Private renting has almost doubled in the period from 2003 to 2015, and in Manchester, it has almost quadrupled, from 6% to 20%.

This means, in theory, that the buy-to-let sector should offer great potential for investment over the coming years. However, as we shall learn later, the traditional way of purchasing single buy-to-let properties may no longer be the best way to capitalise upon this growing market. In fact, it may not be feasible at all for most individuals anymore.

The commercial property market, too, can be a good option.

Investing in commercial real estate can mean:

  • positive leverage (potentially increasing ROI (return on investment);
  • tax benefits (proper structuring can offer an array of benefits tied to interest, depreciation and so on);
  • more control (personal ownership equals control);
  • a hedge against inflation (such property tends to benefit long term from inflation);
  • cash flow and current income (rental income from stable commercial real estate means a potentially steady and predictable income stream);
  • historically strong returns (average annual return: 9.5% sustained over a 20-year period).

You can find out more about commercial property and how it compares with residential property investment later in this book.


To read more about diversification, you can click below to register your interest in the book. Fill in your details, and once the book is released, we will send you more information.

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Why Invest in Property At All?

Why Invest in Property At All?

This is an excerpt from Chapter One, ‘Why Invest In Property At All?’ of Frazer’s upcoming book, The Alternative Guide To Property Investment. You can register your interest in pre-ordering the book by clicking on the button at the bottom of this post.

Fact: almost everybody wants to be able to retire at some point and enjoy the later years of their lives in comfort.

If you think the state pension will allow you to do that, then, sorry, you are living in La La Land. The government will not look after you in your later years. It simply can’t afford to.

The maximum state pension in 2016/17 is £119.30 per week. Can you live comfortably on that? In fact, can you live on that at all?

It is imperative that you do something to supplement that. Your main choices are:

  • savings accounts
  • a private pension
  • shares
  • property

I will dealing with each of these briefly.

Savings Accounts

We are always being told that keeping your money in a bank account is safe and it’s guaranteed – at least up to £75,000. That is provided the government doesn’t also go bankrupt, which is not as ridiculous as it might sound; it would have happened here in the 1970s had the IMF not stepped in, and just take a look at Greece and Italy and Portugal and Spain … oh yes, and France, to see how vulnerable many governments are right now. I do not believe saving your money in a bank account is in any way a sensible manner to provide for your retirement.

The only thing that is guaranteed is that the value of that money is being eroded year on year by inflation, and given the current rates of interest payable the net value is actually decreasing. Even if you had a million pounds saved by the time you retired at, say, 2% interest, that would only provide you with £20,000 a year income – and that’s before tax.

Pensions

So, let’s look at private pensions…

The days of the final salary pension are long gone, and few, if any, private pensions have delivered what clients expected while some, it’s fair to say, have been outright disasters. The returns, whilst clearly considerably better than a savings account, are still negligible and the only people, in my opinion, who seem to really profit are the institutions that provide them.

We’ve seen pension fund after pension fund collapse, leaving thousands with substantial losses, executives ripping off their firms and employees for millions, and major holes appearing in the entire ‘safety-net’ structure. Robert Maxwell and the Mirror Group and British Home Stores are just two of a number of pension funds that spring to mind.

Please read Chapter 3 if you need convincing that the pension most people have is nowhere near enough to generate an annuity that will finance a comfortable retirement.

So whilst you definitely do need a vehicle to provide for your retirement, it definitely does not need to be an institutional or company pension.

Investing in Shares

Clearly, fortunes can be made in the stock market – if you know what you are doing. If you don’t, then picking the best tracker fund you can find would seem the most sensible option. I would not advocate against investing in the stock market but in my opinion, it is considerably more volatile than property and there are many more factors beyond your control that make it harder to invest in successfully.

Property

Of all the investment options available, I believe property is the one people most easily understand and, therefore, are most likely to be successful with.

I mean, let’s face it, even Goldman Sachs didn’t really understand what they were peddling in the noughties. The more complicated something is, the more likely it is that investors don’t really know what they are doing or what the risks are. They don’t even know what it is they don’t know, so how can they possibly evaluate the risks?


To read more about why to invest in property, you can click below to register your interest in the book. Fill in your details, and once the book is released, we will send you more information.

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Should You Judge A Book By Its Cover?

Do you think you should judge a book by its cover? Whether it’s fair to do so or not, it’s a fact that people do – literally and metaphorically speaking.

Whether it’s fair to do so or not, it’s a fact that people do – literally and metaphorically speaking.

Designing the right cover for a book is therefore important, and we would love to get your feedback, before making a final decision on which cover to choose for Frazer’s book.

We have narrowed it down to two choices and would be very grateful for your input.

Chose your favourite cover here


To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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Baby Doomers: A Bleak Retirement Outlook For The Over 55s

Baby Doomers: A Bleak Retirement Outlook For The Over 55s

The House Crowd has conducted a survey of the over 55 age group to ascertain their plans for retirement. The results make for decidedly depressing reading.

Baby Doomers

Those nearing the end of their working years reported a pessimistic outlook for their retirement. 78% of those surveyed said that they are financially unprepared for their retirement, with over a quarter saying that they think it’s too late to change plans and save more.

Just 16% of respondents were confident that their lifestyle will improve once they retire, whilst 37% expected their lives to be worse. The financially secure retirement that we all hope for was considered no longer possible for a full 41%.

State Pension Shocker

Shockingly, it seems that a significant proportion of over 55s will be reliant on their state pension to support them through their later years.

Over half of respondents do not have a personal pension and have no plans to put one in place. Over a quarter have no workplace pension, and – once again – no plans to put one in place.

Once retired, respondents said they’d like £18,235 to live off, but expected just £14,180.

And who’s to blame? 20%, on average, blame the government.

Well, 23% of women do, anyway. Only 18% of men thought the government was at fault for their retirement woes.

Perhaps this has something to do with the fact that fewer women reported being financially prepared for retirement than men. Just 17% of women thought they were on track, compared with 28% of men. Regardless of gender, the results are far lower than anybody would hope.

A Silver Lining

It all looks pretty dismal, but there could be a solution. Frazer had this to say after seeing the survey results:

“These results paint a miserable picture for our Baby Doomers – but it’s not too late for people approaching retirement to improve their situation. By exploring newer investment options, like property crowdfunding, over 55s can benefit from solid rates of return to help make retirement more comfortable.”

The property crowdfunding industry has been around since 2012, and is now worth billions worldwide. Though, as with any investment, there are risks to capital, the potential returns of this method of property investment could mean the difference between a rotten or a relaxing retirement.

Find out more about property crowdfunding as a potential investment choice for your retirement by registering on our site using the purple button below. Alternatively, click the blue button to see our current range of property investment options:

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Name That Book!

Frazer, our CEO, has written another book – his first one was a novel called The Cheshire Sect which is available to buy on Amazon.

This second book is all about how you can build your wealth using property crowdfunding.

It’s due for publication in April but, before it’s published, he would like your advice on what to call it.

We’ve narrowed it down to two potential titles. Just click here to tell us which you think is best.


To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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Performance Statistics: February 2017

Performance Statistics: February 2017

The figures are now in for our performance statistics from last month. You will see below our summary figures from the dividend, interest and capital payments made in February 2017. You can also see our total cumulative returns from 2013, which you may also find helpful to know.

February 2017

  • Projects paid out against = 22
  • Total value of dividends and interest paid = £73,730.53
  • Total value of capital repaid = £493,000 (1 x development capital, 1 x bridging loan)
  • Total number of investors paid = 478

Total for 2017 So Far

  • Projects paid out against = 44
  • Total value of dividends and interest paid = £156,425.94
  • Total value of capital repaid = £866,000 (1 x development capital)
  • Total number of investors paid = 1,020

Cumulative (from January 2013)

  • Project paid out against = 478
  • Total value of dividends and interest paid = £1,292,050.94
  • Total value of capital repaid = £5,871,720.00
  • Total number of investors paid = 9,518

To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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View our Property Investments

 

Performance Statistics: January 2017

Performance Statistics: January 2017

The figures are now in for our performance statistics from last month. You will see below our summary figures from the dividend, interest and capital payments made in January 2017. You can also see our total cumulative returns from 2013, which you may also find helpful to know.

January 2017

  • Projects paid out against = 22
  • Total value of dividends and interest paid = £82,695.41
  • Total value of capital repaid = £373,000 (1 x development capital)
  • Total number of investors paid = 542

Total for 2017 So Far

  • Projects paid out against = 22
  • Total value of dividends and interest paid = £82,695.41
  • Total value of capital repaid = £373,000 (1 x development capital)
  • Total number of investors paid = 542

Cumulative (from January 2013)

  • Project paid out against = 456
  • Total value of dividends and interest paid = £1,218,320.41
  • Total value of capital repaid = £5,378,720.00
  • Total number of investors paid = 9,040

To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

 

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