Category Archives for "Beginner Investors"

Cashflow and Interest Rates

Cashflow and Interest Rates… where they’re likely to go?

Video Transcription:

Hey guys. So Bretts Property Rants. So what I wanna chat about, I guess, is cash flow, and in particular, interest rates, and where they’re likely to go.

I mean, we have had the lowest interest rates ever in the history of the world, I think, to be fair. Probably not the history of the world. That’s probably a, but certainly, in modern history, it’s been the lowest for the longest. And I don’t think they’re ever gonna go back up to where they were, because, you know, corporate debt in America is nine trillion. You know, their consumer debt is 22 trillion. You know, they’re huge numbers. And the problem is if interest rates go too high, then they can’t afford anything, and they’re gonna have massive defaults, et cetera, et cetera, et cetera

And there’s a whole range of reasons why I don’t think it’s going up too high. But I do think the interest rates will go up, and they will need to go up, and I think the key is for you, personally, have you actually calculated all of your debts, put ’em all together, okay, and then worked out if interest rates rose, let’s say 1%, 2%, 4%, you know. I think at 4%, that’s really going to be a massive stress test, you know. And when we look at that, that’d be a massive jump for most people.

So I think if you can sustain a 4%, you’ve got absolutely nothing to worry about. I think 2% is about what, you know, what you really need to account for and you really need to calculate. If you’re gonna struggle, then what you might need to do is, right now, start to look at how you can start putting money aside, maybe paying off some debt or, you know, paying down that debt. If you have to, sell a house. If you have to, you know, don’t take on more debt. All these sorts of things. Don’t just include houses, ’cause this is not just about houses. This is all debt, okay.

The availability of your debt is gonna start decrease, and the money supply is decreasing right now. So, effectively, what that means is as the money supply decreases, you tend to find we go into a recessional downturn, okay. And so all these sorts of things are starting to kick in and start to move forward now. So, you know, you can sit there and say, oh, no, no, no. I’ve been watching the hundreds and hundreds of YouTube channels that say, no, house prices are gonna continue. You know, corporate debt’s gonna continue. Everything’s fine. But I would just say that lot of the indicators now are pointing towards a downward happening. And it could be in 2020, it could be in 2021, it could be in 2022 but somewhere around now. I mean, there are lots of things that countries could do to stimulate and to sort of, you know, stretch it out.

I think the UK’s in a reasonable position because it’s got a very strong economy. And actually, to be fair, we’ve had a pretty rough time over the last two years with Brexit. And that’s kept, the growth down. And that will play into, that’ll put us in a good position if the rest of the world does go into a downturn. That’s not to say that we’re not gonna, you know, see things changing and not have to do this. But I think for this, you know, what have you personally done? Have you done that calculation? If you haven’t, it’s probably time to do it, and then if you want to, you know, one of the big things we do is portfolio management.

So, if you’re not sure what to do, if you’re not sure how to do it, get all figures together, you know, book with a team, and, you know, sit down with them, and get them to run through the implications of that. ‘Cause when you run through the implications, you know, knowledge is power, and you can act on knowledge. You’re sticking your head in the sand and waiting for a kick up the ass, you know, that’s not the way to do it. That is not the way to do it. That’s gonna create stress. Maybe, right now, you can live blissfully, but that’ll create stress down the way, whereas you don’t need to.

Actually, what we find with most of our clients, they are fine. Once they do the numbers, they realize they’re fine, and they can then almost kick back and relax because they don’t need to worry. By far the majority of people are gonna be absolutely fine with that sort of 2% increase in interest rates, okay. So if you’re sitting out there, and you’re concerned about it, and you’re thinking your head in the sand, don’t, give the team a call, like go through the numbers and really get you a sense, you know, some certainty. That’s really what we want, is to give you a sense of certainty as you’re building a portfolio. Now it may be that there’s actually some leeway there if you take advantages and opportunities now. ‘Cause what we’re seeing is, you know, vendors and developers are starting now to give a bit more, you know, flexibility on their pricing, because things have slowed now You know, the numbers are slowing down.

Look, the price houses haven’t dropped off, but they will follow. And, you know, that will start to come, you know. But, right now, you know, things are still looking pretty good. But now’s the time to really make those adjustments if you need to make them.

Alright, guys, have a great day. Live with passion, see ya.

Bretts Property Rants

The North and South Divide in the UK

Video Transcription:

Hi, guys. Brett’s property rant. I was just reading an article about the north-south divide in the UK, between the southern counties, London and the southern counties, and the northern counties. Just talking about how that’s changing now. Now Wales actually kinda doesn’t include it. That pattern is changing. I think, to be fair, we’re gonna see a lot more of that. I’m saying right now, and I’ve been saying for the last couple of years, we’ve sort of backed away from selling in a lot of areas.

I just don’t want to sell ’em ’cause I think long term we’re not really gonna see the growth that you would expect from that property. What’s happening is the fundamentals are moving into the cities, into the major cities. That’s more where our investment focus is and that’s where more your investment focus is, but what that means is that rather than being a north-south divide, I think what you’re gonna start to see is… I think there will certainly be a north-south divide, but I think the other side of it is that there’s going to be a cities and suburbs divide. If you’re looking prediction-wise, give it, you know, maybe 10 years, 20 years, but certainly within a generation, I think we’re gonna start to see the suburbs becoming quite desolate. It’s almost like the Hollywood movies with the tumbleweed rolling down the town that used to have hundreds of people in it. I think that’s gonna start to happen a lot more now.

What you’re gonna find is your rents won’t go up. Your capital values won’t go up. That’s going to be the initial phases of it. As it goes further and further on and it becomes less and less attractive an area, then what you’re gonna see is actually it’s gonna get harder and harder to rent your property out. It might still be fine for owner occupies, but actually, if you’re gonna rent the property out, you’ve gotta be careful. That’ll be the next stage of it. I really don’t think you want to be involved in an area when that hits. Cities, what you’re gonna see is more and more, they’re gonna take over as the place to invest. All right, guys. Have a great day. Live with passion. See ya.

Property Investment Manchester

For property investment, Manchester is hard to beat

Six reasons you will want to invest in Manchester

Manchester is a highly desirable place to work, live and play. It is being developed at a faster pace than most cities in the UK and is attracting high numbers of businesses and young professionals. For those considering property investment, Manchester should be high on your list of UK locations.

Here are six factors that underpin the potential of investing in Manchester property.

1.    Manchester is a mecca for retail and leisure enthusiasts

Manchester has some of the best retail and leisure facilities in the UK. These range from the world-renowned intu Trafford Centre, to the Arndale, Exchange Square and Market Street, and fantastic boutique shopping districts around the city.

For the culturally minded, there are more than 30 museums and galleries to visit. For fresh air enthusiasts, Manchester is a stone’s throw from several of the UK’s most beautiful rural areas.

Manchester is also the home of two of Europe’s best football teams (Manchester United and Manchester City), and Old Trafford is the home ground of Lancashire Cricket Club.

2.    Manchester is the place for exceptional education

With hundreds of schools in the city region and 25 primary and secondary schools rated as outstanding within three miles of the city centre, parents are spoiled for choice for their children.

There are also 20 higher and further education establishments. The total student population is one of the largest in the UK – presenting an exceptional opportunity for investors in student accommodation.

3.    Manchester’s tremendous transport

Manchester benefits from road and rail networks that connect the city to all corners of the UK. When HS2 services start running, London will be only an hour away.

The Manchester region is served by regular bus services, and rail and Metrolink services.

Manchester Airport is the North’s only major international gateway. It serves more than 22 million passengers each year – a number that is expected to rise to 50 million by 2030.

4.    Manchester is a city open for business

The city region houses a population of 2.8 million in its 10 metropolitan boroughs – the largest UK city region outside of London.

With a GVA of £63 billion, Manchester’s economy is extremely diverse with major employment sectors including:

  • Financial
  • Advanced manufacturing
  • Life science and healthcare
  • Energy and environment
  • Creative, digital and technology

Many major companies are located here (including names such as Barclays, BNY Mellon, Cargill, Heinz, BAE Systems, the BBC, Google, and IBM) attracted by the city and its stock of well-educated workers. The rate of start-ups here is also strong.

Consequently, the growth of more than 2% per year in employment that Manchester has experienced in recent years is expected to continue.

5.    Regeneration and development are booming in Manchester

Manchester is the beating heart of the Northern Powerhouse, and billions have been spent and are being spent on regeneration and development. Key projects include:

  • The Manchester Enterprise Zone (business and office space, manufacturing, health, and bioscience facilities)
  • The Corridor (now the UK’s largest academic campus)
  • Manchester Science Park (a world-class science and technology hub)
  • Spinningfields (mixed-use development in the heart of the city centre, providing space for mostly financial and professional services firms)

Regeneration projects include:

  • NOMA (an £800 million project)
  • St John’s Quarter (a mixed-use development including 2,500 new homes)
  • Ancoats (developed with £1 billion from the owners of Manchester City FC)
  • Greengate (2,000 apartments to be completed in the next 15 years)
  • Middlewood Locks (A £700 million mixed-use development)
  • Kampus (200 new apartments, and independent bars and restaurants)

The latest Deloitte Crane Survey forecasts more residential units will be delivered in the next three years than in the previous 10 combined.

6.    Manchester – where the population just keeps growing

Manchester’s city population has grown by 6% in the last three years – three times the national average. With more businesses moving to the region, HS2 soon to run services here, and a young, diverse and well-educated population, this rate of growth is set to continue.

Summing up

World-class retail, leisure and education make Manchester a good place to live and learn. The incredible transport links and a young and vibrant population make it a good place to do business. Add it all together, and Manchester is a great place for property investment.

You can learn more about the best property investment opportunities in Manchester by contacting the team at Gladfish at +44 207 923 6100.

Live with passion,

Brett Alegre-Wood

Property Investment UK

Why property investment in the UK is so attractive

Where else could you achieve these huge benefits?

Property investment in the UK is still attractive, despite the headwinds of higher stamp duties on investment properties, a tougher borrowing environment, and changes to the tax relief on buy-to-let mortgages and wear and tear costs. Here are a few of the major reasons to invest in UK property.

Demand for property outweighs supply

The law of supply and demand has impacted the UK property market for centuries. A continuously growing population fuels demand for new homes. This boosts the price of homes and is great news for property investment in the UK.

According to the Office for National Statistics (ONS), the UK population is forecast to grow to:

  • 2 million in 2026
  • 70 million in 2029
  • 9 million in 2041

This is population growth of more than 11%. To put this in some perspective, the UK would need six cities the size of Birmingham to house it – or 13 Manchester, or 12 Liverpool. That’s a huge demand for extra housing.

UK property investment has continually proved itself as a solid investment

The average UK house price has doubled every eight to 10 years during the last 100 years. Even during financial crises, property investment in the UK has proved more resilient than other assets. When the stock market almost halved in 2008/9 because of the Global Financial Crisis, the average UK house price fell by just 14%.

Stock markets tend to have crashes every 10 years or so. The Oil Crisis was blamed for the slide in the mid-1970s. Then there was Black Monday in October 1987. The dotcom bubble burst in 2000. Throughout such stock market volatility, UK investment property has remained remarkably resilient and astoundingly stable. As ‘safe as houses’, as they say.

(Read our article “If you’re a long-term investor in stocks, you’re a long-term loser” to discover the truth your financial advisor would rather you not know.)

Inflation-proofed income – great for retirement

When you invest in buy-to-let property in the UK for the long term, you benefit from the rental income that you control.

Generally, rental prices increase in line with inflation. Sometimes they rise slower, and sometimes faster.

If you are investing for retirement, the inflation-proofing quality of buy-to-let investment property in the UK will be very attractive to you – especially when measured against the cost of an annuity designed to protect your income against inflation.

You make money on other people’s money

In the UK, you can borrow to invest in property. This means you have the potential to make money on other people’s money, thus boosting your comparable return.

As an example, let’s consider an investment of £200,000, using £50,000 of your own money as a deposit and a £150,000 buy-to-let mortgage to fund your investment. Let’s say that the mortgage interest rate is 4.5%, and you achieve a gross rental yield of 7%.

You will make a gross income of 2.5% on the £150,000 you borrowed, after allowing for the interest payment. Put another way, your gross rental income is £7,250 (7% x £50,000 + 2.5% x £150,000), or 14.5% of the capital you invested.

It gets even better. Should the property value increase by, say, 30%, it would now be worth £260,000. Before costs and tax, this is a profit of £60,000. That’s 110% on your original £50,000 investment.

Such incredible potential returns are all thanks to the benefits of leveraging in property investment.

Perfect passive income

Finally, here is the one that will really make a difference in your life. Who wants to work for their money, when you could be sitting at home (or on a beach) enjoying the fruits of someone else’s labour? Hire an investment property manager to manage your property, and benefit from the perfect passive income that could give you the lifestyle you deserve.

Summing up

For its potential to produce incredible passive income and capital growth over the long term, property investment in the UK is a highly attractive option. Projected population growth should help it to produce the kind of returns it has historically, as you benefit from using other people’s money to maximise the return on your own investment capital.

For more information about investing in UK property, contact the team Gladfish today, at  +44 207 923 6100.

Live with passion

Brett Alegre-Wood

Making money from property

5 Ways for making money from property in the UK

Profitable property investment strategies for all investors

Making money from property is one of the most satisfying ways of investing. And there are many strategies that you could use to do so. In this article, we describe five of the most popular.

1.    Long-term buy-to-let property investment

When you purchase a buy-to-let property, you are investing for the long-term potential in a growing private rented sector in the UK. By investing wisely and getting good tenants, you should profit from inflation-proofed rental income and long-term capital gains from rising property prices.

You can take advantage of the benefits of leveraging in property investment, which massively improves the returns on your invested capital.

You can pass on many of the duties and responsibilities of being a landlord by hiring an experienced and competent investment property manager. With effortless property management, you should benefit from perfect passive income.

2.    Short-term flipping

Investors who want to profit from capital gain, without holding the property for the long term, can do so by using a strategy commonly called ‘flipping’. Two ways you might flip property are:

  • Buying a property that needs refurbishing, doing the work, and selling for a profit
  • Buying off-plan property and selling before the property is complete (or shortly after completion)

If you choose the first method, making money from property this way takes discipline, tight control of costs, and a systematic approach. You’ll need to consider that a short-term fall in property values could damage your forecast returns.

With the second method, you are somewhat protected against the potential for short-term price volatility – thanks to the discount when you invest in off-plan property. By the time you come to sell, this discount will act as a buffer against a fall in the market. If the market price has increased, this will be translated into a larger profit.

3.    High-yielding holiday lets

Investing in a holiday let property is similar to investing in a buy-to-let property, except that making money from property this way relies on a steady stream of short-term vacationers rather than the more stable income from longer tenancies.

There are some tax advantages over buy-to-let investment. For example, you can offset all your mortgage interest payments against your letting income, and the cost of furnishings can be deducted from your income before tax is calculated. Also, because this type of investment is classed as a business, profits become ‘relevant earnings’ for pension purposes – meaning you can increase your pension contributions.

Holiday lets pay higher yields, but you will need to market your property effectively to take full advantage. (Read our article “Is holiday let property a good investment?” for more information.)

4.    Fixed-term hotel room investments

For cash investors with a fixed timeline for their investment, and who want a guaranteed return, investing in hotel rooms may appeal. You gain exposure to high-yielding property investment, without having to buy (and run) an entire hotel! In brief, this type of investment works as follows:

  1. Do your research and select a popular destination.
  2. Select a hotel that offers the benefit of location and good management.
  3. Buy the hotel room.
  4. Receive income from your investment (usually around 8%).
  5. Your capital is returned at the end of the fixed-term of your investment.

This could be a great way for making money from property if you have a cash pot that you don’t need now but will need in, say, five or seven years (for example, to pay school fees for your children).

5.    Diversify with developer loan notes

Have you ever wished you could make the profits that banks make when they loan money to others? Developer loan notes allow you to do just that. In effect, you lend a developer money over a fixed term to help them fund their project. In return you get:

  • A fixed (and high) rate of interest
  • A guarantee on your capital invested
  • The flexibility to take your capital back early

The amount needed to invest is smaller than for most other property investments, and you can build a portfolio of loan notes paying interest and maturing at different dates – allowing some exceptional budget planning.

Summing up

There are many ways of making money from property. The five described here are among the most common. Which is best for you depends upon your personal circumstances, investment objectives and other factors. For a confidential, no-obligation discussion of your options, contact one of the team at Gladfish today at  +44 207 923 6100

Live with passion

Brett Alegre-Wood

Section 21 Ban

What landlords need to do about Section 21 ban

Not very often do I get mad about things but this has set me off.

Theresa May has gone too far with this. As landlords, we need to band together and become one voice.

Anyway watch the video and I will update you about how we can fight back.

Video Transcription:

Hey guys, Brett’s Property Rants. Today, yeah pissed off. You may have seen the live one that I just did, the video I just did. The Government is just losing it. They’re just a bunch of idiots. They’re talking about removing the Section 21, or the no-fault eviction. Anyway, you could watch the live one about my thoughts on that, which is just that it’s ridiculous.

I think one of the points is I’m just reading through the newspapers here. Of course, now, one of the papers, I won’t say who but is talking about them being short evictions. What a load of crap. Do you know why they’re calling them short evictions? It’s because the bloody courts are so frigging useless, yeah, that you cannot get a tenant out for at least three or four months. It takes so long to go through the whole process from the time they stop paying, or the time they do something majorly wrong where you want to evict them, where they should be evicted, rightfully should be evicted, yeah, it takes so long.

Yes, in that relation, it’s a short eviction. Basically, you got to give them frigging two months then, yeah, it’s a short eviction. You know what? This is absolutely ridiculous. It’s just another layer of ridiculousness by a Government that clearly… I mean I’m amazed they even, well, number one, I’m amazed they had even time to think about this. They’re spending so much time on this ridiculous Brexit and how they’re coping with that, or not coping with that. Anyway, it’s not about Brexit today. It’s about this Section 21.

I mean, really, this is the methodology that you have to use now in a lot of cases to get people out or get to the point where you can instruct people to get rid of them. It’s a lot quicker to do it that way than it is to go through all the other rubbish and the ways they do it. I mean the whole Section 8 process just takes so much time. Now, so many tenants can abuse the system.

I mean we’ve got one tenant, I mentioned before in my other video, 18 months they’ve not been paying, $1800 a month for a place. They’re not even a tenant. They claim to be a tenant, they’re a frigging permitted occupier. Yet, they’ve been allowed to go from one court to the next to the next that has been passing it all the way up to the High Court.

So far, I imagine there’s 40 or £50,000 out of that landlord’s pocket in loss of rent, legal costs, in all these sorts of things. I mean because it’s one of our things, I’ve had to instruct our insurers because of the sheer costs that are involved. It’s ridiculous. This woman even had the audacity to try and get an injunction against us, so that we couldn’t do our jobs. In the end, she got advice, basically got told to pull her head in. Meanwhile, I’m 7,500 out of pocket. That’s the appalling state of the market right now.

Now, Shelter and all these other idiots won’t talk about that side of it, which is what landlords are copping and what agents are copping. I mean to add to it, 170 bits of legislation. You know what? This is appalling, appalling what they’re doing. There is no consideration really for what is rational or what is right. It’s a total knee-jerk. They’re not really asking for opinions. They’re not really interested in that opinion when they’re given. I mean it is just appalling.

My take on it is we need to, as landlords, start banding together and having a voice. Otherwise, people like these Shelter bloody idiots are just going to continue to go on and on and on with all this rubbish. I mean we’re talking about small percentages of landlords that abuse it but, yet, they’re applying it across the whole board. I mean we have over 1200 properties we manage. In that 1200 properties, very rarely… And, in fact, I couldn’t even think of one, and neither the guys from the team, think of one instance where landlords are abusing their situation.

You know what? They want tenants in there. They want to keep tenants in there. Yes, they want to raise the rent because their costs are going up. Yes, they want to do all sort of things they have to do that. We have to raise the rent. I can tell you, I will be the biggest one to raise rents on these tenants. Yeah? Because we need to with all the additional costs, with regulations plus with Section 21’s gone, that means more stuff is going to go to court which is going to take longer. Rent and legal insurance are absolutely going to be needed now, which is another cost. All these things are just adding to it.

It’s appalling, absolutely appalling for what is a small minority. Government isn’t interested. It’s no use even talking to them. What we need to do, as landlords, is band together and have one voice and really stick it to them and tell them that this not appropriate. Anyway, guys, have a great day. Live with passion, and we’ll chat soon. Bye.

 

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