If like me you follow property TV shows religiously, then you will know how warm and energetic Kristian Digby used to be when he was talking about the ins and out of the UK property market on To Buy Or Not To Buy, Double Agents, House Swap and Buy It, Sell It, Bank.

His property knowledge will be solely missed, and our thoughts are with his family…

Wendy xx

That is why it is with great happiness that I reveal that leading lenders Santanders are increasing the maximum loan sizes of their mortgages.

Admittedly this news would have been better if these increases were applicable to everyone, but the point to take away from this particular story is the fact that competition is increasing amongst lenders. More importantly, the property market is becoming increasingly accessible to first time buyers again.

To sum up what has happened, Santanders have revealed plans to:

• Change the limit for first time buyers investing in new apartments from 70% LTV to 80% LTV
• Change the limit for investing in property from 80% LTV to 90% LTV

Whilst Santanders also divulged in their report that newly built property developments will remain at 70% LTV for apartments and 80% LTV for houses (for non-first time buyers), it is impossible to see the down side of this news. Especially as I imagine that it won’t be long before other leading lenders change their criteria to include existing property investors too.

All we can do is hope that the competition gets so hot that everyone benefits from deposit reductions and that buy to let mortgages get cut a break.

Wendy xx

I personally would love to retire even earlier than that, and with my extensive range of property lets I am fairly confident that I will be able to achieve this before I am 35. However property investment isn’t for everyone, so the real question is: what other routes are available to you?

Looking at the Co-operative Bank Mortgages figures they revealed that:

• 31% planned to achieve this goal by overpaying on their mortgage every month and reducing the term of their mortgage. And this is a great idea considering the current economic climate and how low mortgage rates are. There is plenty of opportunity to overpay
• 21% planned to achieve this goal by taking advantage of low interest rate deals. Now this one is only good if your current mortgage term is coming to an end. To swap part way through can result in penalties and a lot of paperwork which can get messy if you don’t know what you are doing
• 13% planned to achieve this goal by utilising more of their disposable income. Similar to the one above, this technique is only useful if you are on a tracker deal or are coming to the end of your current mortgage deal, as you need to be on a lower mortgage rate in order to increase your disposable income.

Now out of these 3, I would have to say that the first one is definitely the most viable route. For instance, most banks will allow you to pay an additional 10% on your mortgage over the year without incurring a penalty. However that being said many leading lenders are now considering launching a range of mortgages which will enable you to make additional repayment of up to 50% of your entire mortgage.

Is there another route?

Like I mentioned above, property investment isn’t for everyone, but working solely on my own personal experience, buy to let property investment has enabled me to pay off huge chunks of my own mortgage – fast – whilst leaving my other salary free to offer me the luxuries of reduced working hours.

Take my scenario for example:

Each of my 11 property investments currently produces positive cash flows of between £350 and £980 a month, giving me an additional income of £6,018 (aside from my existing job).

Now aside from the fact that my tenants are essentially paying the entire costs of my property investments – bills, mortgage payments, council tax etc – they are also supplying me with the cash flow to pay off an extra 10% off my mortgage every single month.

See what I mean?! There truly is a diversity of ways to enable yourself to retire when you want to and at an age that fits your lifestyle. So give it a try and see if you too can retire when you want to…

Wendy xx

Like homeowners the last thing they want to do is live next to someone who harasses them – they want to live in peace. But the thing is… unlike homeowners who have to sell in order to get away from such neighbours; all your tenant actually has to do is end their tenancy agreement with you.

And let me tell you, this is the last thing you want to happen…

Can Nuisance Neighbours Affect My Profitability?

Surprisingly so… It is easy as a property investor to forget to check out the quality of your neighbours because you are not living in the property yourself.

Yet thinking on this subject I can see how this could quickly impact on your profitability. All you need is one tenant to say to another: ‘I wouldn’t live there the neighbours are horrible’ and it won’t matter how strong the tenancy demand is or how good the rental yields are, if you cannot get tenants to stay, it will be you who is footing the bills.

So what do you do?

You make sure you know exactly who are investing next to before you put down a bid:

1. Visit the property more than once – the average buyer views a property once maybe twice before putting down a bid and usually at the same time of day. To gain an accurate perception of whether your potential property let is actually a local hot spot for vandals and drunks, or if your neighbours are noisy, I suggest trying to view the property at least 5 times and at various times of the day. This will allow you to see exactly what conditions your tenants will be living under.
2. Introduce yourself to your neighbours – meeting someone face to face can tell you a lot about a person. Before you put down a bid, make sure to introduce yourself to your new neighbours. You’ll soon discover if you are going to have difficulties with them over noise or a shared driveway.
3. Know your covenants – if you have already invested in the property and have got tenants living there, make sure to check the covenants of the property to see if your neighbours for example are prohibited from being a nuisance i.e. playing music at certain times of the day, lighting all day bonfires etc…
4. Talk to a solicitor – this should always be a last resort, but should you find that your tenant makes a complaint; you speak/write to the neighbour and they still persist in their actions, then you may wish to speak to a solicitor. They will be able to issue a letter to your neighbour highlighting the properties covenants and the possibility of legal action.

So try to take these on board the next time you invest in property. £500 positive cas flows and a high tenancy demand are all well and good, but get a bad neighbour for your tenants and they may affect your long term profitability.

Wendy xx

I thoroughly agree that there are landlords out there who abuse their powers over tenants and fail to fulfil their responsibilities. But the latest developments from the government feel more like an opportunity for tenants to ‘landlord bash’ than actually offer tenants better letting relationships…

Take this recent development.

Aside from giving tenants a Housing Hotline where they can seek advice against problematic landlords and the introduction of the National Landlord Register where tenants will be able to see how well prospective landlords maintain their properties. The government has also proposed launching a tenant dedicated website where tenants will be able to supply reviews on landlords and their property lettings – both positive and negative.

And it is here where everything becomes complicated…

Of course there will be genuine negative reviews from tenants against unscrupulous landlords who are at fault, but there will also be an influx of negative reviews from tenants who simply disagree with their landlords about issues which are actually law abiding.

All you need is to have one disagreement with your tenants and this website opens the doors to having your reputation tarnished for good! In some ways such a website could even make some landlords too scared to act on their legal rights in case their tenant tarnishes their name to the world.

It truly is a catch-22 where without the proper regulation this website could easily become a landlord bashing location which only works to drive bad landlords under ground whilst penalising law-abiding landlords instead…

May be it is just me and maybe I am viewing this all wrong, but I do strongly feel that this site could do more harm than good to the rental market where new tenants come to find a good landlord only to be painted a negative picture.

Wendy xx

In his story, he revealed that after securing 90% LTV loans from his bank in 2007, he decided to invest in 2 off-plan properties (1 worth £415,000, the other worth £375,000). However, after Berkeley’s property prices fell by 40% in 2008, banks would no longer loan him this sum offering him a maximum 75% LTV. Faced with either having to fulfil the shortfall himself or abandon his deposit, Dowd tried to default on his deposit only to be confronted with court action from the property developers.

It is a sad reality when a man has to pay over £100,000 in damages, because the economy has turned against him.

But the thing is he is not alone… A further 300 legal claims – in London alone – have been taken against homeowners wishing to default on their off-plan properties.

Who is in the right?

Now on the one hand I can understand that as homeowners have signed a contract on these properties they are legally obligated to complete the deal. BUT when statistics state that property prices in London have fallen by only 14%, not 40% like on these property developments it really begs the question of: what has happened?

The truth is, back in 2007 property developers were seriously overestimating the value of their properties – by a lot. As a result they are now experiencing greater property price drops of an extra 26%.

And it is this 26% that is really biting homeowners such as Dowd…

I imagine, many homeowners may have easily been able to work around property price drops of 14%, but 40% is ridiculous! Who has got an extra £100,000+ spare to cover such a shortfall? Not many and that is my point… It is not completely homeowners fault. Property developers have got equal responsibility for creating this situation after valuing their properties too high in the first place.

It is undeniable that some sort of comprise has got to be met before this situation escalates any further. In London alone, Berkeley signed over 3,300 contracts in 2007 with homeowners, 85% of which were off-plan.

Fortunately many homeowners are forming collectives to help find alternative routes for resolving this issue, and so far they have come up with 13 options. However, with many having signed contracts on these prospective properties, it is going to be a long road ahead before this situation is completely resolved.

Wendy xx

Take this news story I read about this morning…

Over 6,400 property investors who own second homes in Cyprus may now be at risk of losing their land following the case of Linda and David Oram who have been ordered to give back their land to a Greek Cypriot refugee – all without any hope of compensation!

According to the article, this 5 year long case was initially sparked back in 2004 after Greek Cypriot refugee Apostolides went to the Nicosia Courts and put in a claim against the Oram’s land stating it was his and that he had fled it after Turkish troops invaded in 1974.

Now having been through the Nicosia Court, the European Court of Justice and just recently the Court of Appeals in London, all 3 Courts have ruled in favour of Apostolides stating that the land is rightfully his. As a result they have ordered the couple to demolish their second home; return the land; pay Apostolides damages and worst of all, pay him a monthly rent until the land is properly returned.

It is ridiculous to think about the number of cases which are now going to spring up as a result of this case. Especially as in all cases it is neither the property investors nor the Greek Cypriots fault, but those who took the land and sold it without checking its history in the first place.

According to UK and Greek Cypriot officials, more than 1,400 Britons are living on land which is believed to belong to Greek Cypriot refugees, whilst a further 5,000 are living on self-declared Turkish Cypriot land whose title deeds are held by displaced Greek Cypriots.

Add them together and that is a lot of property investors who could potentially lose thousands if not hundreds of thousands of pounds should they be taken to Court.

This case really goes to show, the importance of researching your property and consequently its land first before investing. No matter where it is located – UK or overseas – title deeds and land disputes can really mess up your investments if you are not aware of them when you invest. The outcome may not be as extreme as the Oram’s – who had to demolish their home – but you could still lose thousands of pounds unnecessarily.

Wendy xx

Be Prepared To Walk Away

We have all been in a position where we have bid on an item in an online auction and our desperation to secure the item means we end up paying more for it than we wanted to.  If you let that happen in property, you won’t be successful.  When negotiating prices, be prepared to walk away if a deal doesn’t make you the amount of money that you want.  It takes self-discipline and a hard negotiating strategy but I have backed out of many an agreement as whilst it may be a great deal for someone, it is not a great deal for me.

Manage Your Money

It sounds obvious, but I have met property investors who don’t seem to have a tight grasp on their financial position.  Manage your income from rents, keep a close eye on your finance costs, make realistic budgets for void periods, repairs and maintenance and don’t overestimate potential future capital values.

Your property portfolio should be considered a business.  If you run your own business you keep a close eye on the finances and so it should be the same with your property holdings.

Have A Plan

Most investors buy one or two properties as they have some surplus cash to invest and like the idea of property as an investment.  That’s fine – I started in the same way.  Once you start to build a portfolio, however, it is vital that you have a business plan so as to avoid investing for investing’s sake.

What’s your ultimate intention – capital growth, income, or both? What’s the money for – your retirement, your children’s education or their eventual inheritance?  When do you plan to dispose of the properties?

Having a plan and an exit strategy is crucial.

Research and Homework

Investing in property is, for many, a full time occupation and their one main income source.  In the same way as lawyers or accountants undertake ‘continued professional development’ to further their knowledge, you should do the same.  Property is my business and so I spend considerable time learning about the subject.  Improving my knowledge of property through a property investment course, seminar or reading books on property has helped me enormously in my career.

Learn From Your Mistakes And From Others

I knew a little bit about investing in property when I bought my first house.  Since then, I have made errors along the way and have learned about the mistakes of others at the numerous property investment courses and events I have attended.

If I hadn’t learned from my mistakes I’d still be a small, novice property investor.  As it is, I have changed my practices, tactics and business plans through experience and knowledge and I am now a successful property professional.  It is worth remembering the old adage “Winners don’t do different things, they just do things differently.”

In the past, any homeowner looking to sell their property in Scotland would first have to advertise their property and give a minimum property price quote, before inviting buyers to put in ‘offers over’ bids.

Now what always used to fascinate me about this process was the fact that these quotes didn’t have to be accurate estimations. Using set guidelines, sellers could in fact set a minimum bid for their property which could cause buyers to place bids more than 25% above their original quote. Meaning not only could they benefit from guaranteed capital returns, but they could easily use this extra cash to invest in their property.

However, this has now all changed…

Following the introduction of the ‘Home Report’ last year – which are the equivalent of our HIPs – homeowners must now provide an accurate valuation price of their property, meaning they can no longer experience such sizeable returns.

In fact, Home Reports have impacted on their investment system so much that ‘offers over’ are rarely seen nowadays. Instead sellers are choosing to market their properties under an ‘offers around’ scheme which if they are lucky can generate them some capital, but nowhere close to what they were used to.

I have to admit, that this change to their property investment system has made Scotland a much more accessible location for property investment. Notoriously lower in price compared to properties in the Southern regions of the UK, all the myth – and overspending – behind this region has gone, making their system not that far from their own.

Even their ‘offers around’ is basically a similar version of our own general bidding system where the highest value is usually accepted by homeowners.

I can honestly say that I am thoroughly looking forward to getting stuck into the Scottish property market now it is less of a mystery.

After all, with average house prices of £155,691, and rental incomes of £907.63 a month (based on a 4 bedroom property), the returns far outweigh the investment cost.

Wendy xx

At some point, someone you know will have been selling a property.  A relative, friend or colleague will have been moving home and, all of a sudden, there is a property available that you know well.  You know its history, the value and any problems with it.  That makes such a property the perfect investment as you immediately know much more about it than a house you might have seen in an estate agents window.  Ask the person if you are interested – you may be able to cut a deal as they won’t have estate agents or other fees to pay.

A Local Property

A lot of property investors I have met have bought their first buy to let property investment in their local area.  Some even buy on the same street or in the same estate.  As an investor, you are much more likely to know the values, rental potential, local schools and transport links in your own locality.  It is also extremely convenient for you to manage.

Auction

Whilst some property auctions are not for the fainthearted, I have known investors who listened to others’ property investment advice and bought their first investment property at auction.  Be sure that you fully understand the auction process, but you could well pick up a real bargain in the auction room.

Another Investor

If you are successfully networking with other property investors, either through property clubs or a mentorship programme, there is a chance that you will come across people looking to dispose of their portfolio.  I know of investors who have picked up a good value property investment from a fellow entrepreneur needing to realise capital or review their property holdings.

Leafletting

If there is a particular street or location where you are keen to buy, then ask the residents directly.  Some decent quality leaflets that you can post through the door inviting people to contact you if they are considering selling their homes can be a good way of carefully targeting a particular geographical area in which you are keen to invest.