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

Not only are Google proposing to make their website free – thus helping estate agents to advertise their ‘properties for sale’ for no cost at all – but estate agents will also be able to list their properties in a layer on Google maps.

And with this little gismo on board, it will make it even easier for property investors like you and me to view these properties as we will be able to get a Street View of this property and all its listings.

How will this website impact investors?

Now I am not being callous when I say this, but I am quite excited about the prospect of having access to another property website.

Yes I kind of feel sorry for Rightmove, who currently advertises 90% of the properties which are for sale in the UK – within a day of this rumour being launched their FSTE fell by 10%. But what Google are offering is a property investment route which is free from the costs and complications of extortionate estate agent fees.

Instead you will be able to focus on picking from a huge database of properties that estate agents have willingly supplied because they don’t have to pay for advertising.

At the moment this is still all speculation, and Google are choosing to not comment on whether or not it is true, but considering the success of their Australian property portal and the fact that property experts believe it will be launched in 2010, it is hard not to get excited.

What have Rightmove got to say?

Rightmove supposedly are not concerned about this move by Google as they strongly believe Estate Agents are more interested in raising their brand awareness than getting more properties online. However I’m highly sceptical about this.

Think about it a moment… In the current economic climate, Estate Agents need all the help they can get to sell their properties and a free advertising portal is more than ideal when the majority of buyers/property investors are searching the web.

Either way, should Google go ahead with their plans there will be plenty of property sources to choose from. The question is though: who will win out?

Wendy xx

According to ISPreview.co.uk over 75% of homeowners in the UK would choose to not buy their ideal home if it did not come with broadband speeds of at least 1Mbps.

Now maybe I am just old fashioned or maybe it is because I am not so bothered about the internet, but this is possibly one of the strangest reasons I have ever found for not buying a property.

Surely there are much more pressing reasons for not investing, such as wall damp, noisy neighbours or poor bedroom sizes?  But broadband?!

Yet if you are to take ISPreview.co.uk’s study seriously it would appear that having a good broadband service is now an essential part of property investment. Meaning as property investors we too should be conscious of our rental properties broadband speeds.

Continuing in their report, ISPreview.co.uk revealed that whilst 61.7% of homeowners would prefer to have broadband speeds of over 4Mbps:

• 20% felt 4Mbps would be adequate
• 50% stated that they were open to using fixed Wi-Fi services as an alternative to having landline broadband
• 50%+ would pay more for a house which offered faster broadband access

Either way it would appear that as property investors we need to add another property requirement to our list. Especially if broadband can actually impact upon property prices and raise their values.

Wendy xx

P.S. If you are interested in reading this story, follow this link: http://www.cable.co.uk/news/broadband-services-could-impact-on-the-property-world-19449130/

Ummm probably… but before you discount me as being heartless or ‘callous’ in this judgement let me explain…

You see it is a little known fact that repossessed properties sell for at least 5-10% below market values, meaning you can easily invest in these properties for more than 25% below their original 2007 asking prices, if not more which is fantastic news since property prices have begun rising again…

Now for anyone who doesn’t have a clue what I am going on about, I am discussing Credit Action’s recent report which declared that a new property is repossessed every 11 minutes. That is 131 properties every single day!

Yet this is not the worst of it…

According to Credit Action, the average household has now got a debt of at least £9,161 to their name –excluding their mortgage! Throw that into the mix and household debt rises to an astounding £58,340.

At £58,340, it is no wonder that every 3.97 minutes someone is declared bankrupt or insolvent – the finance market is in a very bad way.

Yet despite all this, it is impossible to ignore the fact that these repossessed properties represent an incredible opportunity to get the property market back on its feet.

With the demand for property growing at an escalating rate and the housing shortage becoming ever more dominant, these properties can easily supplement this demand by being transformed into multiple rental accommodations.

Maybe I am wrong about this. Maybe investing in these properties won’t make a difference. But you have got to admit that at an additional 5-10% off their asking prices it just too good a discount to miss.

Wendy xx

With bidding wars escalating for property, estate agents are reporting that many homes are now reaching their asking price – if not more – because so many people want to invest.

Take this statistic for example.

During July 2009, there were 292 house hunters to every estate agent who had 59 properties for sale. You only have to take one look at this figure to recognise that the property market is hotting up. It is electric.

Yet I have to admit that I am not sure whether to be impressed or concerned.

On the one hand this recommendation by housing experts for homebuyers to wait – unless they can get family to help them – is great news for investors like you and me. If they can’t buy, then they can easily rent, which means an increased tenancy looking for rental properties.

But with terrace properties selling for more than they fetched 2 years ago this is a dramatic increase considering average property prices have dropped 20% in the last year.

The problem is the growing housing shortage. Even with many first time buyers refraining from making property viewings because they know they have not got the cash to invest, there are still hundreds of homeowners to every property – creating even more competition for investors like you and me to invest.

According to the Council of Mortgage Lenders, the average first time buyer is 37 years old, whilst those who receive help from their parents are averaging at 31.

Either way, these ages indicate how hard mortgage lenders are making it for homebuyers to get onto the property ladder. Without outside aid, they simply cannot afford the 25% deposits to invest.

Wendy xx

In the last week, Moneyfacts has reported on average rises of 0.16% on 2 year fixed rate deals, with 5 year deals quickly following suit at 0.21%.

So what happened?

According to Moneyfacts this rise has been triggered as a consequence of inter-bank borrowing, and their rising costs. More expensive to borrow from, banks are now practically stumbling over one another as they try to pump up the cost of their fixed rate deals.

Is it that bad?

Now on the one hand you could argue that a 0.16% rise is nothing, but on a mortgage of £100,000 this could prove to be a substantial increase in the long term.

Take a look at the following scenario.

If for example you chose to invest in a £100,000 property (with a 25 year mortgage) on a fixed rate of 4.74%, that would equate to monthly repayments of £570. However, take this same property at an increased rate of 0.16% (bringing it to 4.9%) and you could face an additional monthly repayment of £9 (£579 in total).

On the outset, £9 extra a month is nothing, but spread that figure over a year and that is £108 more than you would have had to pay on a fixed rate deal of 4.74%.

When you examine the figures like this, it is easy to see why property courses encourage you to invest as soon as you can. If rates can change this much in a week, imagine what we could be facing in a year.

Wendy xx

During February and March their mortgage applications rose by 70%, which is fairly impressive by any banks standards, but is still shocking considering the government is urging them to remove their mortgage deals of 125% LTV’s.

According to the National Audit Office over 33% of their mortgages had fallen into negative equity, with a further 10% expected to join them by the end of this year. Look at this and they don’t come across as offering much security to borrowers.

There is almost 2 sides to their story.

On the one hand, their plans to lend an extra £14bn in the next 2 years, certainly projects a kind of confidence which suggests they are the place to go to get a mortgage. But on the other hand the proportion of borrowers who have gone into arrears whilst investing with them isn’t promising, rising from 2.92% in December to 3.67% of March. This figure alone leaves the impression that they are lending irresponsibly.

Then there is the fact that they have reported a loss of £1.4bn in 2008 due to them setting aside money to cover bad debts with customers.

Okay, okay… maybe I am looking at these figures negatively, but there is definitely plenty to consider when you examine their history.

It is just a question of determining whether their competitive mortgage deals are worth the risk. Already they are predicting negative losses for 2009 and have got the government asking them to reduce their lending – it is a very 2-sided story.

Wendy xx

If like me you were disappointed when many lender’s chose to not implement the Bank of England’s latest cuts, then this story is fantastic news. Let me put it to you clearly. In the last week the following lender’s have released an array of mortgage cuts that could be very beneficial to your monthly cash flow.

• Abbey and Alliance & Leicester: 5 year fixed rate 3.95%
• Woolich: 4 year fixed rate 3.99%
• Lloyd’s TSB: 2 year fixed rate 3.29%

And Nationwide are cutting their fixed rate loans by up to 0.58%.

Yet despite this revelation, mortgage brokers have published the warning that fixed rate loans are highly unlikely to fall any further. If anything they strongly believe they will begin rising again, so now it the time to take advantage.

Now I myself am fortunate that all my investment deals have relatively decent interest rates, but for anyone who did get caught up in higher standard variable rates, making the change to one of these lower rates could be beneficial to your monthly positive cash flow.

Take this scenario for example:

You have got a £100,000 3 bedroom property that produces an average rental income of £683 a month. The monthly mortgage repayment on a property of this type on an interest rate of 6.43% is £671. Do the maths and that leaves you with a passive income of just £12 (tiny).

But if you were to take the same property, bought at the same price, with the same rental income, and had an interest rate of 3.29% as offered by Lloyd’s TSB, your monthly repayment would only be £489.

Subtract that from your rental properties monthly repayments and that equals a passive income of £182 – a substantial increase in profits.

With that perspective, it is perfectly credible to say that now is the time to act, and set up a deal.

Good Luck! xx

I don’t know about you but as an investor I always try to keep a keen eye on the news. It is incredible what stories you can find in there and what they can highlight. I know that I personally find them very insightful when it comes to the type of loans I take out.

Take the BBCs recent article on homeowners who have become trapped by Shared Appreciation Mortgages. These ‘simple’ mortgages – that were available during the 1990s – were aimed at the older end of the market, and were meant to make their loans interest free. The only catch to them was that when these homeowners died or sold their property, the bank would get 75% of its increase in value.

Well you can see where I am going with this one. Whilst these loans were great in the 1990s – as house prices generally remained consistently steady – in today’s market this is bad news.

Imagine for a moment if you borrowed £17,500, and your house was worth £70,000 (at the time) but is now worth £200,000. When you come to sell that property you would have to pay the bank over £97,000 as well as the original £17,500 loan – essentially £115,000 for a £17,500 loan. Now I am no whizz at maths but I would definitely say that a repayment of £115,000 for a £17,5000 loan over 10 years ago is substantially higher than most interest rates. A lot higher.

Okay, so probably wondering what I am trying to get at, but there IS more to this story than press. You see this article proves how easily mortgages can trap you. Unable to sell or move without experiencing detrimental losses, homeowners who have taken out this particular loan are now unable to move.

Now as a buy-to-let investor I know that my key aim is not to sell my properties but to rent them out. But the idea that through taking out a simple mortgage that I could never ever be able to sell without making a financial loss is crazy, and very very scary. This article really puts things into perspective, and shows the importance of checking out your mortgage deal first before commiting to it. If you don’t check out the fine print you could easily find yourself with a mortgage loan that works to disadvantage your profits.

So my recommendation of the day is to take a closer look at the press when it comes to stories like these. It is surprising what you can gain for them.

Speak soon

Wendy

PS. for anyone interested in reading more about this story, here is the link where I found it: http://newsvote.bbc.co.uk/1/hi/business/7853087.stm

I was reading an article the other day that was looking at the differences between salaries and mortgage repayments, and according to the report it has supposedly fallen by 14.4% in the last year. Now I know you’re probably wondering what has any of this got to do with you as an investor, but if like me you are using your own money to fund your properties, this is great news.

Let me explain.

You see, all this report is essentially doing is proving that we are in fact paying less than we were a year ago on our mortgage repayments. Something that in the current financial climate is a bonus.

Luckily when I first started investing I was able to accumulate equity in order to afford my properties, but if the CML is right, I could now potentially be able to earn money back from my properties.

Admittedly, my salary has risen in the last 4 years due to the cash flow I achieve with my properties, but if I base this news on my regular job which is £22,000 a year and then add in the rental yields I am achieiving now (they’ve risen 15%+ in the last year) as well as the lower repayments I am now paying through my new loans/ tracker deals – technically I am making a £100 saving a month. Which to put it in simpler terms means I am actually earning an extra £100 a month.

It is incredible.

And even for new investors this is great news. Let’s just pretend for a moment that as an investor you are a first-time buyer – new to the market and new to investing. According to CML you could be investing in a property at 18.2% lower than you would have in February 2007 (if you compare your income to your repayments).

All of these figures just go on to prove how lucrative the property investment market is at the moment.

Now I know that your salary and your monthly repayments are only a small segment of what you need to succeed in property investment, but I have to admit this news left me feeling more positive about my property investments.

If any of you guys are interested in reading more on this story, here is where I found these figures: http://news.hotproperty.co.uk/Mortgage_repayments_taking_up_less_income,_study_shows_18975323.html

Any ways, speak soon.

Wendy xx