I hadn’t heard of him at first. In fact, when he first approached me, I thought he was a random schmuck selling me double glazing. Then I Googled his name and realised he was actually someone slightly more important than me. Imagine the shock! His picture even turns up in “Google Image” search. THAT’S BIG! Then when I saw his mugshot on the Daily Mail website refering to him as a “property guru”, I thought…”Oh shit, so Sarah Beeny isn’t the only property Guru on the planet”

Ajay owns approximately 200 properties (I’m assuming all BTL), currently worth £14.3m and has £0.7m worth of properties in the pipeline waiting to be added. He aims to buy 5 to 6 properties a week over the next few years or so. He’s currently investing in Scotland, Derbyshire and Lincolnshire. You can read more about his story here.

He’s doing it all without putting down deposits, and buying properties which are below market value (BMV). It all sounds pretty high risk to me, especially in this current climate. But then again, I play everything safe; I don’t even have sex without laying down waterproof sheets on the bed.

Ajay has what I call a high risk strategy (he may disagree- even though I’m right), while my strategy is the polar opposite; I’m playing the low risk game. I prefer buying propertis that are below market value slowly and putting down big deposits. My strategy suits me fine because I don’t plan on getting rich fast.

I’ve seen a few of these “buy property with no deposit” companies circulating around the scene lately, but I’m not entirely sure how to take them, or how they actually work. How it all works is explained here, but to be honest, I didn’t really understand it.

Ajay, if you read this (the Property Guru assures me reads my blog- we’ll see about that!!), help a brother out and explain what your company actually does for an average Joe that wants to buy a property without laying down a fat deposit. Additionally….how much will your services cost?

Just to clarify, I’m not endorsing or censuring the concept of “buying property with no deposit”, I’m just putting the idea out there. Why?

1) I think it’s a good time to think about buying
2) this kind of “no money down investment” may appeal to some people
3) Ajay approached me with his services
4) A lot of people are renting currently, and while they’re renting it’s pretty tough to save money. So while they can realistically afford mortgage payments, they can’t necessarily afford the deposit, which is where companies like this come in

Anyone had any experience with these types of companies?

Related posts:

Buying Off-Plan Property
15 Tips For Buying Property
Steps To Buying A Property

On Monday (17th November), Kirstie Allsopp and Phil Spencer from ‘Location, Location, Location’ were on the show as guests; ready to answer a few property related questions from the public.

I must admit, I don’t watch ‘Location, Location, Location’, but I know it’s an extremely popular show, and I know the pair are talked about quite a bit in the property industry, especially the extremely do’able Allsopp (anyone else feeling her sexual vibe?).

During the interview they answered 3 questions from three different callers. I thought the questions were pretty good. Good in the sense that they’re questions that I imagine a lot of people want answering right now, in this rough climate.

I recorded the Q&A session because there are a lot of good tips floating around in the banter (minus Chris’s expert advice). Just for clarification, it’s all pro-buying; so for those who have been bitten by the HPC (House Price Crash) bug, this may annoy/humour you (depending on your personality) …

Question 1.

I’m looking at investing into buy-to-let. But with the current economic climate I’m a bit dubious about what to do. Any advice would be appreciated…

Answer to Question 1 in mp3 format

Question 2.

I’m looking at a house tomorrow. My question is, what is the realistic amount I can chop off the asking price, so in 6 months time I’m not in negative equity

Answer to Question 2 in mp3 format

Question 3.

I’m a first-time buyer, lookiong to purchase at some point next year. I know getting a mortgage is tough now, so i’m just wondering what a realistic type of mortgage I would be looking at for a 1 or 2 bedroom flat?

Answer to Question 3 in mp3 format

I guess the focal point was that regardless of the current climate, in the longterm, you’re unlikely to lose as long as you buy the right property.

Related posts:

Sarah Beeny Vs Kirstie Allsopp
15 Tips For Buying Property
We’re On Team Kirsty Allsopp

Example scenerio
John wants to be a landlord, so he’s on the hunt to buy a property. John has seen 2 properties he likes. Property 1 costs 150,000 with a potential rental return of £600pcm. Property 2 costs £180,000 with a potential rental return of £775pcm. Which is the better buy?

The formula to work this out is quite simple. It basically boils down to “rental yield”

What is rental yield?

Rental yield is the amount of money a landlord receives in rent over one year, shown as a percentage of the amount of money invested in the property.

The higher the yield, the better.

Calculating rental yield

The formula:
mrr = monthly rental return
i = investment

Yield = mrr*12/i*100

Rental yield for Property 1

Monthly rental return = £600
Investment = £150,000

£600 * 12 = £7,200
£7,200 / £150,000 = 0.048
0.048 * 100 = 4.8 % yield

Rental yield for Property 2

Monthly rental return = £775
Investment = £180,000

£775 * 12 = £9,300
£9,300 / £180,000 = 0.0516
0.0516 * 100 = 5.16 % yield

Conclusion

Although property 1 costs less to buy, property 2 has the better return.

What is a good return yield percentage?

Will, it’s actually a subjective issue. I personally think any property which has a return yield of 7%+ is extremely good. I certainly wouldn’t put my nose up at a property which generates that kind of yield.

Rental Yield Calculator

To make life easier (because that’s what I’m all about), you can use the yield calculator below.

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I didn’t really realise how many reasons there are behind people choosing to rent, and it seems though more reasons surface every day. I mean, when someone tells me they’re renting I just automatically shuffle through 3 of the most possible justifications, and try to guess which category they fall under:

• priced out of the market
• prefer responsible-free lifestyle
• scared of investing at such turbulent times

They’re the most common reasons, right?

I was talking to one of my tenant’s last night about general crap. Then he started talking about the property he’s just purchased. He’s due to move out in 2 months time; he’s bought a house just a few blocks down from the property he’s renting off me. He told me the only reason he and his wife rented for a year was so they weren’t caught in a property chain.

Hmm..that seemed pretty odd to me. They spent nearly 10k on rental payment so they could get into a “chain free” situation. I can appreciate how frustrating being in a chain can be; but for the sake of 10k, wouldn’t you rather just tolerate the pain? I sure as hell would.

I guess the couple must have some dark stories closed away, where they got stung pretty badly by being in a chain. I didn’t pry, even though I wanted to ask more questions. He then began to tell me that it wasn’t the first time they went into rented accommodation to avoid a chain. My tenant basically said they can’t be arsed with the hassle of being in a chain, and from their experience being in a chain free situation makes all the difference when moving homes. After all (I know it’s cliché), but they say:

moving homes is the most stressful time of someone’s life

I can see my tenants’ point, and I can sort of understand their madness of splurging 10k on rental accommodation. The couple aren’t exactly spring chickens anymore, so any fragile turbulence could cause the old dears to topple over like dominos. Why live the later end of life on a rollercoaster, when you can chill in red, plastic trousers like P-Diddy?

But seriously, spending 10k on rent to avoid a property chain? It doesn’t take a year to find a property and push through the sale. At least not from my experience.

Having said that, I can definitely see the benefits of renting to gain a “chain free” status.

Benefits of renting to gain “chain free” status

• you’re not relying on someone to purchase your property
• there’s less stress
• there’s less paperwork on your behalf
• there’s less solicitor costs on your behalf
• you don’t generally have to rush around; everything is more relaxed
• the chain can only collapse on one end, as opposed to both ends- worst case scenario is that the chain on top of you collapses, meaning your purchase might fall through. But at least that won’t hinder your non-existant sale (which happens all the time with people caught in the middle of a chain). Half the stress.

The advantages of being in a chain-free situation are pretty self-explanatory. And I only covered one side of the process there. By that I mean, they were also in a similar situation when selling their property. They were in a protected area of the chain- right at the top, where all they had to do was wait for a buyer to pull through. Ultimately, they sliced up the whole process of buying/selling property into two, stress free sections (at a cost of course). It’s not quite Ocean’s Eleven slick, but it’s a nicely executed performance.

However, as stated, I would NEVER rent for a year just to become chain free; the financial implications are just way too high for me. Hmm…but for a substantially shortened period? Perhaps. While I’m not necessarily a follower of this method, I’m still willing to endorse it. I see the benefits, I see the sense, but I also feel my pockets getting lighter…

Just thought I’d throw the idea out there; maybe someone who has also had chain related stresses is also on the same wavelength as my tenants.

Related posts:

My Landlord Wants To Sell The Property I’m Renting
Property Chain Is About To Break
Renting Vs Buying

Once you’ve found a property that you’re interested in purchasing, secured the mortgage and have acquired the services of a conveyancing solicitor, you’re just about ready to start thinking about a structural survey.

What is a structural Survey?

It’s a report that is designed to satisfy a consumer that the property has no obvious structural defects. The survey is basically there for consumer protection. There are three main types of surveys available:

• Basic valuation
• Homebuyers Survey & Valuation
• Full structural

The differences are pretty straight forward; each report gets more elaborate from each other. The full structural is the most elaborate report, but it comes at a greater cost than the other two options. However, a full structural report has the potential to pick on defects that the other two reports may not. If you are buying an old property, it’s imperative you loosen the purse strings and opt for the full structural option. If your property does not need a comprehensive building survey, but you need more than just a simple Valuation, then the ‘Homebuyers Survey & Valuation’ is what you should require.

Basic Valuation

A basic valuation is an inspection performed by your mortgage lender to ensure their investment in your property is worthy. Essentially, your lender wants to know whether your property is worth at least the amount they are lending you. The valuation is not actually a survey; it’s merely a limited inspection. A property can have defects that a mortgage lender won’t care about and therefore won’t flag it on the report, however, it may affect you once you own the property.

If problems emerge which the basic survey didn’t warn you about then you have a case to claim for damages to cover the necessary repair work. A lot of people believe otherwise, but you can make claims if the problems are blatant and unnoticed.

Homebuyer’s Survey

This survey is the mid range report of the three. The service is carried out to a standard format defined by the Royal Institute of Chartered Surveyors (RICS). The survey is designed for properties built with in the last 150 years, which are of conventional construction and in reasonable condition. The report focuses on significant and urgent matters, such as:

• Property’s general condition
• The value of the property on the open market
• Comments on the existence and condition of damp proofing, insulation, and drainage
• Results of any testing of walls and dampness
• Any defects in accessible parts of the property, which may affect value
• Urgent matters that need assessing before entering into exchanging contracts

Full structural Survey

Here are a few of the issues a full structural should report on:

• Background: who wants the property and where it is located
• Circumstances of the inspection: E.g. what the weather was like on the day on inspection
• Description: history of the property; how the house has been adapted over the years
• Construction: what material the walls and roof are made from, and any other construction features
• Roof coverings: a detailed description of all roof coverings including porches
• Rainwater goods and waste pipes: detailed description of efficiency of the guttering
• Walling: detail of the walls both internal and external
• Joinery: condition of external and internal joinery e.g windows and doors
• Decorations: summary of how good the paintwork is
• Damp proof: notes on the damp and ventilation
• Garage and outbuildings: description of the garage e.g what kind of condition it is in
• Drainage: location and state of drains
• Site: description of the level of the site, fences, gardens and nearby roads
• Roof void: internal roof description including state of timbers and ceiling
• Internal flooring: description of flooring in all areas of the property including the type and finish
• Ceilings: what materials they are made from, and the height
• Timber infestations: report on whether the wood is suffering from woodworm, dry rot, wet rot
• Electrics: state of wiring system
• Plumbing: strand of water pressure, location of stop cocks and storage rank
• Heating: type, age, and efficiency of heating system
• Additional enquires: any additional reports you required

Bear in mind, full structural surveys can be performed to meet your needs. If there is anything extra you want checked, you can request it. Surveyors are not obliged to inspect inaccessible areas- they won’t check in the corner of your loft for rotting timber unless you specifically ask them to do so.

Why is it a good idea to get a structural survey?

Buying a property is an expensive process, so it’s only natural that buyers want to make as many financial shortcuts as possible. One of the most common shortcuts is skimping on the survey. Buyers tend to rely on the information provided by the basic valuation when deciding whether or not to purchase a property. That’s probably acceptable if the property is fairly newly, but relying on an valuation report for an old or unusual property is a big gamble, and I would never advise it. Remember, a survey will give you a legal recourse and benefits the borrower than the lender, a valuation won’t.

Forking out £1k on a structural survey may seem steep, but it doesn’t sound all that expensive when you consider how much money it could save you. You could purchase a property without doing a survey, and then later on find out that the entire roof needs restructuring, which could cost you £15k. Once contracts have exchanged, the vendor is no longer liable for that property.

Who does the survey?

The valuation is usually done on your behalf by your lender. If you want to go a step further by getting a homebuyer’s or full structural survey, you can instruct an independent surveyor to do so. However, your lender can also usually arrange it for you at a reasonable cost.

How much is a structural report?

Costs can vary, but a basic valuation can start from about £200, and a full structural can cost about £1k. These are vague estimates. Feel free to shop around (I advise you to do so).

Do I Need a Valuation or structural Survey?

The valuation report is the bare minimum requirement from most lenders. You won’t be granted a loan without one. The costs are usually included in your mortgage fees.

Related posts:

15 Tips For Buying Property
Steps To Buying A Property
Using A Residential Mortgage For a Buy-To-Let Property

It’s important to remember that any ‘property purchase’ IS an investment, regardless of whether your incentives of purchasing is purely based on your personal pleasure and comfort. Further down the line you may want to, or even need to, sell the property and that’s when the problems you’ve loved to accept may cause problems for other potential buyers.

The key to property investment is buying a property that people WILL buy, whether that be for renting or buying, and the best way to do that is to find out what people DON’T want. Right.

Garden

Topping the list of ‘must-haves’ is a garden. Yup, a patch of private green to roll around on and do whatever we damn please is a desirable feature. What can I say? People like the green, whether that involves BBQs or topless sunbathing, I’m not going to argue.

If you’re buying a property without a garden, or an extremely small garden, remember you’re heavily alienating yourself from the majority of the market when it’s time to sell. Not a good start.

Garages

I’m pretty convinced that a buyer knows whether they want a garage or not before they start property hunting. And considering how much extra a property with a garage costs (a significant amount), I’m going with my spider senses, which tell me that a lot of people would happily live without a garage because property is expensive enough. Besides, it’s not like the average person drives a Bentley anyways. However, according to The Co-operative Bank, 28% of people consider a garage a crucial deciding factor. Perhaps it’s something to think about…

Vandalism/graffiti

It’s all bunnies, daisies and sunshine when the property is in perfect condition, but what about the neighbourhood? According to a recent survey by Propertyfinder.com, 79% of people are completely put off by vandalism and graffiti. You know the old saying, “you can’t put a diamond on a piece of brass and expect it to look like gold”. No matter how nice a property is, if the surrounding area is a bogged down by unsavoury acts of deviance, the property won’t shine. Ever.

Before committing to a purchase, do some independent neighbourhood watch; you know, look at a few walls and stuff for graffiti.

Teenagers loitering in the street

In recent years there’s been an abundance of rats populating the streets; usually seen in Burberry and 9carrot Argos jewellery and going by the trade name of “chavs”. These youths have become so powerful that they can actually make house prices tumble like Lego blocks.

Apparently 52% of home buyers are put off by teenagers loitering in the street. I’m not usually one to judge and generalise, but I can safely say that a pack of chavs is enough to put me off from a neighbourhood…

Once again, independent neighbourhood watch is highly recommended. Look out for Burberry covered car seats and blurring Garage music.

House on a main road

Not the most obvious hurdle, but definitely an important one. 30% of people wouldn’t even contemplate buying a property on a main road. Why? Well, I can think of a few reasons. For one, it would be extremely noisy, especially if the property didn’t have double glazing. Secondly, pulling in and out of a main road in a car could prove to be frustrating, not to mention dangerous. Those are just a few reasons out of several. Ultimately, I know which I would prefer if I had the choice between a property tucked away in a cul-de-sac and a property on a main road. It’s a no-brainer for me.

Transport

A lot of people rely on public transport; whether that be so their kids can get to school or because they need it for work themselves. Not only is public transport an extremely desirable feature, but it also adds a lot of value. Research released by HotProperty.co.uk finds property within a five minute walk of a tube station can be up to 21% or some £80,000 more expensive than a similar property half an hour away, where public transport lacks. Cha-ching. It’s definitely worth taking into consideration…

Related posts:

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Easily Fixable Features That Puts Buyers Off
Questions Buyers Should Ask Estate Agents

I was recently put into a situation where I had the opportunity to snap up an extremely undervalued property. It was undervalued by 50-60k because it’s in dire need of some intensive renovation loving. However, after making the required amendments, I would still be quid’s in by a considerable amount. Unfortunately, I’m not a builder, nor do I have anyway near enough knowledge or experience to try and shortcut the project by doing any of the work for myself. If I was going to take on this project, I would need professional help for pretty much everything. I suppose I could manage slapping a few coats of paint onto random walls and hmmm…errr…yeah.

From what I understand, the problems with the property are quite serious. It’s suffering from a serious case of subsidence. The walls aren’t completely crumbling, but I’m convinced a horny couple could bring the house down. Boom, Boom. There’s also something wrong with the roof. Don’t quote me, but I think the agent said there’s a “rodding” issue. I tried googling it, but no cigar. I’m starting to think I misheard the snake. But whatever, the point is, the place is all kinds of fucked up. If an agent admits that a property is in bad shape in this currently dry market, it really must be messy.

My main point is, being a developer is one thing, but I’m merely a buy-to-let landlord. There’s a significant difference between the roles and key skills each role is required to have. After consideration, I decided to walk away from the project for various reasons.

Here’s a list of reasons why i walked away; perhaps these are reasons you should consider if you’re in a similar position:

• Renovating a property can be a full-time job; I already have a full-time job. I couldn’t deal with having 2 full-time jobs. More importantly; no word of a lie, I’m seriously cool as shit, which means I have a social life that needs maintaining. When i’m not working, blogging, playing chess online, watching Star Trek and painting War Hammer figurines, I seriously am cutting shapes on a dance floor in a trendy establishment. Bottom line, I would struggle to find the time, which this development desperately needs.
• While i’d be at work during the hours of 9am to 5pm, I would need someone onsite to manage the project. More specifically, I would need someone to keep an eye out on the the cowboys (the builders). I’ve heard too many stories about workmen taking one too many sandwich breaks. The last thing I want to do is pay a group of hairy lumberjacks to sit on a bench, with their asses hanging out, eating cucumber sandwiches.
• I’ve never done a development project before. I know, I know, that’s a weak excuse; if we all used that excuse, no one would do anything. But the point is, because I wouldn’t be on site for the most part of the working day, I actually wouldn’t learn much. I already know how to pay people to do things (all kinds of things). I’d feel a lot more comfortable taking on a development project whilst I’d actually have the opportunity to learn something. There’s really not much point undertaking huge projects if I’m not going to walk away any wiser. I want to learn so I can prosper with my future projects.
• Renovating property can be a lengthy task. All my investments are long-term projects and I intend on keeping them that way. I’m not one of those big shot developers like you see on Property Ladder. If I were to buy this property, it would be for buy-to-let investment purposes. The renovation would take at least 6 weeks, which would mean I would be paying the mortgage out of my own pocket for at least 2 months, as opposed to rental income taking care of business. That’s lost profit as far as I’m concerned.
• Because there are some major fundamental issues with the property; the restoration would entail going down to the core of the property and start mending from the base. When builders start digging deep, other problems usually start to come to surface. That’s when time and money starts to spiral out of control. I prefer it when financial skeletons remain in the closet.
• I go away on holiday in 7 weeks. If I start getting the wheels in motion now, I could end up owning the property whilst i’m out of the country. That would be a foolish mistake. I know I’ve referenced Property Ladder already, but I just need to do it one more time, I promise. Seriously, Property Ladder is like my Quran. Anyways, I’ve seen 2 episodes now where the developers go away on holiday during mid-development. The developments get delayed and they ultimately lose money. What kind of bullshit is that- going away on holiday during a 6-8 week development? Crazy mofo’s…I seriously can’t understand the logic behind that kind of Tom foolery.
• Like with all developments, you need good tradesmen to execute the development. Not just in terms of skill, but also morality, as in, won’t charge you an arm and a leg for a job that’s only worth an arm. Do you know any honest tradesmen? I sure as hell don’t. Most experienced developers have relationships with tradesman, consequently have a team of people they can trust for their projects.

They were all my main concerns; enough to scare me away, that’s fo’sho. I’m not trying to encourage everyone that has development aspirations to run away from their dreams like a little sissy. I’m just saying, if you don’t know shit about renovating property, be careful. It’s not all glam like you see on Property Ladder. Shit, I lied (I promise I won’t mention PL again, seriously). Perhaps before you decide to undergo any development projects, you may want to consider my points and plan ahead so you’re prepared.

For anyone considering taking on a development project, i’d like to point you in the right direction, Golden Rules For Property Development.

Related posts:

Buying Off-Plan Property
Steps To Buying A Property
Buying Property With No Deposits

I’ve Seen A house I like

I’ve been looking at a few auction websites for properties in a particular location that will shortly go under the hammer. It’s not necessarily an upcoming ‘hotspot’; it’s already a well established area. However, there is great rental return in the area and properties with in that area rarely go under the hammer. That tells me that there isn’t much repossession going on there, which is good because it means the area is most likely going to sustain its value. If a location is being haunted by repossessions it probably means that it’s going through a meltdown. That’s never a good sign.

I’ve spotted a house that is extremely under priced, and the area is extremely sought after by tenants. It’s not clear whether it’s a repossessed property, so I can’t determine whether it’s being sold by a private owner or a lender. The particular auction house that has taken control of the sale is a bit ridiculous, in my opinion. Even as a bidder, you need to register and pay an excessive registration fee. Apparently the commission they make from the sale alone isn’t enough. Selfish gits.

Approaching The Vendor Directly

What I plan on doing probably isn’t ethical, but it is legal, and it’s a good way of avoiding certain costs and getting in there first. I’m going to contact the seller directly and see if I can cut a deal without using 3rd party mediums. I hope that the property hasn’t been repossessed, but the vendor is at the stage where he/she needs a quick sale. I’m going to knock on the door in attempt to turn over a few stones.

The Benefits Of The Direct Approach

From my experience, a desperate vendor would rather sell directly to a buyer due to the added bonus of a super quick sale and the abolishment of extortionate fees from the middlemen. So I have nothing to lose. If it doesn’t work out, then it doesn’t work out. But there is no harm in trying. In all honestly, I’ll probably always try and contact the vendor directly in all my pursuits this year. Eventually someone is bound to strike up a deal with me on the aside because private sales can be so much quicker and cheaper, and you get the luxury of not having to deal with snake oil agents.

It can be a gamble

My method is a gamble because I could end up offering more than what it would have gone for at auction and vice versa. However, i’ll still be getting a discount property and i’ll still be paying what I can afford to pay. And most importantly, it’s an opportunity for me to get in there first, consequently reducing the chance of missing out on the deal.

Is what I’m doing ultimately praying on the vulnerable?

I’ve heard that argument before. The psychological state of a desperate vendor is exactly that, desperate. So I can understand why people would think I’m taking advantage. But the truth is, the vendor needs a sale one way or another. The vendor doesn’t have to take up on my offer, I’m just providing another option for a quick-sale.

What about the Estate Agents and Auctioneers lost profit from your direct approach?

Exactly. What about them? They’ve had an easy ride in the last decade and they charge extortionate amounts. Why should they be the only options available?

Buying Property Cheap

I definitely plan on buying this year, but I plan on buying cheap. Approaching vendors directly can be a good way of getting a good deal, especially if their home is going to sell at auction. I’m looking for “cheap” to the point where the property is approximately 20% under current market value, so I can afford to penetrate a hit by the market (if shit happens). A lot of people are scared to death of property right now and that’s why it’s a perfect time to buy. I guess I should thank the media for that (but I won’t).

Has anyone else ever been a sneaky little shit and contacted the vendor directly to strike up a deal? Let me know your story!

Related posts:

What Are The Signs Of An Approaching Property Crash?
Vendor Compromised With A Sale Price
The Advantages And Disadvantages Of Selling Property Privately

Investing in up-and-coming locations rather than already popular locations will give you a much better return on your investment. So how do you identity a potential ‘hotspot’?

There are a lot of techniques used to predict an upcoming ‘hotspot’, but a lot of them I find limited in terms of usefulness. For example, some argue that ‘good schools’ can be used as an indication to predict a hotspot. Yeah, I don’t believe that. ‘Good Schools’ are more likely to be in already established areas; when was the last time you heard of a good school in the middle of Moss Side? Here’s a list of techniques that I use to determine which area is most likely to be a potential hotty…

1. Employment Opportunities
Huge development projects that will encourage a mass growth in employment such as factories, business parks and/or hospitals is a pretty good indication of potential local growth. Employment opportunities can attract hundreds, if not thousands of people from other areas. Those people will need places to live, or rent. A local population growth can also have a significant impact on future developments i.e the more people in a town, the more commodities a town will need.

2. Regeneration
If an area has plans for major regeneration then it’s a good sign that the local authorities have funding to pump into the local area. An area with a positive agenda like regeneration is a no-brainer for investment. Sweeping the grit off the streets and transforming into a more presentable area will entice people to move into those locations, and that’s when property will be in demand.

3. Growing Student Areas
A lot of areas in London have become extremely trendy for students, especially places like Clapham and Dulwich. A lot of students initially flocked to those areas because they were cheaper alternatives to the city. Due to the mass growth in student population, a lot of trendy bars and restaurants started to emerge. Once upon a time it was extremely affordable to buy in those areas- not anymore.

4. Upcoming Surrounding Areas
Look for areas that aren’t so popular, but have surrounding districts that are already popular and desirable. Eventually when those popular districts get overly popular and expensive, the demand for property will overlap into the surrounding locations. I just mentioned that Clapham and Dulwich have become increasingly popular, and that has had a direct impact on the surrounding district, Hackney- a once seen hell hole is now becoming a ‘hotspot’ thanks to it’s local brothers and sisters.

5. Transport Development
Transport is (debatably) at the top of the list of being one of the biggest factors that draw in buyers and renters. Good transport links automatically add value to a property’s price tag. Look for areas that have plans to improve local transport; you can get information from your local council.

Research released by HotProperty.co.uk finds property within a five minute walk of a tube station can be up to 21 per cent or some £80,000 more expensive than a similar property half an hour away.

Important note
Wherever you decide to invest, make sure you get in early. Once a ‘hotspot’ leaks out, sheep will follow and the profit margin will shrink rapidly. Stratford was announced as being the central point for the Olympics 2012- the people that got in early don’t need to worry about their pension- those that want to get in now are running a risk of losing their pension. The surrounding areas, however…

Related posts:

Coming To The End Of Your Fixed Rate Mortgage Period?
How To Spot A Good Landlord
There’s Never A Bad Time To Invest In Buy-To-Let

Anyone can squeeze money out of a booming market; it takes a good investor to squeeze money out of any given market condition. I don’t practice any magic formulas, I follow the basic theory of supply and demand. You buy in an area where demand is low but where you believe more people will want to rent in the future. Those areas are known as the “upcoming hotspots” For example, before it was announced that the 2012 Olympics were going to be held in London, a lot of people took a gamble and purchased property in the Stratford area because the proposal was to centre the events in the planned Olympic Park in Stratford. When London got the go ahead, those people had money signs in their eyes.

While that was a good spot, I wouldn’t usually endorse buying in major cities like London, Manchester or Bristol. Buying in well developed areas is a mugs game; you need more money to invest and the profit margin isn’t all that flexible. Instead, I go for small towns that need a bit of TLC, such as Harlow. For the amount you would need to spend in London for just 1 property, you could alternatively buy 3 properties in Harlow and get a better return.

Last year I purchased a property in Harlow, Essex. This was around the time when speculation of the expected “property crash” started to race around the circuits. Harlow is a small town outside of London, but it has a few thriving business parks and a big hospital which attracts plenty of workers; workers that need shelter. At this point property prices were at their peak, so buying was out of the question for a lot of people. But there were a few areas in Harlow that were extremely affordable which were prime locations for nurses and factory workers to find accommodation. While this wasn’t entirely a ‘hotspot’ find, because the area was already developed, the rental demand was there, and there were still parts of the town that weren’t ‘cosy’. In general, if parts of a town are being developed, it will positively reflect on the less developed areas. The logical step was to find an affordable property based in one of those less developed spots, which had scope to attract a lot of tenants. One year later, while the cynics are still hauling all their savings under their mattress and bracing themselves for a crash, the property has gained value by 20k, and currently leaves me with £100 beer money after paying my mortgage with the rental income I receive.

The hotspots idea is not rocket science. I look for areas that conform to my price and rental requirements. But hotspots cool as the sheep try to cash in by buying and pushing up prices. It’s the ones that spotted the areas before getting hot that really cash in. Which leads me back to my key point- research is key to finding those hotspot locations. Look for small towns that have plans for major developments- anything like hospitals or major business parks. Places like that will bring people in by the masses, and they will need somewhere to live.

Right now, more and more first time buyers are being priced out of the market and that’s great news for buy-to-let investors; those people need to live somewhere, so they have to rent. The reason they can’t buy is they cannot find the deposits and/or maintain the mortgage payments. With demands being so high for rent, it’s a buy-to-let paradise. Point being, don’t let a overpriced market scare you- no one is going to rent if houses were affordable and the market was booming. Would they?

During the course of an investment, prices may fluctuate and that’s why investing should be all about the long term. I buy to hold and not to trade. If you move in and out of the market and expect to make up on capital values what you lose on rents then buy-to-let will be a disaster. Long term buy-to-let investors won’t even feel the dips in the market, they’ll only feel the equity growth over the long haul, and that’s exactly why I’m still looking for property to invest in, while others are camping under their doorways with safety helmets on. Short-term fluctuations in property prices shouldn’t be a concern. Just look at the way prices have increased over time. Even if prices fell tomorrow, they will crawl back up again. It’s just the gloom-mongers who are making people more cautious at the moment. The only thing that can kill me is a quick rise to 10% in interest rates. That’s extremely unlikely to happen, especially since rates are currently at 5.5% and are expected to drop later on during the year. But if interest rates rise it will largely be because of inflation. So my rents will go up as well. You’ve got to have a cushion against harder times. Otherwise, you’ll be a distressed seller forced to get out of buy-to-let at a loss.

There’s never a bad time to buy-to-let, there’s only a bad time to sell…

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