2007 Vs 2009

“The 14 Biggest Differences Between Investing NOW & Investing Pre Dec 2007”
[As printed in the Article for Your Property Network Magazine]

Continued…

11) Pre 2007: People got lazy. Diligence stopped. Assumptions were made about values & rents
Post 2007: People had to get smart. Those left in the market got smarter, did more study & they will do well in 2009 & beyond

12) People were offering 85% of market value & were happy to get 1 in 3 accepted
Post 2007: Professionals are offering 35%+ below market value & getting 1 in 20 to 1 in 50 accepted

13) Pre 2007: Networking was under-rated & under-utilised. Brokers fees were expensive & they were complacent
Post 2007: Networking is part & parcel of a professionals' toolbox for sourcing Property, building contacts & gaining finance. Brokers are attending more meetings & having to seek out business: their rates are reflected in this

14) Pre 2007: Mortgage rates would change slowly, incrementally & infrequently. Credit ratings were bypassed
Post 2007: Finance and rates are changing every day. Old rules no longer apply. Many lenders are not passing on rates & finding excuses not to lend. Credit MUST be solid

And here are the first 10 just to remind you

1) Pre 2007: Bubble Growth from '02 covered up Bad Property purchases
Post 2007: You are forced to buy well [25-35% BMV]. Lenders will not accept shortfalling properties, low yields and bad credit scores

2) Pre 2007: People were talking about growth as a vehicle for Property profit & buying cash-flow negative properties
Post 2007: You can buy genuine net cashflow Property now with yields on single lets of 9-12%. Don't expect growth for at least 24 months

3) Pre 2007: It was fashionable to buy rent-backs from leaflet dropping & internet lead generation sites. Many of these rent back tenants have now defaulted
Post 2007: The best source of genuine deals is now through the New 'Motivated Seller' – the Estate Agents

4) Pre 2007: There was competition everywhere. People were watching Property Ladder then bidding professionals out of the market
Post 2007: Your competition has all but gone. Most people are worried, & the majority of the rest can't get finance

5) Pre 2007: People were getting sucked in to New Build, Off Plan & Overseas Property as investments & distorted discounts
post 2007: Lenders will rarely lend against these now. People are looking at genuine discounts from sold prices on existing Property

6) Pre 2007: NMD was rife. People were getting 90 – 110% finance & lenders were letting it happen. Portfolios were built & lost fast
Post 2007: No Money Down is much harder. Loan to Values are at 65-75% & more deposits are needed. Focus on raising deposits & buying sensibly

7) Pre 2007: Existing portfolios at 75-85% Loan to Value were cashflow neutral or negative
Post 2007: Existing portfolios on tracker mortgages have become highly cashflow positive due to reduced interest rates. Save the cash: interest rates won't be this low for ever

Pre 2007: People were buying Property all over the UK: especially in fashionable city centres such as Leeds & Nottingham
Post 2007: Smart investors are sticking to local areas [within areas] and going back to fundamentals: yield and cashflow

9) Pre 2007: People thought that the market would never stop going up. Ever. When things are good; people think it will never end
post 2007: People think that the market will never go up again. When things are bad, they think it will never end

10) Pre 2007: Rents were static & quite low, especially in over populated city centres where development was everywhere. Void periods in these areas were long
Post 2007: Rents shot up as sales reduced. Yields went up. LHA areas became in increasing demand. With potential unemployment looming, Council paid rents could be a savvy move because rents may dip again

Be well and enjoy
Speak soon