What has 2011 got in store for the property market? With all the negative press & economic fear for 2011, should you be scared or excited?
The consensus from House Price Indices [HPI] indicates a flat market with uncertainty & downward pressure with lending & the economy
Interest rates on all UK property are at an all time low, and may have hit rock bottom. The rates are currently being held at 0.5% despite growth forecasts to 1.7%, the Bank of England [BoE] has been urged to hold the interest rate at the current low throughout mid 2011, to ensure a steady and sustainable recovery
If you are a time rich, but cash poor investor, then the following should prick your ears up. Many wealthy individuals have voiced their concerns over rising inflation over the next few years, and as a result are keen to put their money into the property market for better returns and to avoid their cash devaluing.
Most wealthy private investors, especially in London, can’t match the yields you are able to get training with Progressive, & this will have a compounded effect on your ability to attract JV partners. See our latest article on raising joint venture [JV] and private finance [PI], also on our Blog: http://tinyurl.com/3a44svr
They are now the new ‘Motivated Seller’ having to find alternative investment strategies [and fast] to replace loss of interest income. You can then make every deal a ‘None of your own money down’ transaction for you, whilst reducing your overall risk
Come the start of 2011, & despite low interest rates being set by the government aimed at reducing the number of repossessions, economic times are bad, uncertainty is rife for 2011, so repossessions are likely to be significant. People overspend through Christmas and stretch themselves, more divorces happen in January than in any other month, so things start to get hot.
Banks will hold off repossessing in December as a PR exercise so as not to get negative press for being unfair or unethical, & these will become backlogged, rolling into the New Year. Every year, repossessions are high in January, & it is vital for you that you are ready to hit the ground running then to buy undervalued properties whilst helping vendors & banks out of sticky financial challenges
Getting Banker status with Estate Agents, leafleting & positioning yourself as a serious buyer in December & January will largely dictate your investing success over the next 6 months. Most investors back off, go on holiday and relax in this time: a BAD decision. While your competitors are doing what everyone else is doing, you are able to accelerate & leverage your status, position and ultimately the amount of deals you get in 2011
The panic stricken talk in the media about the possibility of another dip in the UK housing market, & banks instructing surveyors to down value is bad news for sellers, but can create a contrarian opportunity. In 2008 & 2009 people sold because they believed the market was going down; selling on future downward prices, and anticipating loses, reflected in sale prices, before they actually happened.
The sales created the drop, NOT the drop created the sales. The contrarian understands this opportunity is likely to be here again in 2011 & will buy these properties at cheap prices and wait for them to go up
The Comprehensive Spending Review indicates that current negative pressure will account for an rough estimated 5% decline in house prices in 2011 as job losses intensify. This will be your opportunity to buy in this downward market, and those who wait for the market to ‘bottom out’ lose out by missing the bottom [because they are always waiting for it] & buying in the upward curve again
The rental market, especially in Q4 of 2010, has been one of the most competitive we have experienced in recent years. Sealed bids which have been common place in the sales market are now being applied to rental units which are in short supply & higher demand. This is largely due to would be buyers being priced out of the sales market, not being able to get finance because banks aren’t lending as freely and want higher deposits; thereby being forced to rent
Forget growth [for now], and think yield [cashflow]. With increased numbers of would be and first time buyers looking to rent who simply cannot afford the next step on the property ladder we are likely to see this strong rental market continuing into 2011
Although we have seen private banks becoming more dominant for the property market & taking their opportunity to get increased market share, we’ve also seen a number of big lenders entering back into mortgage market, which show signs of potential stability & increased liquidity. Despite this, Joint Ventures and Private Finance offer a more secure, stable, liquid & leverageable [yes, we made it up!] medium for accessing funds in the 2011 property market
If you can, however, establish long term relationships with private banks, they are offering very good lending rates to new and existing clients who meet their criteria. The art of borrowing finance with these banks will mean getting access more readily and easily than if you had shopped around and chosen a lender who you have no relationship with. It pays, especially in this market to be a private client with significant benefits. Commercial finance will become more important in 2001 to the contrarian investor than standard buy to let mortgages
Strategies such as Options [O], Sandwich Lease Options [S/LO] buying properties with Short Leases [SL], those which are ‘quietly’ marketed [QM], Joint Ventures [JV], Mortgage Hosting [MH] using Deeds of Trust [DoT] & leveraged strategies, along with trading & packaging deals [DP] will become more common place in 2011 for the cashflow investors
Get cracking NOW while everyone else is winding down for Christmas, do what others are not prepared to do to be successful, and enjoy the contrarian opportunity of 2011