Month: January 2020

Our Plan for Property in 2020

I often get asked by my investors and potential investors what my plans are for property. While we help our clients grow their wealth through property, we’re also active investors ourselves. This article outlines our plans for 2020.

When planning the year ahead, we need to consider our 18-month cash flow for the business. As I’m sure you can calculate, our plans for 2020 were formulated during the summer months of 2019. That means we’re now looking at plans for early to mid-2021 too! Outwith the services we provide to our investors, we strive to generate strong cash flow for the business both from regular monthly income from rental properties and also lump sums of cash from buy-to-sell projects.

This year we plan to grow our portfolio of buy-to-let properties. Ideally, this will be spread evenly across the four quarters of the year, but depending on the properties sourced off-market, there can be particularly busy spells throughout the year. We aim to buy properties at or below market value, to ensure we make money when we buy, protecting the investment should the market take a dip. If we needed to sell a property rather than to hold and rent, the equity gained on purchase is essential to allow flexibility in the sale price. We ensure our rental properties are in the top 25% of rental properties on the market in terms of standards of living, therefore every property we purchase we renovate to a high standard before moving tenants in. This ensures we have minimal gaps in tenancy and our tenants enjoy living in our properties. 

We have a small number of buy-to-sell projects planned for this year. The type of properties we focus on renovating are older properties with period features, and these tend to be flats or houses within Edinburgh. We find the key to a successful buy-to-sell project is targeting the customer who is going to purchase the property once renovated. For example, if we decide to purchase a two-bedroom property in a popular area for young professionals and university students, the renovation is going to be quite different to renovating a 3 or 4 bedroom terraced home or large apartment that we plan to sell to a family. Always tailor your renovation to what your potential buyer wants. If you know your local area well, start looking through homes sold recently in the area that have achieved a sale price higher than expected. If you can identify any special touches that made the property so popular with buyers, you’ll do well in a renovation project.

We would love to hear from you if you are interested in investing in property. We offer a fixed return on investment for investors who want strong returns from property without owning property personally. We also enjoy working with investors in joint ventures.

If you would like more information about investing with us, please click the button below to book a call with me.

Mortgage Changes for 2020

Whether you’re a first-time buyer, a homeowner looking to remortgage or a buy-to-let landlord, 2020 is sure to be another rollercoaster ride in the world of mortgages.

There have been a few big changes in the mortgage world for different groups of buyers.

First-time buyers will definitely be happy with some of the recent changes. We have seen 95% LTV mortgages re-emerge on the market place. Barclay’s paved the way for more relaxed borrowing rules, allowing individuals to borrow five times their salary as first-time buyers (so long as their salary was above £30,000). This is very interesting for investors looking to flip properties, as first-time buyers often look to purchase properties that have recently been renovated that are ‘walk-in’ condition.

Rates look set to stay low for now, with many homeowners capitalising on fixing their mortgage for five years at a low rate. Two year fixed rate mortgages still have a little wiggle room to give in comparison to the five year fixed rate deals, so we will have to wait and see if the banks adjust the two year fixed rates.

Your age can play a part in how much you can borrow and for how long. Recent changes in the market have made borrowing easier in later years, with some lenders removing their maximum age for buy-to-let mortgages. We also saw the introduction of 40-year term mortgages, which is likely a reflection of the increase in the number of first-time buyers in the housing market.

For those of us who own our own homes, now could be a good time to remortgage. With rates so low and some lenders offering a very competitive ten year fixed rate mortgage, many homeowners will look to remortgage. As rates are low, and stamp duty costly on higher-end properties, it’s likely we will see an increase in borrowing for those remortgaging to renovate their homes or add extensions, as an alternative to moving home.

Landlords will undoubtedly need to have their wits about them in 2020. 2019 saw many lenders offering fantastic rates with cashback, but landlords have been caught out with upfront fees of up to £1,995. Two year fixed deals are becoming ever more popular with landlords who are uncertain about the long term profitability of owning properties affected by the mortgage relief tax cuts. 

As you can see, 2020 will be an interesting year for lending across the mortgage spectrum. It’s good news if you are due to remortgage, and also great if you are a first-time buyer. It’s potentially less exciting for landlords, however, using a mortgage broker who has access to the whole market may help with profitability from your portfolio. 

If you’re interested in investing in property but don’t have the time, knowledge or know-how, then click the button below to book a call with me.

Are Your Savings a Thing of the Past?

From a young age, most of us are taught by our parents or teachers to save part of our earnings. Save for a rainy day, a deposit for a house, a special occasion, or an emergency. Saving our money is ingrained in us. 

But is saving money in the bank a smart thing to do, both now and for future generations?

Putting money into a savings account is a smart thing to do for a percentage of your wealth, to ensure you have money set aside in case of emergency. But for many parts of Europe, individuals are being charged to do this.

The European Central Bank lowered its interest rates below zero during 2019. Negative interest rates mean it costs you money to keep your savings in the bank and was introduced as a last resort to stimulate growth in the economy in Europe. The plan was to lower interest rates below zero to encourage banks with significant cash holdings to get capital out to work.

We’ve all heard the phrases “the rich are getting richer” and “it takes money to make money” but many of us would assume this relates to the rich earning high salaries and accumulating savings in the bank. When we think about our savings account, for example in an ISA, you’d be lucky to make 1% of interest per year on your savings. Considering it costs you money to have your savings in the bank in Europe, this begs the question; how do the rich grow their wealth if their savings are not growing in the bank.

Many individuals who are growing their wealth faster than the average individual are doing so by investing their capital in assets. We can accumulate wealth by the rising value of assets, such as property and shares. The wealthier have more assets and more capital gains. These are banked, not consumed, explaining why the so-called rich get richer. Property, in particular, has been very profitable for investors in the UK since the 1990s.

Could it be time to challenge our beliefs of putting a portion of your salary every month into savings? I’d say it’s time to reassess what part of earned income is saved, and increase the portion that’s invested in assets. The start of a new decade could be the perfect time for you to assess your current wealth and consider investing a portion of your savings in assets. 

If you’d like to get into property investing but don’t have the time or knowledge, book a call with me using the button below to discuss how I could help you on your journey.

2020: What’s in Store for the Housing Market?

We are now officially in the next decade, with many looking for smart ways to invest their capital. Property one of many investment vehicles for individuals looking to grow their wealth. But what’s on the cards for the housing market in 2020?

House prices shrugged off Brexit uncertainty to end 2019 1.4% higher than at the start of the year, according to Nationwide building society. One statistic to note is that Scotland ranked the strongest performer in property price growth 2019, up 2.8% in the fourth quarter alone. The critical question is: can we rely on this trend of slow growth continuing into 2020?

Many key factors are supporting the housing market growth, such as strong employment, low mortgage rates and a lack of supply.  Even in the face of considerable economic and political uncertainty, we have seen slow growth in the property market.

One sector of the market has seen steady growth: first-time buyers. The number of people who took their first step on the property ladder last year is estimated to have reached its highest levels since 2007. For individuals looking to invest in the property market, this could be a target market. Identifying areas local to where you live that are popular with young professionals, where you can buy properties that need a degree of renovation and style them to attract first time buyers.

Although the end of 2019’s property transactions helped show growth in the market, the number of transactions in 2019 was down in comparison to 2018. Brexit certainly will have put many individuals off selling their properties, so only time will tell whether this will inject some life into the market in 2020. 

With the next Brexit deadline looming on 31st January, some are expecting a sluggish January. It will be a case of watching and waiting for many. 

Despite the uncertainty and slow growth, it’s still an excellent time to get into the property market as an investor. So long as you buy right, you will be in a strong position to do well in the property market. 

If you’d like to get into property investing but don’t have the time or knowledge, book a call with me using the button below to discuss how I could help you on your journey.