Working out your Return On Investment
January 14th, 2011
This is an extremely important calculation to make, only by doing this you will avoid the trap that many investors fall into that of purchasing a liability rather than an investment.
Robert Kiyosaki (motivational speaker and author of the “Rich Dad, Poor Dad” series of books sums up the definition of an investment perfectly “To be an asset it must pay you cash every month, AND appreciate in value”
Far too many “investors” concentrate on the later part of this quote and forget about the income, many are enticed by the promise of a huge growth in the value of their property and are left with a cash flow negative property (outgoings and commitments higher than rental income) that they cannot sell, there is no longer the guarantee that a property will immediately increase in value as soon as you have done any alterations or repairs, Many investors are then left with a liability which they have to pay out cash for month on month. The results of which are:-
Reduction in your standard of living, an investment is supposed to enhance your lifestyle not restrict it.
Problems should your other income streams fail through unemployment, dividend payments; this may force you to sell your property at a loss causing more financial problems.
Increasing your portfolio becomes impossible if you are already subsidising 1 property at £200 per month do you want to increase this to 10 properties and £2000 per month.
It really is important to do your homework and ensure you purchase a property that gets the balance between income and growth right and the only way this can be done is to follow the steps laid out to you throughout our guide.
1. Find the right property
2. Pay the right price
3. Keep refurbishments within budget and timescales
4. Factor in any hidden costs
5. Ensure you have tenants ready to move in as soon as the property is ready
At Happy Homes Investments we ensure these points are covered every time for every investor, as we want to make sure our Investors buy a good solid investment not a liability.
Letting Agents, what to look for.
July 1st, 2010
Once you have purchased your Buy to Let Property you need to make the decision “do you get an agent or do you go it alone.” Going it alone can be time consuming and a legal mine field if you have not got all the documents, agreements, do’s and don’ts laid out beforehand. Don’t forget this is your property that someone else has got rights over; this alone is a good enough reason to take on a Letting Agent.
So what should I look for in a good Letting Agent?
The first thing to do is take a look at what associations they are members of , the main ones to look for are ARLA (Assoc of Residential Letting Agents), NAEA (National Assoc of Estate Agents), NALS (National approved Letting Scheme), or RICS (Royal Institution of Chartered Surveyors). All these associations are bound by a code of conduct that helps protect you as their client.
What will my Letting Agent do for me?
The services a Letting Agent provides varies from agent to agent, it is always advisable to sit down with your agent and outline exactly what you want them to do, this can be as little as just finding you a tenant to fully managing the property. Having your property fully managed can save you a lot of time and energy in the future as they will carry out all the necessary inspections, report to you any problems and if agreed up front send out trades people to deal with any minor or emergency repairs without you needing to get involved.
How much will all this cost?
Fees, like services vary from agent to agent, the cheapest may not be the most economical and the most expensive may not be the best. In general a Letting Agent will charge a percentage of your monthly rental income usually around 10-15% depending on the level of service they are offering.
The Impact of the end of the Stamp Duty holiday
April 2nd, 2010
The end of the Stamp duty holiday had a dramatic effect on the housing market as the Council of Mortgage Lenders reported 49% fewer house purchase mortgages were granted in January than in December. However the 32,000 loans granted was still an increase on the 23,000 for the same time last year. The biggest drop was in first time buyers where the number of loans dropped by 54% compared to the number of mortgages granted in December.
The end of the Stamp Duty Holiday saw an increase of 49% in mortgages granted in December followed by a 71% drop in January.
The Director General of the CML Michael Coogan said, “When the December and January data are taken together, they show little change in the underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier.”
Happy Investing!
How to Rent out Your Home
February 26th, 2010
The property slump, recession and the phenomenon that is Buy-to Let has led to more and more accidental landlords. These are home owners who for whatever reason have decided to rent out their property rather than sell. Here are a few things they had to consider:
1] Do your maths: Do all your figures add up? Does your rental income cover all your houses outgoing costs? Don’t forget your tenants will be paying the utility bills and Council Tax.
2] Go it alone or get an Agent: letting Agents take the hassle out of renting out your property; they will find a tenant, collect the rent, arrange repairs and manage the rental from start to finish. What they will also do is charge a fee, and this can be anything from 5%-15%. Do your homework and choose a good agent not a cheap one.
3] Let your current lender know: You need your lender’s permission to rent out your property. If you do not inform them, you could be in breach of your mortgage terms and conditions. The majority of Lenders are not going to object, so what have you got to lose.
4] Know the rules: It is vital to know the rules and regulations, now you are a landlord. This may not be an investment property but you may still be liable for tax. Don’t forget you are now responsible for gas, electricity and fire regulations, Energy Performance certificates, Tenancy Deposit Scheme, etc.etc. etc.
5] Don’t forget Insurance: Your buildings insurance will be invalid as soon as you rent out your property, so this will need to be taken out as a landlord, and don’t forget to get cover if your tenants default on their rent.
Happy Investing!
Tenants outnumber properties
February 15th, 2010
According to the Association of Residential Letting Agents (ARLA) the rental market is seeing an upward trend in the number of tenants. A survey conducted by ARLS showed that the previous surplus of rental property is reducing at an unprecedented rate wile the demand growing even quicker.
During the last quarter of 2009 ARLA reported that 41% of its members were reporting more tenants than properties, compared to just 21% in the previous quarter.
Demand for tenanted accommodation is coming from previous homeowners who have been forced to sell their property during the last year due tot either moving jobs, or financial instability and they are now finding it difficult to find the right property or funding according to ARLA Operations Manger Ian Potter. He added the rise in Tenants is a positive sign for the industry as it indicated increased market movement, it also shows more people will learn the benefit of living in rental accommodation.
Happy Investing!
Naughties see biggest rise in house prices
January 21st, 2010
House prices in the UK have risen by a massive 273% since 1959 according to figures published by the Halifax. The last 10 years alone have seen house prices rise by a huge 62%, just beating the Eighties where growth was 61%. The accolade for the worst performing decade goes to the nineties where property prices fell by 22% in real terms.
The jump in housing prices during the eighties can be attributed to the introduction of the Right to Buy Scheme, which also counted for the fall in the number of people in rented accommodation from 33% of the population in the sixties, to just 9% by the start of the nineties, however the rental market is making a come back with that figure now rising to 14% by the end of 2008.
Happy investing!
The Property Market makes a buoyant start to 2010
January 18th, 2010
Property website Right Move said record numbers of people logged onto its website to view property at the start of January. Volumes are up 26% compared to the same time last year.
With the current number of potential buyers continuing to outnumber the properties available on the market, along with dramatically low number of new builds being completed due to developers calling a halt to many building projects at the end of 2008, house prices are being pushed steadily upwards. The start of January saw the price increase trend from 2009 continue, with houses prices rising 1.2% in the first 2 weeks.
Happy investing!
Growing confidence in the housing market
January 14th, 2010
World Wide Property Group have release a survey showing the general public’s growing confidence in the housing market.
In November, just 57% thought that house prices would continue to grow in 2010. Asked the same question in December, a huge 68% responded positively with 1 in 5 of these expecting the rise to be as high as 10%.
Kevin Wilkes, Managing Director of the World Wide Property Group said “I it just goes to show that people are getting on with their lives and putting economic fears behind them.”
The survey also stated that 82% of those questioned were quoted as saying that property still offers the best investment potential of any investment.
Happy investing!
House prices had a mixed December
January 12th, 2010
House prices continued to rise in December but at a slower pace than in either October or November, the latest survey from the Royal Institution of Chartered Surveyors (RICS) has revealed.
House prices in the North and West Midlands dropped for the first time in 11 months with the East Midlands holding steady.
The survey showed the Christmas break had shown a slowing down of interest from potential buyers, but that they were still out numbering the potential sellers therefore overall we still saw a rise in the average house price to £200k+.
“It is likely that the new year will see more interest and activity in the market as those who held back start to market their property with renewed optimism,” said RICS spokesperson, Jeremy Leaf.
Happy investing!
Good News For Homeowners
December 4th, 2009
There is finally some good news for homeowners. The Halifax has reported an increase in property prices for the 4th consecutive month with October alone showing an increase of 1.2%. The Nationwide are sending out an even more positive message reporting growth for six consecutive months.
The average house price in the UK is now £162,764, 2.9% higher than prices at the end of 2008. Even with these increases house prices are still not back to the heady heights of 2007, which makes investing now a golden prospect.
A recent report from RICS stated that a fall in the numbers of rental property (the first fall in 2 years) combined with and increase in tenant demand means there will be an inevitable rise in rents over the next 3 months rather than the expected decline. RICS also reported that demand for house rental jumped from 6% to 22% in October whereas demand for flat rental remained the same.
All this is fantastic news for both investors and potential investors with Happy Homes. Current investors are not only seeing the benefit of a regular income but now an increase in value of the bricks and mortar they own, potential investors are still able to purchase much needed and sought after rental property at pre 2007 prices. Now that’s what I call a win win situation.
Happy investing!