As The UK Market Shows Significant Signs of Recovery, Property Investment Expert Glenn Armstrong Advises How to Make the Most of the Current Climate
As my 50th birthday draws closer, I reflect back on the business decisions I have made and the mindset that I have adopted to get me where I am today. With a UK portfolio of 193 properties, which is worth in excess of £30 million, I have gone on to share my knowledge with UK investors up and down the country in their dream to become truly financially free; at least 26 of my students are now equity millionaires.
I am a firm believer that the UK property market is beginning to show green shoots and activity in the housing market has picked up over the last few months. In March 2009, it was clear that the bottom end of the property market reached rock bottom in my local area of Milton Keynes, Bedfordshire. The biggest problem estate agents are having at the moment is a lack of supply, everything they are getting at the right money is being sold very quickly. I recently looked at a local agent’s website and every single property that was priced at the right price has now been sold. The only properties that are not being sold are those that are unrealistically priced for the current market. All UK agents are struggling to get enough instructions and when they do get instructions they are selling them in literally a matter of days and in some cases I have heard that gazumping is back!
Before March 2009, a good below market value (BMV) deal in my area, would be buying a property worth £120k for a price of £75-80k. These deals are now few and far between and we’re currently now only buying 5 good deals a month rather than the 20 we were buying prior to April; we’re now paying an estimated £5k more for these properties than we were. The reason being that motivated sellers have now slowed down, interest rate cuts are now having an impact on the market and there are less repossessions as building societies/banks are being instructed to be more lenient.
As American Investor Warren Buffett said:
“Be fearful when others are greedy, and be greedy when others are fearful”
If you’re serious about building a property portfolio, here’s some simple advice. If you know the true market value of a property and are looking for a buy-to-let deal and buy it at 70% of that price, then you’ve built in your own safety net in case the market drops further. You need to be buying for cash flow purposes and you want to have at least a £6-£12k cash back when re-financing after refurbishment and at least £200 cash back positive every month. This is a safe deal for any would-be investor. The art of property investing is to be able to find these kinds of deals. These guidelines should become your buying criteria and once you have this criteria, it eliminates any uncertainties you might have when making an offer to the agent. It is crucial to adopt this mindset when you’re looking to buy and build your portfolio.
Glenn’s Top Tips for Would-Be Property Investors who want to make the most of the current market:
1) Choose the right area for you – a maximum of 1 hour from where you live and avoid the scatter gun approach (buying properties across the UK), as this could be a nightmare to manage. And always research an area thoroughly before you buy. You need to know your area and establish a good relationship with the local management agents – ARLA agents are more costly but in the long run this will prove more cost effective especially if you’re not UK based.
2) Don’t get carried away on buy-to-let refurbishments, examine your target market and do the refurbishments in accordance with this market rather than your personal tastes so as to avoid any unnecessary expense. You need to look at the profit margins rather than the actual value of the house. Ask yourself a) Will it not let if I don’t make this part of the refurbishment? b) Or will it increase the rental income I receive? When recently showing one of my mentees a property they asked whether it needed to be refurbished but I assured them in this market and area, the property was fine as it was – this saved them the potential £8k in refurbishment costs they would have paid,
3) Choose your buying criteria and stick to it, focus on your cash flow and not capital appreciation if you want to build a profitable portfolio!
So many of us are afraid about making investments but we believe it’s all about having the right mindset, but any fears can be set aside when you use the above buying criteria. I should know, I started investing in 2004 and look where I am today!
Glenn teaches would be investors the art of successful investing. To sign up for a free 5 part e-course on how to buy property without spending any of your own money please visit our website www.glennarmstrong.com.
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