Colour Investments Property Investment

Having just got back from a visit to Turkey I have to say I am very impressed with what they are doing there in terms of tourism.  I have heard that Turkey now receives more UK visitors than Spain and I can see why…  Even though it was during the winter it was still a compelling place. My first surprise was on the fantastic drive from Milas-Bodrum airport to Altinkum, where I passed a fantastic lake and mountains – which reminded me of Scotland!…  This wasn’t what I expected of Turkey at all.  Then you pass the Temple of Apollo and come to the  beach resort of Altinkum, much larger and more developed than I had expected.  The bay of Akbuk is stunning and no brochure can do its tranquility justice, I just cannot wait to go back in the summer!

On the investment front I met the governor of Didim and the mayor of Akbuk to find out what they had planned in terms of commercial and touristic investment and it was great to hear that they appreciate (without my prompting) that it is not just about building apartments and hotels.  They grasp the concept of growing their towns into tourist hubs whilst maintaining the essence of peace and natural beauty.  Some great ideas were put forward in terms of what they want to do and I am staying in touch with them personally to see how it pans out….

Buy-to-let tourist rentals in Turkey are thriving thanks to a surge of British visitors caused by the favourable exchange rate, an investor has noted.

Libby Garside told the Daily Mail that she and her husband Ted rent out their villa in the Mediterranean coastal resort of Kalkan when they are not holidaying there with their daughters.

Observing a rise in demand from Britons for its use, she said: “More consumers seem to be looking to Turkey as a holiday destination due to rising costs in more traditional European resorts and also because of the terrible sterling to euro exchange rate.”

The paper stated that foreign exchange firms have also seen a rise in the trading of sterling for Turkish lira and Egyptian pounds as tourists look for cheaper alternatives to the eurozone.

In contrast, it observed, the poor return on UK pounds converted into euros is making travel to many traditional destinations more expensive.

Turkish lira could be even less expensive soon as the value is expected to drop with an anticipated cut in the country’s interest rates, overseas investor magazine BuyAssociation has noted.

It said this could effectively make Turkish homes seven per cent cheaper.

Source: Propertyshowrooms.com

So 2009 was an interesting year with the credit crunch still lingering… will 2010 bring even more positive news to the property sector in the form on stable, sensible growth? What do you think? (please comment below…)

Personally I think it will stay stable and growth for the next couple of years will be relatively small and sensible. Then I see larger growth starting to happen, nothing crazy but sustainable, solid economic growth. I don’t think there will be a “double bounce” that some doom and gloomers predict which is why I’m personally buying more property this year as I think any serious investor should be!

I’ve so far bought a 1 bed apartment in Makadi, Egypt (available on our website here: www.colourinvestments.com/makadi/introduction) and also a 7 bedroom HMO property in Reading, Berkshire UK. What have you bought if anything? (again please comment below and share you views with us)

Good luck in 2010 and I hope we can help you achieve some of your investment goals in 2010

Take care
Nick

House prices rose by 1.6% during September, the third successive monthly increase, according to Halifax.

The mortgage lender says typical values are still down by 7.4% compared to this time last year, though they are up 2.8% over the previous three months. The average home now costs £163,533.

Halifax’s figures contrast with the recent Land Registry index which showed a 0.1% drop in August. The official body said house prices are now flat.
Mortgage lender Nationwide reported a 0.9% rise in typical property values during September, the fifth successive rise.

The Land Registry data lags behind both lenders, yet is seen by a number of people as more representative as it takes into consideration all property sales.
Nationwide and Halifax just measure their latest lending data.

Do you think property prices will increase by much this year and if not when do you think they’ll start moving again?

thanks for reading
Nick

Figures released by Nationwide today show that UK property prices have risen for the 5th consecutive month.  This means prices have now recovered to the same level as they were in September 2008.

As usual everyone (or at least most people) are still predicting doom and gloom but it is difficult to argue against the fact that the worst times are over and property is back on the up.  Properties with a real discount from RICS are being snapped up at an incredible rate when they come to market, and normal properties are also moving quickly when they come on for sale.  Hold on to your hats we could be on the verge of some incredible price lifts over the comking 12  months!

“The number of new mortgages for home purchases rose in July for the first time in over two years.

Data released today by the Council of Mortgage Lenders (CML) show the first annual growth in lending to home buyers since early 2007.

A total of 56,000 homebuyer mortgages went through in July – a rise of 19 per cent on a year ago and 24 per cent on June.” – Source: The Times

We have seen a pick up in the housing market over the past few months and a pick up in some sectors of the economy but due to supply and demand the housing market is the strongest sector and most likely to bounce back. Some people claim it is just a blip on the continued downward spiral but I am currently house hunting and that does not seem the case to me as I can’t find any bargains!  Prices in my area (Surrey) have increased since last year and the year before.

Obviously this could be a blip but do you want to take the chance and miss out if it isn’t??  Thats what most people did after the last recession…  Only time will tell, but I for one, will be snapping up any bargains I see from now on.

Buyers of property overseas often subject themselves to much too high a risk, something you can and should avoid. This month, I’ll share with you 5 top tips to buying safely – follow these tips and there is no reason why you’ll be taking any more risk buying overseas than you do at home.

Before I begin, I remind you that I’m not trying to sell you anything in this article (or, indeed, anywhere else). The AIPP is a non-profit organisation set up to make the international property market a safer place to buy and a better place to work. It is an independent industry body for international property.

So, onto those tips….

1. Independent lawyer

No matter what anybody tells you, no matter how easy it all seems, ALWAYS use an independent lawyer to represent you throughout the purchase of your property overseas. It is the lawyer’s job to protect you and inform you. You will need to pay the lawyer a fee – accept that as part of your purchase costs. This is not an area in which to keep costs down.

The definition of ‘independent’ is that the lawyer represents you and only you and certainly not the developer you’re buying from.

2. Do the numbers

Make sure you know your budget before you start looking at properties – this should include at least a provisional mortgage offer if you’re borrowing money. Never has it been more important to check that you can raise finance before you commit to a purchase as it is significantly more difficult to raise money now.

If you can raise the money, don’t then be tempted to buy more properties than you can afford (particularly on off-plan properties) hoping to sell the extra properties before completion unless you fully understand the risks as well as the rewards (see point 5). This was widespread practice in the boom years and was risky then – it’s even more so now.

If borrowing money, your repayments will stretch over several years, years in which lending criteria and borrowing costs may change. Discuss the long term repayment with a financial specialist before proceeding and make sure you’re also aware of the effects of foreign exchange movements (see point 3).

3. Beware exchange rate movements

The rates do not need to move substantially to affect the value of your purchase. When you start looking, £100,000 may buy you a certain property – a 10% drop in the value of the £ against the Euro, for example, may then put that property out of your budget. If you’ve already signed contracts to buy, this could cause you a problem. Speak to specialists in this area and secure your rate of exchange early.

The rate fluctuations will also affect the costs of mortgages (if you raise the mortgage overseas and earn your income at home). Again, speak to a foreign exchange specialist to highlight the risks and to take appropriate action.

4. Use professional agents and developers

There are few, if any, guarantees when buying property, at home or overseas. Using an independent lawyer (see point 1) significantly reduces the risks you take on an overseas property purchase and employing a professional agent or buying from a professional developer will also help you.

Ask lots of questions. 3 year old children are known for asking lots of questions (why? why? why?) and you should follow their lead when talking to agents about a purchase. Initially, focus questions on the company itself, not the properties for sale. Dig around for details on the founders of the company and the track record of the company. Ask for client testimonials (real ones) and make sure you find out in detail exactly what service they offer. Don’t just take their word for it – ask for details on their service in writing, preferably in the form of some type of ‘Terms of Business’. If there is disagreement in the future about the obligations of either party, a ‘he said, she said’ argument will carry no weight – get commitments and obligations in writing. (Colour Investments have standard reservation contracts which lay out the terms of the sale clearly and they have cooling off periods for all purchases to ensure their clients are making the right decision for them).

5. Remember the reward : risk ratio

If you are buying property overseas as an investment (as many people have done in recent years), you need to bear in mind that big returns may come with significant risks. Be careful to assess the possible downsides to an investment property as well as the enticing investment numbers that could be achieved if all goes to plan. The present climate has reminded us of the dangers but history teaches us only one thing: we rarely learn from history. Take the recent lessons and remember them when considering reward vs risk.
Simple!

That’s it. 5 simple steps. Most sound obvious. Most have been ignored by many purchasers for many years. Right now, I’m sure there will be someone signing a contract to buy a property overseas having done none of the above.

Mad, I know. Crazy, nonsensical, incomprehensible even. Happening every day. Don’t let it be you.

Article written by Paul Owen

Paul is Chief Executive of the Association of International Property Professionals (AIPP). A non-profit organisation, the AIPP was set up in 2006 to make the international property market a safer place to buy and a better place to work. Vetted and referenced before acceptance, all Members have voluntarily agreed to follow the AIPP’s professional Code of Conduct and to face disciplinary action if they fail to do so. The AIPP gives consumers free advice about how to buy overseas property safely and produces an annual guide. Full details including a list of Members can be found at www.aipp.org.uk

Seems to me that we still have the same problem that we have experienced for about as long as I can remember….   Huge demand and under supply….  Unfortunately this is now exacerbated by the fact that people believe they can pick up a bargain as it is a ‘buyers market’, therefore prospective sellers are reluctant to place their properties on the market for fear of having to take a hit on the price.  And the result is less stock, huge demand and virtually no movement.  So if buyers realise that they cannot obtain hugely discounted property, and sellers realise that we are not in a buyers market then we will be well on the way to recovery….  Here’s hoping!

I’ve always struggled with this question, because how do you get to the people that really need this knowledge as it’s catch 22. They don’t know about property investment strategies and will go on blindly unless they stumble across a company like us or another respected professional in this industry…

Traditional marketing won’t work – it’s like a “meatball sundae” as Seth Godin (expert marketer, author and guru in my book) would say… New exciting property investment strategies need focused investors to really make use of ther true potential. These people are usually highly IT literate and hence they will have already found us via the website, this blog or perhaps even Twitter or Facebook. The others – word of mouth perhaps (often very effective!), network meetings, seminars? Some unlikely to get a high hit rate I’ve found and often you can’t tell where your next valued customer will come from…

Anyway I hope this blog will find the more un-educated property investors amoungst you and you can follow our tips, tricks and general ramblings about property which should brighten your day and hopefully before long put some money in the bank for you!

What would you like us to talk about? Suggestions welcomed via the “comment” feature at the end of this post and we’ll try and post a training session up on your chosen topic!

Thanks
Nick

Well we have recently been offered properties around the $8,000 mark in Detroit USA – so do you think that’s a good buy?

Well I guess if there was some sort of demand it would be as that’s seriously cheap!

My personal feeling is that without living in the US or going over and spending thousands in upkeep and travel costs it would be money badly spent. (I live in the UK most of the year).

You should invest in an upcoming area, a great location and somewhere where there is demand!

Remember location, location, location! AND demand, demand, demand!

They kinda go hand in hand but you get my point…

What do you think?

Nick