We have moved: Go to www.PropVestment.com

This blog is now not being updated, to get the latest posts, please visit

www.PropVestment.com

Follow on twitter @PropVestment

Like Facebook www.fb.com/PropVestment

 

How to be wary of ROGUE Brokers

Over the last few weeks some of you may have noticed the Sub Prime page disappeared from the site, as with every unusual occurrence there is an interesting story explaining it.

The story begins in early 2010 when I was trying to expand my business and needed some finance. I approached a broker (who now I can not name for legal reasons) who got one of my associates a very good deal and unsecured finance many times more, than the menial sum I was trying to raise using the  EFG, Enterprise Finance Guarantee Scheme.

So we went through all the usual protocols and credit checks and as promised I received a principle letter of offer, and I sent the broker his fees. The deal was a go.
If only business was this easy, and as I have been told many times, if it seems too good to be true, it probably is. When it came down to the nitty gritty and actually receiving the funds to complete my deal, the broker disappeared.  Numerous ways of contact failed, emails, calls to an office line, mobile, text messages and I even got my solicitor to write.
A few weeks of this and the vendor of the business I was trying to buy from understandably got frustrated, kept my deposit and sold to another prospective buyer.

Now I was in a real situation, No Deal, No Finance, No Broker.
I instructed my solicitor to proceed with legal action against the broker, after a few letters were sent and the broker emailed, with apologies and saying he will send my fees back once he’s back from holiday. That day never came, and soon I was advised by my solicitor not to proceed further as my legal costs were building up to similar levels of the fees.

Devastated and angry I felt that the business world had failed me, I even thought of reporting him to the FSA, but then found out they would be of no help as they do not regulate commercial brokers.
That’s when I was in the developing stages of this site, I thought wouldn’t it be great to advise all of you PropVestors, fellow Landlords and Investors about the best and worst people in the market from our experiences. This led me to set up “The Prime” and “The Sub Prime” section on the site.
Naturally I listed this broker in the Sub-Prime section. We do not want people like this in the industry.
Over time the Google spiders came crawling and found this broker’s details on the site and ranked PropVestment.com accordingly in their search rankings.

I received an email from this Broker about a month ago threatening the owner of the Site with legal action, at this point he did not know the owner was me. I spoke to my solicitor once more and he advised me to remove the content before this matter escalates and I’m forced to shut down the whole site.
Being the stubborn PropVestor I am, I decided instead to fight my cause and emailed the Broker saying that I would remove all specified contact as soon as I received my fees owed to me. After some deliberation and claims that PropVestment had caused him to lose deals in excess of ten times the initial fees and a Google search of number 4 when you searched his company. All searchers were being exposed to my claims of his dishonesty.  If I delisted the page he agreed to send the fees back.
Even at this stage it took his bank two weeks to send me the fees, I mean what bank in the UK when you are in the financial industry takes two weeks to send a small online transfer. This may be why his business is slow. So the unprofessionalism continued, but in the end I did get my fees back.

Pointers to take away:

• PropVestors are not well safe guarded by the UK legal system against rogue brokers,
• the power of the Internet is such that any individual can have a big impact.
• So beware of who you upset and for those fellow PropVestors use the tools we have to make a stand.

PropVestment recommends Ash Shah of Crystal Financial Solutions, here’s what he advises:

“It is always beneficial to use an Independent Financial Adviser (IFA) and Independent Mortgage Broker. Not only will they obtain the best deal from you on the market based on your circumstances, they can also take away a lot of the hassle and headaches involved in transactions. Being professionals they know niches and can save you money.

Personal recommendations for advisers and brokers from friends and families go a long way….And if you do use one who has helped you, spread the word…We need more decent  IFA’s and Mortgage Brokers in the market.

Sites like www.ubiased.co.uk can help find the right professional.”

The Sub Prime section will be back soon, just awaiting legal advice to protect PropVestment, any help on this is welcome, email info@PropVestment.com and also send us your Prime and Sub Prime candidates.

A new rental concept: SpareRoom+eBay= airbnb

the eBay of rentals

Airbnb is a fresh concept at the rental market, an innovative service that brings the industry in line with the world of Facebook, eBay and YouTube.  What does this kind of service mean for the real property investor and how does is change the industry? Is it applicable to a major portfolio or just limited to the vocational landlord with a spare room under the room? In this article I’d like to introduce this innovative service and discuss the implications for landlords and how best to make use of such a service and adapt it to your investments and property portfolio.

apps are the new way

Airbnb was founded in August 2008 and based in San Francisco, California. Airbnb is a trusted community marketplace for people to list, discover, and book unique spaces around the world online or from an iPhone device.  In April 2009 it received $600k from Angel investors and has now raised $7.8m through venture capital.

It brings the Ebay concept of how to monetise items in your house, airbnb aims to help people monetise space in their property. Whether the available space is a castle for a night, a sailboat for a week, or an apartment for a month, Airbnb is the easiest way for people to showcase these distinctive spaces to an audience of millions. By facilitating bookings and financial transactions, Airbnb makes the process of listing or booking a space effortless and efficient. With 50,000 unique listings available in more than 8,000 cities and 167 countries, Airbnb offers the widest variety of unique spaces for everyone, at any price point around the globe. One founder Mr Chesky has no permanent home, instead is a client of his own business, moving from property to property.

Airbnb requires compulsory reviews, this ensures people respect the system and builds a profile; one bad review can damage your reputation so one must have trust and respect and be honest. It helps create a social network style environment.

The procedure

The procedure

1. Sign up, create a profile and list
2. Get booking
3. Airbnb takes credit card payment in advance and releases to hosts a day after client checks in, to ensure quality assurance and make sure client is happy with the condition. Airbnb charges a 6-12% commission.
4. Compulsory review

The more reviews the better your profile and more prospective business.

It is clearly a promising option, nearly 100 hosts made $50k last year, so it is a viable alternative. A couple in California rents out their tree house, and made $29k in one year. They never got a good response from traditional listings to fill their property.

Listings for host and clients are getting even easier with the launch of mobile phone apps for the site.

But now back to the serious property investor, is this a viable approach and alternative?

I think it comes down to the type of property and location. It is very appropriate for spare rooms and extensions to existing owner occupied properties where the landlord can host and provide the hospitality. Also the higher premium for the short term lets is a great option for exclusive spots, say in city areas, or areas where there is a short-term explosion in demand. It is clearly not worth it for your suburban apartment; one must remember the type of client searching on this site and the other options available to them. To be successful the property has to offer something different, a unique experience that another hotel or bed and breakfast does not.  Competing on price alone will not be sufficient especially as it is a new way and will be perceived riskier.

Some research and data that can be collected over time as this service becomes more prominent, and then we will be able to analyse with empirical evidence.

For the time being watch the space www.airbnb.com . It is going to have some impact on the industry and may just spring a new range of innovative services and companies that take the market into a new dimension, for the traditional market I do not feel it is a threat yet.

 

PropVestment Guide: Top Tips for Property Listings

Top Tips for Property Listings

With so much online and offline marketing now available through traditional estate agent, and corner shop window listings, through to listing online or Zoopla, Right Move, Gumtree, Findaproperty etc…It is vital your listings catch the attention of viewers and then that attention must be converted into interest. Here is a basic guide of some of the essentials you must get right whether listing to sell or rent, offline or online to get maximum impact.

• Be Simple & Truthful
• Lots of Photos & Map
• Eye catching Title
• Appropriate contact information
• Content
• Technology, Video & Social Media

Today: New Laws for Landlords, All Tenancy agreements upto £100k become ASTs

Landlords and tenants should be aware of significant new changes around tenancy agreements as of October 1, according to The Deposit Protection Service (The DPS).

From Today, shorthold tenancies where the annual rental amount is above £25,000, but not more than £100,000 a year, will become Assured Shorthold Tenancies and this will apply retrospectively.

However, tenancy deposit protection should not apply retrospectively and, therefore, only new deposits and renewals taken on or after October 1 will definitely need to be protected. The advice from The DPS is to protect all deposits now as it is better to be safe than sorry.

Going forward, this closes a loophole that previously left many of the most vulnerable tenants with no protection. Higher rate tenancies were not originally included under tenancy deposit legislation, which only covered ASTs up to £25,000. Tenancies valued higher than this were seen as contractual tenancies and deposits did not need to be protected.

But this situation, according to The DPS, left some groups such as students or large house-shares vulnerable.

The Deposit Protection Service (The DPS) is calling for all landlords, and tenants, to be aware of this change and also to protect themselves until there has been clarity in this policy area.

This does mean extra paper work for Landlords but it is better to be safe than sorry, the procedure of registering and updating details on the DPS website is very easy and straight forward, http://www.depositprotection.com/

Your tenants can also check if they are covered and overall gives a Landlord a much more professional impression. Make sure you are registered and upto date with all the latest legislation. Do not hesitate to email us: info@PropVestment.com if require any advice, its free!

Protect Your Property and Finances: Landlord Insurance

PropVestment: Cover yourself for the rainy day

Are you covered? Do you know your BSI for each property?

Many Landlords, me included, have not always got the right insurance in place for their properties and portfolios. One of the main reasons for this is the lack of information available in the everyday press, news and media. It is not like normal insurance which is shoved down your throat at every bank, supermarket or post office you visit. It is more specialised and can be tailored very much to your needs and you’ll be surprised at how many companies do provide it, and the reason it has come to my attention is I drove past a Direct Line Landlord insurance bill board yesterday.

There are many different types of Landlord. From the individual who is renting out their second home to the ambitious property tycoon with an ever-increasing portfolio of trendy dockside apartments. The common theme for all landlords is the need to purchase landlords insurance to protect their investment.

As a landlord, you are effectively using your property as an extra source of income – and this needs to be protected. A normal home insurance policy is not valid when you are taking an income from the property. A residential landlord policy is what is required.

With the correct landlords insurance policy in place, you can relax knowing that should any damage be caused to the property you are protected against the financial consequences. With this peace of mind in place, you can worry about running your property and nothing else.

HMO: Huge Money Opportunity?

HMO: Rewards if put together properly

Although Multiple Occupancy can achieve huge rewards in the form of rents, in particular student lets, Landlords must take the required legal procedures to ensure it is all above board. In our experience it is easy to gain over 50% premium on rental income under HMO. There are now professional agents that can take care of the managements and legalities but here are some basics you must know. Licenses are only £335, so get them and don’t risk fines or prosecution when the outlay is so small.

The returns can significant, raising the ROI above any other residential investment, letting are very easy through university listing or sites such as http://www.spareroom.com.  Please get the relevant advice and don’t take short cuts in the pursuit of profits.

After reading this nitty gritty we offer a fantastic investment opportunity at the bottom of the article.

Here is the Basics

What is an HMO?

HMO stands for House in Multiple Occupation and generally refers to one of the following:

• A house split into bedsits
• A house or flat share where each tenant has their own tenancy agreement
• Students living in shared accommodation

London Property has No Recession: Observations from Savills Auction

PropVestment at the Auction

On Monday I went to The Royal Garden Hotel, Kensington to the Savills Residential Property Auction. The atmosphere of auctions has changed, and there were some shocking observations I made, both subjective and objective.

Key Points: First 50 Properties

Average Guide Price	£259k
Average Bid (Sold)	£288k
Average Bid(RNM)	£324k
Average Highest Bid	£301k
Average increase on Guide by Highest Bid	19%

• Sellers’ Auction, High Prices & Reserve not met too often
• Properties sold up to 205% of guide price
• Reserves not met on over a third of properties

What the new shorthold tenancy classifications for UK private property landlords means

• Deposit guarantee scheme for all properties earning upto £100k rental per annum
• Failure to do so in 14days means no Section 21 (eviction order) can be served
• Fines up to three times the original deposit
• Student accommodation and multiple occupancy also affected
• Advice: Use a reputable and experience lettings agent, email info@propvestment.com for our quote and special offers.
• New legislation mainly affects high rental properties in particularly in London
• Extra Red Tape that makes it difficult for honest, reputable Landlords

Getting into the Mind of a Surveyor

Can you imagine what it is like to be a surveyor?  They have the power to make or break a market.  They made it for us on the way up and broke it for us on the way down.

Back in the days you would ask a surveyor to value a property at £60,000 which you had bought for £38,000 3 months ago and they would do it no problem.  You would remortgage and get a nice chunk to go and reinvest in more high yielding and high growth properties.

Now it is a different story.  You ask him or her to go and value a property you are trying to buy for £60,000 and they value it at £38,000.

So why do surveyors do this?  Well simply they are scared.  They are scared that the bank will come after them when the borrower has defaulted and all the property is worth is £38,000 when sold at auction.  If they put a value of £60,000 the bank could come after the surveyor for the difference i.e. £22,000.  The surveyor’s insurance will pick up the bill but the surveyor’s professional indemnity insurance rockets and the surveyor gets known as a bad surveyor.

Good surveyors in the bank’s books are the ones that down value.  The real pessimistic ones are the banks favourites.  But there is a point when the bank wants the surveyors to put an optimistic valuation.  Then the tide turns.

The surveyors that start valuing on the generous side start to get the work.  Ultimately the bank is safe because the surveyor has insurance.  So it becomes a game of who has the most balls.

We are not there yet.  But there will be a point when one of the banks says “I want to lend big time”.  Then there will be pressure from above on the surveyors to start valuing up properties.

Once other banks see what is happening they have two choices:

1. Do nothing and lose market share or

2. follow and compete by getting valuations that value up

The time of change will come back, tide will change and the cycle will circulate.

Article sourced from the view point and opinions of Ajay Ahuja of ahuja.co.uk

Follow us on www.twitter.com/propvestment