I like to play fantasy property investments out, by monitoring Rightmove.com and doing the sums on potential investments. This week, I came across a property which sold at auction, that looked like a good investment. I didn't invest in it, so I see it as the investment that never was.
A property came up at auction recently, which sold for 190k. It was one property made up of 2 self-contained one bedroom (1br) flats, including the freehold. I analysed this investment and determined that it is a profitable one. Each flat therefore cost 95k, but they needed renovation work (surely no more than 10k on each, maybe even less than half that). In contrast, local 1br flats in that area cost at least £130k. A 1br "shared ownership" flat was going for 200k, proving how overpriced they are!
I'm pretty sure that just one of those flats of the auction property would cover the mortgage, with the other flat bringing in pure profit. In the process of my due diligence, I also discovered that banks will now lend me 4.5 times my income, so they have clearly increased their lending. My original assessment was that it would be a long time before banks raised their lending, but it seems this is not the case. George Soros changes his plans if he discovers he is wrong, as I saw in his book The New Paradigm, so I must also reassess my course of action and look into investing further in property, if the finances make sense.
So what about leaving my deposit in the bank? Well I've noticed that the banks like to keep dropping their interest rates, and it is very annoying. Fixed rates are more reliable, but right now, its lower than what some property investments could pull in. I believe the investment above would pull in at least 7% per year after all other costs, which is far more than the bank, as some accounts pay 0.40% or less. I am sick of watching the bank interest rates as they keep dropping. With a property investment, I have far more control over the income.
A property came up at auction recently, which sold for 190k. It was one property made up of 2 self-contained one bedroom (1br) flats, including the freehold. I analysed this investment and determined that it is a profitable one. Each flat therefore cost 95k, but they needed renovation work (surely no more than 10k on each, maybe even less than half that). In contrast, local 1br flats in that area cost at least £130k. A 1br "shared ownership" flat was going for 200k, proving how overpriced they are!
I'm pretty sure that just one of those flats of the auction property would cover the mortgage, with the other flat bringing in pure profit. In the process of my due diligence, I also discovered that banks will now lend me 4.5 times my income, so they have clearly increased their lending. My original assessment was that it would be a long time before banks raised their lending, but it seems this is not the case. George Soros changes his plans if he discovers he is wrong, as I saw in his book The New Paradigm, so I must also reassess my course of action and look into investing further in property, if the finances make sense.
So what about leaving my deposit in the bank? Well I've noticed that the banks like to keep dropping their interest rates, and it is very annoying. Fixed rates are more reliable, but right now, its lower than what some property investments could pull in. I believe the investment above would pull in at least 7% per year after all other costs, which is far more than the bank, as some accounts pay 0.40% or less. I am sick of watching the bank interest rates as they keep dropping. With a property investment, I have far more control over the income.
I was planning on waiting for at least a year before investing further in property, but I cannot see any good reason not to bring my plan forward now. The bank are not helping me to get rich, so I have to help myself. I really do think that auctioned and repossessed properties are the way to buy at the moment, as its more likely to get a cheap bargain. Lets see if my hunch proves right.
Do I regret not making the investment? A little, but its important to move on. In the book Think and Grow Rich, Napoleon Hill said "every disappointment carries with it the seed of an equal or greater benefit". It's important to look for the positives in this situation. I now have a clear idea of the type of property I want to invest in. The hunt continues for the next great deal.
Do I regret not making the investment? A little, but its important to move on. In the book Think and Grow Rich, Napoleon Hill said "every disappointment carries with it the seed of an equal or greater benefit". It's important to look for the positives in this situation. I now have a clear idea of the type of property I want to invest in. The hunt continues for the next great deal.
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