Welcome to the latest round-up of news and views…
We’ve been talking to various BTL investors lately – they are testing a new service for us behind-the-scenes (more soon) – and it is interesting how investors seem to use different calculations to assess their ROI, return on investment. The basic measure that is quoted most widely is income divided by the investment multiplied by 100. So, if you have a basic BTL and the rent is £5,250 and the cost was £100,000, the yield is 5.25 per cent.
Of course, would-be investors will then talk about gross profits, net profits, mortgage borrowings, cash put in, extra costs incurred, void periods and so on. Personally, I’ve always taken the net profit at the end of each year and compared that to the cash that I put in in the first place; some of you, if I left it there, would then chide me for not mentioning that the property price, and therefore the equity in the investment, may have gone up or even down over the past year and that I should really compare the net profit against the cash/equity that is still in the investment; if I put in, say, 20 per cent cash at the outset, the net profit in relation to that may be quite good. But if I effectively have 40 per cent cash/equity in there, it may be less impressive and I could maybe do better elsewhere. An endless debate! More to come; we are just taking soundings from different correspondents – lots of different opinions – and will have an article soon for newcomers.
Some of you, who have already invested in Brazil, have asked if you can come along to the 20 March event. Yes, please do! It is a good chance to meet Adam and the team, get an update, compare notes with fellow investors – we always encourage new investors to chat to old investors – and have a drink with me before or after. Email for details.
The latest currencies review – sterling/euro/US dollar – is in from Peter Lavelle at Pure FX. If you’d like to receive it, and this is surely a must-read if you are exchanging currencies soon, please email back. We will send it on.
Two for members today…
Tottenham – freehold house currently arranged as two flats and fully let. Estimated market value £530,000 – 10 per cent discount for quick sale – cash buyer preferred.
Yorkshire – freehold block of 10 modern apartments. Individual break-up value of circa £650k from RICS report. Fully let. Quick sale required at £550k.
2 per cent finder’s fees required on both. Email for details. Please, no daydreamers.
If you are replying to the 70-30 JV opportunities introduction in London, please do make sure that you have £500k. This key criterion seems to be causing some confusion with some members as we have had a stream of replies this week beginning along the lines of ‘I don’t have £500k or anything like it but would like to get involved.’ Apologies -you can’t.
Strutt & Parker’s quarterly report covering PCL, Chelsea, Kensington, Fulham, Notting Hill, Knightsbridge and Belgravia, shows sales and rentals are rising. ‘We have seen Chelsea, South Kensington and Fulham assemble the most diverse spectrum of international buyers, while Knightsbridge is highly attractive to those from the Middle East. Kensington & Notting Hill has changed from being a more domestic market to an overseas hotspot. South Kensington and Fulham also saw an increase in transactions values compared to 2012 (14.5 per cent) which is likely due to selling the largest quantity of flats since the peak in 2006.’
‘The lettings market has proved equally buoyant. There were 13,752 property lets agreed in PCL during 2013, representing an 11.6 per cent increase on 2012 and surpassing the peak of 2009 by 8.2 per cent. The largest change was seen in the Knightsbridge & Belgravia submarket where house lettings increased by nearly 32 per cent compared to 2012.Lateral apartments and small family houses continue to be the properties of choice.’ More to come. We have a 12-page report coming for those serious investors looking to buy here; email for it.
All for now, as ever, feel free to email back.