September 27, 2010 | Author

Author Julie Hanson

Phil Martin asks …. SO…. is property investment really as good as it’s cracked up to be?

We are at a low point in the property market.

We are bombarded by information from the media that we are in a Credit Crunch and that the Recession will continue to bite deeper.

I do not internalise this very much and choose not to have a personal recession, instead seeing the huge opportunities that others miss.

It is however apparent that a lot of people have had their unwavering belief in property investment hit and with helpful reinforcement from their friends and family, they now doubt the Amazing Power of Property.

The truth is that there have been recessions, crashes and crunches before, the breathing in and out of the collective economies. These appear in nature as well as throughout human history. There will always be times of expansion and times of contraction and consolidation, each shift and change can be painful yet also a chance for economies and personal finances to heal, start afresh and return invigorated.

We are always told in property however that it is a long term plan and as long as you can afford to hold a good number of properties and cashflow your position for 10 years you have it made for life, for generations actually.

If you are waiting to buy when property falls in value, you will immediately be competing with everyone else and that increase in demand will rise the prices back up.

The real bottom of this crashed market will last about 4 weeks and will be gone in a blink.

For me the test of a property deal is how much of my own money it takes to acquire the property in the first place, how much cashflow at 6% base rate (taking all property issues into account) and how soon could I get my original capital investment back.

Nothing compares to property because over time a certain type of magic happens:

Inflation erodes the value of the mortgage debt to a negligible sum (Imagine a £2k mortgage on a £125k house today) and at the same time rises the value of the property.

Gerry Pridham, the well respected property investor summed it up recently when he posted “From 1959 to 2010. 50 years is a long time, but £190 to £600,000 is just plain ridiculous, and makes a mockery out of saving for a rainy day by any means other than real property.”

What else is there about property that makes it the ultimate asset class? How about these 10, just for starters?

1) Anyone can get started in property, all the skills and attitudes needed are learnable and teachable.

2) You do not need huge capital sums to get going, there are niches at ALL levels.

3) It is possible to negotiate purchases below the market price, building in instant equity and providing a buffer in the event of you choosing to, or needing to sell.

4) A small investment of ideas, skill and money can disproportionately increase the value of your property and also the income from it.

5) Property management can be systemised and outsourced so that your portfolio rental income can be a truly passive, residual income.

6) A portfolio of property gives you a secure and increasing income.
An income that is derived from an essential requirement for housing from tenants and the government, rather than being a purchase of choice.

7) A portfolio of property lasts for generations, it is solid, insurable and appreciates consistently in value over time. This is not a speculative investment, the Office of National Statistics shows solid growth since records began.

8) A portfolio of property cannot be taken away from you by a disgruntled boss, it cannot make you redundant.

9) A portfolio of property can be leveraged with external finance so that you get the full benefit of capital increases in value yet have withdrawn your initial investment years earlier.

10)Any mortgages and finance you have on properties are eroded naturally over time by inflation.

You see, anyone else who tells you that property is not a good investment or that it is too risky, is either speaking out of bitterness or ignorance, they are certainly not telling you the whole truth.

Before you listen to them, ask yourself, do they have the kind of life you want? Will they have the kind of life you want if they carry on doing what they are doing?

Look at the fruit on their tree before you take their advice, are they happy and fulfilled? are they financially secure? Are they free of a boss controlling their destiny?

No one else will pay your bills or take care of your family’s future, except you.

Property is your chance to make it big, to invest time and money now, to work now and ride the wave of this work into a bright future.

I hope this article is helpful to you and wish you the very best of success in property,

In total support,

Phil Martin