Yesterday we looked at trends in BMV investing. My personal colours are nailed to the mast - play the waiting game until Spring/Summer 2009 when the institutional money rides back into property. This is what I said back in October:

OK, property might not going great guns on the capital appreciation front in the short term recession profits can be made.

but let’s not forget that as an asset class, the yields are looking pretty good and
How will these be impacted by the interested rate cuts in the UK?

Reaction to Banks
* Independent: When in doubt, blame the banks Dominic Lawson gives an alternative view to the Government and media obsession with dropping interest rates.from Houseprice Crash
* The banks have said that they are reviewing their Standard Variable
Rates (SVR) although it is highly unlikely that any of the banks will
announce if their decision on passing on the 1.5 percent rate cut today. HSBC reporting that they may not announce their decision until Monday.
* “I’m a homeowner, will I benefit from the cut? About 50 per cent of
existing mortgages are fixed rate deals which will not benefit from the
cut, 40 per cent are…” from the FT
* Yesterday’s sizeable and surprising cut in the bank base rate comes at
an interesting point in the housing market. Whether it becomes a
turning point, however, is dependent on various other factors,
including whether our semi-nationalised banks do the decent thing or
“do a Millwall” (as in the chant favoured by this club’s supporters:
“No one likes us, we don’t care”). from the Times Online
* The Anning family are among the millions of borrowers who immediately
benefited from yesterday’s one and a half percentage point Bank of
England base-rate cut. Anyone who has a tracker, or is due to take out
one, will notice a huge fall in repayments - £133 a month off an
average loan. from the Times Online
* Monetary Policy Committee chose not to act to alleviate what to some was an obvious storm gathering argues Damian Reece
* Investors will breathe a sigh of relief that the Bank of England
Monetary Policy is in fact in touch with the reality and I’m impressed
with the action they’ve taken rather than the usual wait and see. from Brett Wood YPC
* Finally Mervyn and the MPC woke up - The Base Rate cut was savage as we said (Stuart Law)
* Base rate cut to 3% (Juswant Rai)
* Interest rates were just cut by a massive 1.5%. I think most people
were expecting 0.5-1%. Great news for people on tracker mortgages. 3%
is the lowest since 1955. (property investment project)

Future Rate Forecasts
* Bloomberg: Zero Rate World May Lie Ahead as King, Trichet Cut (Update1)
As major central banks slash interest rates with unexpected speed,
benchmark borrowing costs are now below core inflation for the first
time since the early 1980s, and policy makers are signaling they will
go deeper. from Houseprice Crash

Impact on Savings
* Savers will miss out as banks and building societies have began withdrawing attractive savings deals. from the Telegraph

House Price Forecasts
* Times: Five experts predict how much further prices will fall
When will the house price crash end and how far will prices fall?
Should buyers grab a bargain now, or wait another year, or even longer.
Times Money asked five experts for their predictions on how far prices
will fall before they reach rock bottom.
Martin Ellis (Halifax): -10% Jonathan Davis (Housepricecrash.co.uk):
-35% Yolande Barnes (Savills): -10% Nick Bate (Merril Lynch): -10%
Nicholas Leeming (Propertyfinder.co.uk): -10% from Houseprice Crash
* Is this really a crash or just a blip? from Rod Thomas
* Capital Economics forecasts
* UK house prices fell by 2.2% in October, bringing the average price back to the level in October 2005 at £168,031 from Housefund
* BBC News: Facing up to house price deja vu Faced with a nosedive in UK house prices, some homeowners are suggesting we learn from the past to prepare for the future.

Economy
* Economists predict that the interest rate cut from the Bank of England
could be too much too late, and warn that we may have further cuts some
even say taking the interest rate to zero.
* I have a feeling that this recession is going to be deep and very long and unlike what I have experienced in the last 37 years. from Investment Blog]
* Some thoughts on surviving the credit crunch, which is more about mindset than anything else.
* Deleveraging - a word we’re going to hear more of in the BMV world
* What’s next? Ask George Soros

OK, property might not going great guns on the capital appreciation front in the short term recession but let’s not forget that as an asset class, the yields are looking pretty good and profits can be made.

If you’re sitting on top of a few million, you’re probably wondering where your money is best hedged. Banks don’t look so safe right now and gold doesn’t offer both the tax breaks and leverage that you can get with property.

That’s why instituional money is heading into property, but not for a few months. I’m confident mid-2009 we’ll start to see institutional money arrive on the property doormat.

What will it look like?

Sovereign wealth funds and overseas portfolio owners all know that money locked in the UK long term makes sense, they’re just waiting for the storm to blow over and the bargains to be had. When these guys get involved they don’t waste time buying a flat here, an HMO here as a first time buyer might - they buy large portfolios to use their economies to negotiate discounts.

And “storm blowing over” means the exit of 1000s of would-be property investors and gurus who are still promoting the same way of doing business that worked pre-crunch.

So SWF money will come in the form of the representative - the agent fronting the fund interest in the UK. Expect to find a lot of fixers with Chinese, South African and evn Japanese accents sniffing around networking events the other side of 2009.

That’s why we’re building BMV Monster - the exchange for investors to trade with other investors - because that is where the SWFs and institutional investors are going to land as their first point of contact. Time to get ready…

swfs, buy property deals, property portfolios, property investment, discount properties

Last market downturn I experienced was the dotcom bubble of 2001 which resulted in the widespread deflation of tech stocks. It was also the year we started our telecoms business with zero start up capital ending in a modest profit 12 months down the line. In short, money can be made even when markets fall - you just have make the decision to take some risks and stick to the investment basics.

If you want another example, here’s one from That’s Business - the excellent case study of Charlton House - formed in the recession of 1991, turning over £340,000 in year one.

I’ve already blogged about profiting during the property market downturn and focused on the need to change your existing business model.

When it comes to property investment, we can consider the market as two stakeholders - the deal providers and the buyer/investors. Currently, the business model is flawed. BMV deal providers spend 99% of their time finding and packaging deals and 1% marketing them to an unknown market of investors. Yes, there are plenty of sites selling BMV leads and deals but it’s needle and haystack stuff. The more proactive are running their own property events, such as Rhett Lewis, which makes sense but as you’ll see a diminishing pool of investors leads to a higher overhead required to produce the same results.

The marketing that BMVers do do is reliant on mailing lists (which are generally ineffective) and promotion at the usual events. But, as you can see from this blog, even these aren’t working out anymore.

Investors, however, spend 99% of their time looking for these deals.

Seem like something’s wrong? That’s why we started the BMV Monster exchange to help facilitate a bridge in this information gap. We haven’t fully launched yet, but if you’re interested in latest developments and trialling the exchange sign up for launch announcements on the top right of this page and we’ll give you exclusive access as soon as it’s available.

Mortgage lending is up and the LIBOR is starting to ease, so the market is less about panic and more about the economic fundamentals. And, while the fundamentals aren’t positive at least it’s a case of the devil we know and the panic has subsided. If we follow the US lead, we are about 6-9 months behind. US sales are up (thanks mainly to the availability of bargains) and I firmly believe we’ll see UK property prices fall another 10-15% over the next 6 months followed by stabilization mid 2009. Also check out this blog by Matthew Moody on getting involved in property right now.

property, bmv property, property leads, property deals, bmv investors, find bmv deals

by Graham Brown

Seems a crazy time to start a new venture, particularly in the middle of a recession when mortgage lending is effectively negative. According to these stats, property sales in England alone have fallen from 100k to 17k. But as one pundit said:

It may seem impossible to comprehend but in the Great Depression multiple fortunes were made, money just changes hands during a depression and within the next few months you simply have to choose whether you want to position yourself for wealth or not.

However you slice the onion, most people out there are going to end up with very little to retire on and whatever the real reason for the bailout, we won’t be getting much of the action.

So, assuming you’re in it for the long haul and not just a quick buck, the best time to start building a portfolio of assets for your future is when they are cheap and there is less competition - like now (landlords are getting pounded right now which in my opinion is good news as too many were too highly geared and had little or no business sense). Less competition = more rewards for the rest of us who have made efforts to grow their businesses organically and not follow the herds and property has historically held its value with your average investment at least 20% below what you were going to buy it for last year. Same property, different price (see this blog).

You only have to look around you to see how, with repossessions up 24% (although admittedly still behind the US), mainstream media is gearing up for a festival of repo related content in the near future (see also here). Homesgofast reminds us to enjoy the falls (seems like not everyone’s miserable!)

But then, nobody made any money following mainstream media’s common sense advice did they?

And it’s not just an opportunity for the rich because even the rich are losing out in the meltdown. It’s an opportunity for those who are able to change their business models and evolve.

And yes, there is plenty of crunch still left in the pipeline - expect property prices to fall even further until we reach the require capitulation point at which we know we’ve hit the bottom. So, when’s the best time to prepare yourself for the turnaround - before or after it happens? LIBOR is already easing and prices will be up again in 14 months (other source) so get yourself ready.

That’s why we’re putting together an exchange for investors to buy and sell these assets between each other - enter BMV Monster. More on that later as it’s currently in BETA (more like Alpha).

Technorati Tags: bmv, property investment, credit crunch, donald trump, property prices, graham brown

Hello and welcome to BMV Monster Blog by Graham Brown, the companion to the BMV Monster website - the marketplace for trading BMV Property investment deals.