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

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).

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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.