Property Investors, Affiliate Income and HIPS – More Baloney!

I recently received a magazine in which a Get Rich Quick in Property Guru was harping on about how “Property Investors” - (funny that these guys never refer to “landlords” who have to actually get in and do real work like arrange to get fixes for boilers, sort out tenant issues etc, but let’s leave that aside for now) - could make money by other sources of income linked to their property sourcing business.

The guru referred to how investors could make thousands each month by becoming a letting agent for other, er, investors, how they could do a spot of mortgage broking on the side or how they could make lots of cash each month by running affiliate schemes for landlord products such as we do on our Landlords Services page.

Not Much Money Here!

What a load of baloney as they would say in New York.

Most letting agents I know do OK, but they are not rich - and the work is very hard indeed involving long and antisocial hours dealing with difficult tenants and more than a few awkward landlords. And as the barriers to entry to become a letting agent are so low, profits have always been and always will be on the low side.

Or Here.....

The same goes for mortgage broking.

Right now mortgage brokers are having a very hard time in the buy to let arena as volumes are low and as more and more people go direct to the lenders (hardly surprising as there are so few lenders to choose from.)

And as to affiliate income, well I know from experience that even with our own busy site there is not much money to be had from that source either. A few hundred pounds a year from one of our insurance affiliates and that’s about it.

Maybe these guys have to promote these ideas about other sources of income because too many of their clients are so disappointed when they find they cannot make the £s they were promised at seminars through the route of No Money Down or Cash Out Property Deals, so they have to sweeten the clients up a bit and tell them the Holy Grail of Get Rich Quick is still possible. As they say in New York, again, Forgeddaboutit!

HIPS

So, Labour is the only political party that wants to persevere with the Home Information Pack (or HIP) in its current form.

My view is that it was too bad the current Government allowed itself to be bludgeoned into jettisoning the Property Valuation Report, which was to have been in the HIP when it was originally designed.

What should have happened was the Valuation Report should have been included in the pack provided by the seller.

It could have been made to be valid (or extendable at low cost) for say a minimum period of 6 months. And as a neat side benefit, this would have helped ensure only serious sellers put their property on the market in the first place – which seems sensible to me.

So why didn’t they do this?

The Banks and RICS Scuppered the Best Plans

Well, the net effect would have been to reduce the number of valuations that were done overall and so this idea may not have appealed to those with vested interests in the valuation business – namely RICS and the mortgage lending banks.

The banks (who make a pretty penny out of Valuation Reports) moaned about how no buyer would trust a report produced by a vendor. (Really, even one done by an esteemed RICS surveyor?)

Unfortunately, the government (back then as close to big business as ever) believed this nonsense and didn't face down the surveying industry or the banks on the issue.

And so we ended up with a HIP that, without a valuation, was not much use to buyers at all.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the broadcast media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars. With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

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Property prices will Rocket, Then We All Die. Cheerful Stuff from LettingFocus.com

Ever heard of James Lovelock and Gaia theory?
James Lovelock is a chap you really should know about because his theories, if they come true, will impact all of us.
Lovelock is an independent scientist whose Gaia theory - that the Earth is a self-regulating super-organism - came out many years ago.
Stay with me this really has something to do with property, I promise.
His new book, “The Revenge of Gaia”, predicts that by 2020 extreme weather will be the norm and by 2040 much of Europe will be Saharan and parts of London will be underwater.
Increasingly and rather scarily, other scientists like those on the Intergovernmental Panel on Climate Change, tend to agree.
Sadly, according to Lovelock, global warming has now passed the point where it can be stopped and catastrophe is now inevitable. (Well, if the whole world went fully nuclear tomorrow we may just have a chance but that’s pretty unlikely with oil men being so close to the White House and Kremlin.)
Before that happens, he says, the UK will increasingly become a place for refugees from mainland Europe as life in the south of Europe, Africa and Central & South Asia beomes impossible.

GOVERNMENT STATS AGREE
On population predictions the UK’s own government statistics make similar predictions to Lovelock. At http://www.statistics.gov.uk/cci/nugget.asp?id=1352 you can read the predictions that government minister for immigration Phil Woolas was so cross had been published at all.
These say that the UK population is projected to increase by 4.4 million by 2016 an increase equivalent to an average annual rate of growth of 0.7 per cent.
If past trends continue, the population will continue to grow, reaching 71 million by 2031. This is due in part to natural increase (more births than deaths) and because it is assumed there will be more immigrants than emigrants.
So just before we all die – and I hope I’m joking here- we will certainly see a shortage of property and record prices for houses and possibly high rents, i.e. any form of shelter from the burning heat.
But once catastrophe beckons, (Lovelock predicts 80% of us will be dead by 2100), I guess you should substitute your assets out of property and switch into buying cans of tinned food, a secure bunker and some guns. Cheerful stuff!
For the sake of my darling 7 year old son, I dearly hope that Mr. Lovelock will one day turn out to be a very very deluded octogenarian with a book to promote who has finally got it wrong.
I’m an optimist so I’m sticking with that hope.
In the medium term given the increasing population and a dearth of house building I just can’t see house prices falling much more.

ESTATE AGENTS REALLY ARE GETTING BUSY
I know they are eternal optimists but the number of estate agents in the London area who seem genuinely rushed off their feet (at least outside the prime property markets) may really suggest we are getting near the bottom for house prices.
This is backed up by my own experience too. Every week I go to Rightmove and select 2 bed flats and houses in an certain area of central London (well 3 miles out if you must know) where there are loads of identical property.
These are my bellwether properties.
None have dropped their asking prices for 2 months now – further signs that we could be near the bottom.
Around the rest of England and Wales I’m hearing the same story.
I’ll be looking in mote depth at the state of the property market and the opportunity for investors, at my seminar on Wednesday. I’ll also have special guests along who are experts in mortgages, tax and buying below market value.
Come to Our Next Evening Property Event in London Evening of 18th March
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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property letting experts. Read Property Articles by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert property writer and property speaker - and I run the well known landlords blog that you are reading now.
Come to Our Next Evening Property Event in London Evening of 18th March
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
Find out about some great deals we have arranged at our Landlords Resources page.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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