Copyright 2006 Vincent Wilmot
Being a landlord may be a very sound investment especially with rising property values - yet property investment can be risky and lenders will give you a loan for a bad scheme. The wise Buy To Let investor, before buying property or getting mortgages on any Buy To Let idea, gets expert financial advice - often using a good property investment calculator and often low cost.
The two main property investment choices.
There are two main choices in property investment, buy a house to let when the maximum UK mortgage will be at most 85% of valuation, or let your own house and buy yourself a new house when you may get 100%. But certainly, before you buy a property to let or decide to rent your own house and buy a replacement for yourself in England, you should get an expert estimate of your likely profit or likely loss, and also get an estimate of how big a rent and mortgage loan you should be able to get ! Even if your Buy to Let idea is at an early stage, with no actual property in mind yet, you should be able to get good advice on your approximate estimated ballpark figures.
Buy To Let Mortgages.
Before you make an offer or bid for a property, you may want to apply for a mortgage - lenders will often not need to know what property you want to buy but may want to know what rent you hope to get. For your Buy To Let property purchase a 10% cheque will normally do for a deposit, but you will get at most an 85% mortgage so you will usually need another 5% at completion. However, you may find some sellers prepared to cover that 5%. If you want speed, you can get a surveyor to go with you when you view a property - but if you need a mortgage then the lender may want their own survey done after also. But be warned that many selling good Buy To Let mortgages will give you dangerously poor advice on the wisdom of your property purchase - for that you really need independent advice !
Letting property that you already own.
If you are thinking of renting out property that you already own, or if you are now letting property, then it may be wise to get an expert report on how good a financial property investment it is. You are investing the value of your property, and you should be sure that it is making reasonable profit. Your current property value estimates, and current mortgage loan amounts will allow an expert appraisal including rent level advice and taxation advice.
Do be the wise investor.
If you are wise then do not consider buying property to rent out, until you get an expert estimate of your likely profit, or likely loss, and expert advice !Major UK lenders like the big banks have said that they think all investors thinking of buying property to rent, should get an expert financial appraisal before seeking a Buy to Let investment mortgage - as does the Council of Mortgage Lenders guide "Buying to Let". Many lenders will not calculate your Buy to Let mortgage on your income, property price or value, but on your expected rent as do good mortgage calculators. Some lenders may use your income, or part rent and part income, but lenders can give you a Buy to Let mortgage on a project likely to make a loss and which you cannot afford, and letting agencies can land you with a rent level that is too high or too low, so you do really need expert investment advice first - and with luck that need cost little !
About the author:
Vincent Wilmot currently lives in Grimsby UK and has several interesting websites including http://www.buy-to-let.me.uk
Saturday, October 27, 2007
Words Alone Can't Explain This Stock Market
Last week, I read that the folks at Oxford English Dictionary had a slate of American English words for consideration in future editions. Apparently, because of its international influence via the entertainment industry, America is the prime source of new entries into the language (I guess it's good to see the country still has some influence, because there are very few areas that our global neighbors still look up to us). The word erm that I found to be the most interesting for consideration is bling-bling.
The word refers to large jewelry, such as platinum chains and diamond rings that rappers and athletes sport. However, the word could also perfectly describe the nature of the stock market in the late 1990s. Moreover, it is the perfect way to describe the pay packages of CEOs, and lest not forget that house that the former CFO of WorldCom is building in Boca Raton. Although it is obvious that the editors at OED are becoming hipper, they're still a little slow on the latest in urban vernacular. In this case, it is probably a blessing. According to the Financial
Times, a writer from Houston recently stated, "The Bling-bling era is over". It better be, as far as individual investors are concerned. In fact, the bling-bling era has temporarily been replaced by the but-but era. Or in some cases the butt-butt era. The latter refers to how many investors feel after being taken advantage of by the entire system, or to the expression on the faces of those that continue to take the 5th during congressional hearings.
In the meantime, the Bush administration spends a lot of time saying "but-but". The drubbing of stocks was the clearest message the people have sent since the Boston Tea party. Moreover, it wasn't just Americans that were voicing their dissatisfaction with the President's address concerning the confidence crisis. When those safe haven stocks began to tumble during the week, one had to know that it represented a lot of foreign investment. As Ross Perot would have said, that was a
big sucking sound. (By the way, didn't he get in trouble this week?) Yes, the foreigners are taking their money out of the market just as fast as US investors, who withdrew about $20 billion from funds last week. It is interesting that much
hasn't been made of the simple fact that the market can't go higher if there is more money going out as there is coming in. Anyway, I think Bush will come back with a more definitive plan that goes beyond punishment and maybe focuses on prevention.
I know that the GOP thinks that those dynamics are one and the same, but in certain situations they're not.
The spectrum is such that those that have nothing to lose, and see no other way, aren't going to be swayed by prison terms or other forms of punishment. Sharing this space are those that are either so inherently criminal, that it is part of their being to break the law and those that are so blinded by greed that any risk is worth the reward. In their zeal to achieve bling-bling status, there is nothing that can stop them. They break every rule in the game. So, it stands to reason that these same people would first manipulate the rules, bending, twisting and corrupting them.
There, ladies and gentlemen, is where the President has to focus his next address on the topic. After all, when it comes to those in this country that see no other way, the rules are extremely precise. If a 19 year-old kid from the ghetto can get 10-years in prison for selling $20.00 worth of crack then that person knows the risk when he/she hits the street corner. (A discussion on the fairness of this type of sentencing could go on forever. I do find it shocking that the type of fraud that results in people losing their entire life savings only has a maximum term of five years. The but-but crowd has never seen anything unfair about such inequitable punishment, but may begin to backfire on them.)
The rules of the game have to change to the point where anyone investing in the stock market understands them. Let's face it, many of the companies and individuals facing public scorn did nothing illegal. On Wall Street it was akin to some sort of magic show. The sleight of hand was rewarded and applauded. You bought stocks because a company could manipulate the numbers. You loved management that found ways not to pay taxes. The CEO that could only pull a rabbit out of the hat was seen as behind the times. Heck, we loved to see the company sawed in half, only to emerge
whole by the time the earnings were announced. The President has to understand that the audience doesn't want that anymore. They want reality television. No more tricks, no more hocus-pocus. No more voodoo accounting. No more but-but.
In the end, the president has to cast a net so wide and ambitious that he may even be snared by it. This is the law and order party, so we expected longer prison terms. However that doesn't change the fact that there is too much gray area in the rules, and until that changes many public companies are going to go for bling-bling.
After all, that is the difference between a for-profit and a not-for-profit-company.
At the very least, individual investors buy stocks in companies because they think the company will grab the brass ring (if you're lucky, maybe said company
will reach the platinum ring).
A final thought on the Bush address. It is obvious that he has a formidable obstacle in front of him trying to fix a problem that is systemic in nature. Years of status quo have to be torn down, almost overnight if the US equities market is to ever recover from its current state. In the meantime, his get-tough approach could put another nail in the coffin of small publicly traded companies.
I'm talking about the 3000 or so companies that trade like orphans in the market, with no Jack Grubman to pump them. These companies already pay a disproportionate amount of money on compliance and filings. They simply can't be expected to adhere to the new rule changes; it will put many out of business. I'm not sure if the public is in the mood for special exemptions or if the Bush administration really cares or understands the problems. Yet it could be disastrous. These small companies are already afraid of the SEC, because they don't have the large legal department that can fight back. They need a break, or else another victim of the current crisis in the American financial system will be the American promise itself. The dream is that a company can get financing and challenge the giants and in the process add to the spirit that has kept America ahead of the rest if the world in terms of innovation andtechnical prowess.
It is a tough and dire situation. Somewhere down the line the goal of innovation and achievement gave way to greed. We all have been seduced by bling-bling, but now it's back to basics, hopefully the market can hang in there while the transition is
being made.
Other Thoughts and Observations
A few weeks ago, I said that the individual investor wouldn't step in to buy stocks on weakness like they did post September 11th. It is one thing to not let the bastards win, but another to bail out homegrown bastards that abused the system and our trust. Since then, the selling has become so pronounced that a hint of patriotic fervor has returned. It moved long-time bear, Byron Wein, to pick up the flag and say stocks are a buy. Other well known Wall Street bears made upbeat comments about the long-term potential of the stock market. However, none picked the bottom.
Outside of the days and weeks immediately following the terrorist attacks, I can't think of a time when Washington should be less partisan. Forget the blame game for a moment and stop acting like the Hatfield and McCoy clans. There is nothing to brag about and the problems are so universal and pervasive that everyone has played a role.
I've asked that everyone remain hopeful but gather as much cash as possible. It may be time to put that cash to use, really soon. My best guess is that 8177 is going to be the launching pad. I do find it interesting that the techs are probably going to
outperform the blue chips this summer. If there is a new paradigm shift then that means a long-term recovery in the stock market will have to come from a sector other than the techs.
About the Author
Since 1991, Charles Paynes' Wall Street Strategies has
successfully provided timely and effective equity advice to institutional
money managers, retail brokers and individual investors
of all types, and has thousands of subscribers from hundreds of
brokerage firms. http://www.wstreet.com
The word refers to large jewelry, such as platinum chains and diamond rings that rappers and athletes sport. However, the word could also perfectly describe the nature of the stock market in the late 1990s. Moreover, it is the perfect way to describe the pay packages of CEOs, and lest not forget that house that the former CFO of WorldCom is building in Boca Raton. Although it is obvious that the editors at OED are becoming hipper, they're still a little slow on the latest in urban vernacular. In this case, it is probably a blessing. According to the Financial
Times, a writer from Houston recently stated, "The Bling-bling era is over". It better be, as far as individual investors are concerned. In fact, the bling-bling era has temporarily been replaced by the but-but era. Or in some cases the butt-butt era. The latter refers to how many investors feel after being taken advantage of by the entire system, or to the expression on the faces of those that continue to take the 5th during congressional hearings.
In the meantime, the Bush administration spends a lot of time saying "but-but". The drubbing of stocks was the clearest message the people have sent since the Boston Tea party. Moreover, it wasn't just Americans that were voicing their dissatisfaction with the President's address concerning the confidence crisis. When those safe haven stocks began to tumble during the week, one had to know that it represented a lot of foreign investment. As Ross Perot would have said, that was a
big sucking sound. (By the way, didn't he get in trouble this week?) Yes, the foreigners are taking their money out of the market just as fast as US investors, who withdrew about $20 billion from funds last week. It is interesting that much
hasn't been made of the simple fact that the market can't go higher if there is more money going out as there is coming in. Anyway, I think Bush will come back with a more definitive plan that goes beyond punishment and maybe focuses on prevention.
I know that the GOP thinks that those dynamics are one and the same, but in certain situations they're not.
The spectrum is such that those that have nothing to lose, and see no other way, aren't going to be swayed by prison terms or other forms of punishment. Sharing this space are those that are either so inherently criminal, that it is part of their being to break the law and those that are so blinded by greed that any risk is worth the reward. In their zeal to achieve bling-bling status, there is nothing that can stop them. They break every rule in the game. So, it stands to reason that these same people would first manipulate the rules, bending, twisting and corrupting them.
There, ladies and gentlemen, is where the President has to focus his next address on the topic. After all, when it comes to those in this country that see no other way, the rules are extremely precise. If a 19 year-old kid from the ghetto can get 10-years in prison for selling $20.00 worth of crack then that person knows the risk when he/she hits the street corner. (A discussion on the fairness of this type of sentencing could go on forever. I do find it shocking that the type of fraud that results in people losing their entire life savings only has a maximum term of five years. The but-but crowd has never seen anything unfair about such inequitable punishment, but may begin to backfire on them.)
The rules of the game have to change to the point where anyone investing in the stock market understands them. Let's face it, many of the companies and individuals facing public scorn did nothing illegal. On Wall Street it was akin to some sort of magic show. The sleight of hand was rewarded and applauded. You bought stocks because a company could manipulate the numbers. You loved management that found ways not to pay taxes. The CEO that could only pull a rabbit out of the hat was seen as behind the times. Heck, we loved to see the company sawed in half, only to emerge
whole by the time the earnings were announced. The President has to understand that the audience doesn't want that anymore. They want reality television. No more tricks, no more hocus-pocus. No more voodoo accounting. No more but-but.
In the end, the president has to cast a net so wide and ambitious that he may even be snared by it. This is the law and order party, so we expected longer prison terms. However that doesn't change the fact that there is too much gray area in the rules, and until that changes many public companies are going to go for bling-bling.
After all, that is the difference between a for-profit and a not-for-profit-company.
At the very least, individual investors buy stocks in companies because they think the company will grab the brass ring (if you're lucky, maybe said company
will reach the platinum ring).
A final thought on the Bush address. It is obvious that he has a formidable obstacle in front of him trying to fix a problem that is systemic in nature. Years of status quo have to be torn down, almost overnight if the US equities market is to ever recover from its current state. In the meantime, his get-tough approach could put another nail in the coffin of small publicly traded companies.
I'm talking about the 3000 or so companies that trade like orphans in the market, with no Jack Grubman to pump them. These companies already pay a disproportionate amount of money on compliance and filings. They simply can't be expected to adhere to the new rule changes; it will put many out of business. I'm not sure if the public is in the mood for special exemptions or if the Bush administration really cares or understands the problems. Yet it could be disastrous. These small companies are already afraid of the SEC, because they don't have the large legal department that can fight back. They need a break, or else another victim of the current crisis in the American financial system will be the American promise itself. The dream is that a company can get financing and challenge the giants and in the process add to the spirit that has kept America ahead of the rest if the world in terms of innovation andtechnical prowess.
It is a tough and dire situation. Somewhere down the line the goal of innovation and achievement gave way to greed. We all have been seduced by bling-bling, but now it's back to basics, hopefully the market can hang in there while the transition is
being made.
Other Thoughts and Observations
A few weeks ago, I said that the individual investor wouldn't step in to buy stocks on weakness like they did post September 11th. It is one thing to not let the bastards win, but another to bail out homegrown bastards that abused the system and our trust. Since then, the selling has become so pronounced that a hint of patriotic fervor has returned. It moved long-time bear, Byron Wein, to pick up the flag and say stocks are a buy. Other well known Wall Street bears made upbeat comments about the long-term potential of the stock market. However, none picked the bottom.
Outside of the days and weeks immediately following the terrorist attacks, I can't think of a time when Washington should be less partisan. Forget the blame game for a moment and stop acting like the Hatfield and McCoy clans. There is nothing to brag about and the problems are so universal and pervasive that everyone has played a role.
I've asked that everyone remain hopeful but gather as much cash as possible. It may be time to put that cash to use, really soon. My best guess is that 8177 is going to be the launching pad. I do find it interesting that the techs are probably going to
outperform the blue chips this summer. If there is a new paradigm shift then that means a long-term recovery in the stock market will have to come from a sector other than the techs.
About the Author
Since 1991, Charles Paynes' Wall Street Strategies has
successfully provided timely and effective equity advice to institutional
money managers, retail brokers and individual investors
of all types, and has thousands of subscribers from hundreds of
brokerage firms. http://www.wstreet.com
Your Worst Enemy To Successful Investing - The Media
How do you make your investment decisions and where do you get your information? If you're like most of the people I know, you look to the experts.
That's fine, however it's important to be aware that for every expert, there's an opinion and for every opinion there's an expert. I have a friend who says that opinions are like noses: everyone has one but you wouldn't live in anyone else's nose!
Around the first of the year, along with the New Year's resolutions, come the New Year predictions for what will be hot and what will not. As if that isn't enough to produce a massive case of information indigestion, now we have the cable financial shows with pretty much the opinion of the hour.
What this is producing is a frenzy of buy and sell activity for stocks in general, and now for mutual funds as well. I don't think this approach serves either the investors in particular or the funds in general.
The big problem with this for mutual fund investors is that all the experts are recommending different funds. It might be one thing if experts had a solid basis for their perspective. If they did, then you would think their recommendations would line up and they'd all be touting the same thing.
But they don't and they aren't. Oh sure, each one of them can make a good case for their pick. But so can the next "expert." And usually both of them won't be right (if either of them is). So, where's the value in this for you? Beats me.
Another problem with this approach is that many experts recommend different funds at different times, and, in an effort to be in the hot fund, investors keep moving from fund to fund.
In the same breath, the experts are telling us to invest for the long term. Well, I can't figure out how to do both: be in the latest hot fund, and hold what I've got for the long haul.
The downside of all of this for the funds is that sometimes a fund touted as the hot one to be in attracts so much investment attention (i.e., money) that it grows beyond its original intention. At that point, it loses its direction and the very thing that made it strong is sacrificed. And guess what happens to the performance?
So, in the midst of all the hawking and hype for this fund or that, what's an investor to do to make intelligent choices?
For myself and my clients I use a trend tracking methodology, which identifies long-term trends in various markets. I research funds for stability and reliability as well as current performance. Then, when our trend indicator signals a Buy, we select our mutual funds based on momentum figures for various time periods to arrive at the most promising fund(s) to use for this cycle.
This gives us a head start and sometimes, weeks after we've bought a fund, I see it written up in financial papers as being one of the best performers.
Does this approach always put us in the number one fund? Maybe not. But we are almost always in funds that are doing very, very well. And do we get in at the bottom and out at the very top? Again, maybe not.
However, I can tell you that, using this methodology, my clients and I followed the sell signal we got in October, 2000, and were safely invested in solid money markets when the stock market crashed and burned.
Is this approach for you? It depends on how much adrenaline rush you like when you watch your investments. Personally, I fulfill my thrill quotient with other things in life and enjoy sleeping at night when it comes to my investments.
Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com
ulli@successful-investment.com
That's fine, however it's important to be aware that for every expert, there's an opinion and for every opinion there's an expert. I have a friend who says that opinions are like noses: everyone has one but you wouldn't live in anyone else's nose!
Around the first of the year, along with the New Year's resolutions, come the New Year predictions for what will be hot and what will not. As if that isn't enough to produce a massive case of information indigestion, now we have the cable financial shows with pretty much the opinion of the hour.
What this is producing is a frenzy of buy and sell activity for stocks in general, and now for mutual funds as well. I don't think this approach serves either the investors in particular or the funds in general.
The big problem with this for mutual fund investors is that all the experts are recommending different funds. It might be one thing if experts had a solid basis for their perspective. If they did, then you would think their recommendations would line up and they'd all be touting the same thing.
But they don't and they aren't. Oh sure, each one of them can make a good case for their pick. But so can the next "expert." And usually both of them won't be right (if either of them is). So, where's the value in this for you? Beats me.
Another problem with this approach is that many experts recommend different funds at different times, and, in an effort to be in the hot fund, investors keep moving from fund to fund.
In the same breath, the experts are telling us to invest for the long term. Well, I can't figure out how to do both: be in the latest hot fund, and hold what I've got for the long haul.
The downside of all of this for the funds is that sometimes a fund touted as the hot one to be in attracts so much investment attention (i.e., money) that it grows beyond its original intention. At that point, it loses its direction and the very thing that made it strong is sacrificed. And guess what happens to the performance?
So, in the midst of all the hawking and hype for this fund or that, what's an investor to do to make intelligent choices?
For myself and my clients I use a trend tracking methodology, which identifies long-term trends in various markets. I research funds for stability and reliability as well as current performance. Then, when our trend indicator signals a Buy, we select our mutual funds based on momentum figures for various time periods to arrive at the most promising fund(s) to use for this cycle.
This gives us a head start and sometimes, weeks after we've bought a fund, I see it written up in financial papers as being one of the best performers.
Does this approach always put us in the number one fund? Maybe not. But we are almost always in funds that are doing very, very well. And do we get in at the bottom and out at the very top? Again, maybe not.
However, I can tell you that, using this methodology, my clients and I followed the sell signal we got in October, 2000, and were safely invested in solid money markets when the stock market crashed and burned.
Is this approach for you? It depends on how much adrenaline rush you like when you watch your investments. Personally, I fulfill my thrill quotient with other things in life and enjoy sleeping at night when it comes to my investments.
Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com
ulli@successful-investment.com
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