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Does The Credit Crunch ‘Stop Play’ For The Property Investor?

By Andy Shaw | January 23, 2010

Originally Posted 23rd April 2008

The simple answer is Only if you don’t know what you are doing!

I said in my book that my strategy would work in a rising, static and falling market. So why is it then all of the agents we buy from (without exception) say we are the only buyers of flats?

They tell us that they are selling 3 & 4 bed places, though not many. But apparently there are no buyers for flats, So, 1st time buyers have left the building! Buy to let Investors, have left the building! Property Investors, have left the building!

What do you think that has done to our ability to buy?

Talk about cherry pick!

I’m just back from Cyprus and on my return I looked through the last few purchases made last week. Now I’ve actually instructed the guys to buy 50% of what we were buying on purpose, not because I’m scared but to make the agents think that we are considering pulling out of the market.

So is it working? You bet it is they are afraid to lose their one and only buyer! So what do you think that is doing for our negotiations from vendors?

This bit is not Rocket Science :-)

One of the properties we just bought was the one below, and here’s the email communication I had with Julian on it:

2 Bed Maisonette

Price: £85,000

Re-val: £139,950

Re-furb: £2,467.50

Re-mortgage 80%

So the deal gives us all money back, roughly £6,000 in cash and £27,990 equity.

Of course it fitted our model…

I emailed him:

Hi,

This is a stunning deal, amongst other excellent deals, well done.

Was the vendor on this one a new to buy to let, investor or a long term property investor?

Andy

Note: I knew it wasn’t someone who lived there as they can’t afford to let them go at these sorts of discounts.

His response:

A very frightened but experienced investor.

Now what does that say to you?

First off I thought it was going to be someone new to BTL, but it wasn’t, it was an experienced investor. So the experienced investors are panicking, but why are they panicking. Because they are uninformed of course, because they don’t actually understand property investing, because they got into it because they knew it was the right thing to do. But his laziness towards learning about his investment, his lack of memory towards the decade before, when the only people who lost money Investing in property were… the ones who sold of course!

So he’s just transferred some of his wealth to one of my Passive clients.

Now anyone could get that to value for £120k, anyone so why did he sell? Why did he change from knowing it was right, to now believing that he must sell?

Well he has listened to the uniformed bloke in the pub or the rubbish being covered on the TV, he has been poisoned and now he believes he is more at risk if he stays in.

Recession’s become a self fulfilling prophecy in the end, as people talk themselves into it (mind you I’m helping to talk the Estate Agents into it :-) ) but in truth the game has just changed shape, the rules have altered but the game does not ’stop play’ for the sophisticated investor.

For the sophisticated investor the game gets easier as there are less un-sophisticated people around getting in their way and making a profit by mistake.

So now You are in a unique position at the moment as probably everyone else is being scare mongered, so you can capitalise on this situation just as we are.

The other deals I ok’d yesterday were:

4 Bed Maisonette

Price: £100,000

Re-val: £150,00 – he thinks we can easily get more but it will be capped by rent!

Re-furb: £2,733

Re-mortgage 80%

Yes it did say 4 bed!

3 flats with the exact same maths:

1 Bed Flat

Price: £75,000

Re-val: £119,950

Re-furb: £2,467.50

Re-mortgage 80%

Another 3 flats with the exact same maths:

1 Bed Flat

Price: £73,000

Re-val: £119,950

Re-furb: £2,467.50

Re-mortgage 80%

As you can see the guys in acquisitions are really having some fun right now, we have got stacks of agents that we are telling the same story to about the doom and gloom and they are telling other agents. And as I said in the book, how are prices decided for property? Well the Estate Agent looks at what their competitors’ are doing, and then sets his price accordingly.

So that was 8 stonking deals, all of which have gone to our Passive clients. And as I said I’ve asked them to slow the buying down! So these are the fruit we are picking up off the ground.

If this is what a recession looks like then from a property investors point of view, I’d much rather be doing this now than any time since I’ve ever been an investor. The averages we are making for our Passive clients now are higher averages than at any other time.

So what does this mean for you? Well frankly one of two things, either you need to get out and be doing wicked deals like us but protecting your cash flow, or simply and unashamedly, it has never been a better time to be a Passive client than right now.

You know how it is always the other person who seems to get the breaks, and how the general public look at them and say something like, ‘well it’s alright for you, you got in at the right time!’ Well when we started in 2002, there was no boom going on, the media was saying there’s a crash coming (no shock there) and all of our friends and relatives said something like, ‘you’re mad to get in now, you’re buying at the wrong time.’

We did anyway, we knew we were right we acted boldly and unseen forces came to our aid. As when everyone is pointing one way, there is money to be found in the opposite direction. Nothing knew there, so why is it when it’s happening right now, or whenever it does are so many people stunned into panic or just frozen to the spot?

I think this goes a long way to explain why 99% of You will not retire rich. Money is not made following the herd, money is made going off in your own direction. Why is it when people read self development books that teach them to look out for opportunity and be ready, that they tell themselves they will be, yet when opportunity comes along they simply are caught like Rabbits in a cars headlights? Opportunity favours those who act.

Those same friends and relatives now say to us, ‘well it’s alright for you, you got in at the right time.’ They have forgotten what they said before, their delusional minds cannot let them know that they missed out and we told them so, as then they would have to do the unthinkable and ADMIT THEY WERE WRONG!

So what do you want to be?

The one who goes against the tide of lemmings, or the one who takes the easy route and goes along with them (the easy route is just the long route in disguise :-) ). Don’t worry afterall if you choose the easy route, your mind will cover up your mistake for you, don’t worry the chances are it will find a way of completely wiping the memory of this article from your mind. If you chose to go down that route you will not regret it, as you will forget this was ever said to you, as it is just part of our natural survival instincts.

Or you can ‘Act Boldly, And Unseen Forces Will Come To Your Aid!’

One of the broadcasts I still receive is from a man called Phil Gosling. I was fortunate enough to speak on the same platform as him a few years ago and found him to be quite inspirational. Phil really does look at things differently, a broadcast he sent out the other day told the story of the TV show Grand Designs. Where constantly people bite off far more than they can chew, and in a lot of cases have no idea where they are going to get the funds from to complete their homes.

So it is touch and go for them, and they undoubtedly cause themselves problems to make it actually happen in the future. The sensible thing seems to be to quit and walk away, licking their wounds, but ALL of the people keep going, they ALL complete their dream homes, they ALL say it was worth it in the end.

So what is the difference between the people who do and the people who don’t?

Well those people have planned their home, their success down to the minutest detail, so they have visualised their home finished in their minds, they have seen themselves living in it.

Watching them achieve it against all odds should be inspirational to any that understand it. That is the message that the show unknowingly is sending out, if you are not blind to it. They are looking for reasons to succeed, not reasons to fail, so their mind is closing off the failure doors and only presenting them with the success doors. Are they delusional? Well probably, but that can be what it takes, it did with us. I forget who said it now, but when you see a great big result that means somebody took a great big risk.

If you want mediocre results, then go with the crowd. Join the lemmings and get mediocre results by not taking action. As with the crowd it is a certain way to end up with a mediocre result. If however, you want great big results then act boldly and expect to get them.

If those people believed they were going to fail, then they would. But instead they believed they were going to succeed. Whatever you choose to believe will become your reality.

So if you do believe right now that it’s the wrong time to get into property investing, or if you have been infected by the poison being spread, then don’t worry your brain will look for the reasons to justify that decision for you in the future. And this ’supposedly’ rich madman who told you to buy when everyone else was telling you the market was a disaster was simply wrong and delusional himself.

Before I was wealthy I longed for rich people to tell me how to do it. But all I was presented with was very rich property investors. So obviously I ignored them, and kept thinking when will I be presented with someone rich to tell me what to do?
Well if you are reading this, then you have that right now, but are you as blind as I was?

Will you wait for 11 years as I did before acting on the information that is being shown to you?

I’ve had emails from people saying they waited 30, 40, 50 years, with each passing decade they found another reason not to act (now that’s a true crime!).

So will you wait 50 years?

I said in the book if you don’t do this within 12 weeks of reading then you won’t do it at all. Well, was I right?

Or less likely for the population but more likely for you if you are reading this; is that you are simply uninformed and confused. So right now you are trying to get a handle on what you should do, your instincts are telling you, ‘now’s the time’, but everyone else is telling you ‘no it’s not!’ So you have a confused mind, and a confused mind never buys.

So the question you have to ask yourself, is, who do you trust?’

Or personally the better question is (cashflow aside) has playing it safe and not acting given you the result you want for your life and the lives of the people close to you?

Once again for those who can’t remember, or may have just temporarily forgotten:

It’s always a good time to buy property!

But will your mind let you believe that?

Best wishes

Andy

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