Is The Housing Market Going To Go Down? And How You Can Profit From What Happens

By Andy Shaw | January 23, 2010

Originally Posted 17th December 2007

This is a continuation of other previous articles on the housing market and it is an attempt to give you insight to what I feel is going on. So that it can help you make sense of all the abundance of conflicting information that is presented to you on a daily basis. Which of course is so that you may profit from it when others are heading in the wrong direction. But it is only my opinion so it’s up to you to decide who is right.

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Topics: Property, The Economy | Comments Off

A Year On!

By Andy Shaw | January 23, 2010

Originally Posted 13th December 2007

It’s been a exactly a year since we first launched the membership site and I just thought I ought to mark the occasion saying what I thought we’d all achieved as well as give you some feedback on what the business has achieved and where we are heading.

When we launched the site at 12.00pm, on 13th December, 2006, we did it with an internet marketing launch as many of us will remember, and we went from zero to several hundred members in the space of a few minutes.

We launched the site, at the time, using my well known style of, ‘Ready, Fire, Aim’. We had in fact only started building the site a couple of weeks before, and all it had on it was just a few articles from me and a forum. It had virtually none of the tools that I wanted to be ready. It makes me laugh now when we get emails almost daily from new members saying I can’t believe how much stuff there is on it.

Anyway, I said I would bring the tools on and have brought on several key ones in the last year, with plenty more still to follow. I got quite a slating at times for not having them on there from the start, and in a lot of ways justifiably so. But I also knew that if I ever wanted this project to get off the ground then it would have to go off half-cocked, or it would never even start. As frankly my existing business was making me a lot of money, so in theory should have taken priority. It was only thanks to the quickly proven income stream and the belief and support from all of you that could keep me interested long enough to actually create this very powerful tool.

Over the year, the number of members has varied. Initially it went very high to around 2,500 and then dropped back to around 1,000. I’ve just checked and there seems to be over 2,100 people at the moment and that always includes a few hundred on the free 30 days trial, but even so, it looks like we have well over 1,500 members who are committed to creating wealth for themselves. So I’m really pleased that we have been able to find this many people.

My primary aim with the site was and still is that all site members get substantially more value from the site than it ever costs them. Frankly if the site is costing them money then they should not be members. This aim also includes a minimum increase in net worth of 15% or a cash increase of at least £10,000.

Well, from the feedback we have received and continue to receive, we as a whole community have over-delivered on this primary aim. I know for a fact that hundreds, probably even thousands of people are now making £10,000+ of new wealth, and a few dozen have made well over half a million and much more … so far! So I am extremely proud of this achievement.

I have just had a meeting with Phil and we were both going through our frustrations of the bits we wanted added by now or the little bits we still had to fix. It is very easy when in business, as in personal wealth creation, to not be able to see what you’ve already achieved. I consider it an essential part of my wealth creation to stop and take account of what I’ve done and achieved and then to be grateful for it.

Before I tell you what we have got planned for next year, I thought I’d remind you why I do this, as I know there are people out there that think I’m on some altruistic, artistic journey. Well I’m not, anything like that, that comes to me along the way is purely a benefit to me and is not my primary aim. I am a believer in the virtue of selfishness.

My primary aim of course is to find enough people I can help so that I get paid a lot of money, and this aim should serve your interests as well for obvious reasons. Trouble is most of the media and the British culture is to think badly of someone who is making money out of other people, especially if it’s being made out of them.

Well hopefully you guys realise that if I wasn’t earning good money out of this then I would not be interested in doing it. Yes I’d like to give something back, but I am in this for the same reason as you are, I’m in this for the money and hopefully that should give you confidence in that what I am going to be bringing in will not only help to carry on making you money but will be increasing the pace of it as well.

I did a bit of a back of the fag packet calculation this morning to see what financials we had done since 13/12/2006 and in the first 12 months of turnover in the first trading year was approx £1,021,000 + vat. So to the non-business owners out there, it wasn’t all profit! But needless to say I did earn enough to keep the wolf from the door and more importantly enough to keep my interest going.

Now I would love to do some calculation that was able to show just how much money I’d helped people create but it would just be ridiculous to even guess at, so all I will say is that the Universe owes me big time!

Next year:-

The Site

You’ve obviously seen the huge number of changes going on at the moment and there are going to be a lot more new features being added over the next year. We now have 3 programmers working on the site (2 full time), the site improvements will be coming along thick and fast and we have several key software tools coming online in the first six months of next year. Once they are complete, then I will be directing the use of them properly together with the other existing tools and intend to do a seminar for a day to explain how best to use them and the site for maximum effect.

Don’t hold your breath though on when the seminar will be, and it will probably only be for a hundred people or so. But it will only be at a nominal cost that will cover the expenses and the filming of the event. This will be videoed so that all site members can view it later when it is ready.

I would guesstimate that we are currently at 20% of the way through the site’s development with us hopefully moving to 70% within the next 6 months. Nearer the time for the seminar I’ll run a survey to get feedback for exactly what is wanted.

We are intending to put the price of the site up to all new members. This date has yet to be set but it will probably be the anniversary of when people actually started paying to be here, which was 11th February 2007. All existing members will have their current price frozen for the duration of their membership, so don’t worry, the price isn’t going to be going up for you. We said when we started last year that when we thought the site was of sufficient value then we would increase the price. Well we think it has been there for sometime now so we will be raising it in due course.

Then later in the year, after we have completed and finished testing the new range of tools that are coming in then, and have filmed the seminar, then we will be completely changing the price structure of the site. This is to give people choice over what bits people want, in a similar way to the way Sky Tv works. As before all pre-existing members will be ‘Grandfathered’ in so there will be no extra cost to you, nor to any new members taken on before that time. But if there are areas of the site you do not use then there may be ways for you to lower your expense.

Also if Phil can ever manage to keep hold of a moderator/editor for more than a few weeks, then hopefully getting the answers you want should become a lot quicker too. We also intend to incorporate plenty of other infrastructure improvements, including project managing the further developments at a greater speed than we are currently capable of.

New stuff

From a sales point of view, thanks to the feedback you gave us, we have decided to get an audio version of the book done. This is currently being created.

Also there are a couple of other DVD products coming out next year, including the DVD version of the ‘Become a Property Investor’ seminar we did. So I’m sure you’ll see an email or two coming your way on these when they are available :-) There is also a free book, that when Tim actually gets finished editing it, will be available to all.

So 2008 should be an even better year than 2007. I’d like to thank you for myself and on behalf of the whole team here for your continued support, and I wish you more of the success you’ve experienced in the first year!

Best wishes


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How Is It That Property Prices Can Continue To Rise At A Higher Rate Than Inflation?

By Andy Shaw | January 23, 2010

Originally Posted 13th December 2007

I was asked this question on my previous article ‘A Rate Cut?’ and thought the answer would be useful so didn’t want it buried in the comments.

Hi Olly & Jarred,

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Topics: Property, The Economy | Comments Off

A Rate Cut?

By Andy Shaw | January 23, 2010

Originally Posted 6th December 2007

“What do we want that for?”, says Mervyn King.

I was looking at all the info available for an indication as to what the Guv should do, and it seems pretty straight forward to me, obviously I must be looking at different figures probably though. And so I thought I wonder what conversation he’s having at breakfast this morning with Mrs Guv…

“Well Dear, yes, yes I know I’ve said we should, and I know we’ve been heading in the wrong direction for quite a while now. And I know that most people think I should take control of the current financial problems by doing my job and lowering rates, and yes I know some of those people calling for the cuts who were previously on the monetary policy committee.

But I have to say in all honesty, I’m crap at reading financial information and I really can’t make head nor tail of what these indicators are telling me.

Frankly it’s all just gobbledygook to me!

So just to be on the safe side, I really think we should carry on flying the economy towards that big mountainous looking hill that we’re heading towards.

I also think my inability to make the correct decision will look really good on my P45!”

…Anyway, if I was a gambling man, and I’m not. I think that even Mr King should be able to figure it out this time and cut the rate, but the question is can he manage to swing three more people towards a rate cut today.

My opinion is he actually will, but I would not bet on it :-)

Best wishes


Topics: Free Content, Government, Property, The Economy | Comments Off

Is Christmas The End Of Your Year? And Do You Really Want It To Be That Way?

By Andy Shaw | January 23, 2010

Originally Posted 27th November 2007

A few years ago I realised that I’d been programmed to look at Christmas as the end of my year. I previously didn’t realise that I’d been programmed, and I didn’t really know what I didn’t like, it was just my instincts were telling me there was something wrong with this plan, and I knew that one day I’d suss it out!

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Constant Contact

By Andy Shaw | January 23, 2010

Originally Posted 26th November 2007

I was chatting with Julian a few weeks ago regarding how frustrating it is when you walk through the door of one of your best producing Estate Agents only to see in the window a property that if they’d offered it to you, you would have just bought.

Ron the operations manager was there at the time and he said, ‘But how can they end up in the window when the agent should know that we’ll buy it?’ To which Julian and I both scoffed at him saying, ‘they don’t do that Ron!’ And herein lays one of the great unknowns regarding the vast majority of Estate Agents.

Most EA’s really do have the memory of a Goldfish and whether we like it or not it is our job as diligent property investors to make sure they do their job properly. Yes, I know we shouldn’t have to but that’s beside the point. The reason I first employed Julian was that he used to be an EA and when a property came in that he thought even vaguely matched my criteria he would pick up the phone and try to get me to view it. He was the only one in the entire Worthing area that did that, despite the fact that we already owned 50 to 60 properties.

The trouble is that EA’s don’t think outside the box regarding sales, they don’t look at their most valued clients and think I’ll call them first even though you’d think they would. Why? I don’t know why! And right now, while you’re thinking well mine does, the chances are they are already going cold on you, but you won’t realise it for quite a while.

But the main reason for me telling you is that just putting your name down on the list of people to contact when a property comes in is not very likely to get you a deal. It is all about being in the right place at the right time. EA’s have 10 people a day coming to them and saying they are property investors. Julian says that EA’s consider these leads ‘binners’ in other words after you’ve given them your details and left, they put your info in the bin.

They haven’t got time to remember you! As they are far too busy dealing with several sales going through on properties where other investors are giving them grief. So why is it then that we’ve found some of our best EA’s have passed deals to complete newcomers over us? As we think this may actually be a clue as to why they persist in doing things the hard way. I think it is simply that the person was in the right place at the right time and they were the easiest route to a sale right there and then.

So the solution is to get yourself into the position of being in the right place at the right time, so that you create in the EA’s mind, ‘Top of Mind’ awareness. They need to think of you first, and how we have to get them to do this is by near constant contact. We call the agents we use the most on a near daily basis just checking that they haven’t had any new property come in that morning or afternoon, and even at that level of constant contact, sometimes a walk in investor still gets to the properties in front of us. So if you want to become the person that people say, ‘Oh well the EA calls them first.’ Then simply all you need to do is be in their face in a nice way several times a week. In the end the EA will get fed up with not having done a deal with you, and that will help you get a call or them asking you to go and do a viewing when you next call.

Also the ones we get before they come to the market are where we call and ask, ‘Are you doing any viewings that may interest us?’ When you’ve got a good track record the agent for an easy life will like to tie up a deal quickly with someone they know will complete on the sale with the smallest amount of grief possible.

The reason we are able to buy 3.8 deals a week in a market where people say they can’t find deals is because we are in constant contact with our Estate Agents, are you?

Best wishes


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What The Latest Bank Of England Inflation Report Means To You And Me

By Andy Shaw | January 23, 2010

Originally Posted 16th November 2007

The BOE released its latest inflation report this week, and much to my relief and disgust at the same time they have finally reached the conclusion that they have over corrected the market – better very late than never I suppose.

I apologise for repeating the next bit if you’re a regular reader, but it explains the economy and my view of it really well to all new comers:-

I think the economy is like flying a plane, and a plane has a number of controls, the ailerons, the flaps, the rudder (I have a Private Pilots License but I can’t remember if that’s the right name as it’s been so long since I flew!), the power, the wind (you don’t control that, but you can choose where you want to go and data is made available to you from various different indicators to allow you to ascertain the likely speed and direction of it- but this force is obviously outside of your control), and finally the trim.

Applying very slight positive or negative pressure to most of those items alters the course. When I was taught to fly, I was taught to make minor changes and then wait and see what happened, then make further minor adjustments to correct the course. If something in the weather started to look poor then I would take precautionary measures to try and remain on a comfortable course. The point was always to be in the precautionary state rather than the reactive state.

Well the BoE in my opinion flies the economy in the reactive state in other words they wait until they know it’s way off course before correcting instead of being able to feel that it is going off course and make a minor correction. When you leave a correction too long, then you run the risk of having to over correct, and this is where I feel the BoE is at its weakest. What’s worse is the BoE flies this economy just by using the power alone! And that’s no way to fly a plane.

I first used that analogy a few weeks ago, and if you read between the lines I made a couple of key points about how the BoE work. They use the power alone (interest rates) and they work in a reactive state instead of precautionary.

The funny thing is that they actually think they work from a precautionary state, trouble is how can accountants and actuaries ever be able to work from a precautionary state, all of the data they compile is based on what has actually happened – hardly precautionary!

I will continue with my bank beating in subsequent articles as frankly they deserve it, and even though my economist friend says that these people are ‘galactically clever’ I really do struggle with his conclusion. He recently said to me that I thought tenants were idiots, to which I replied by saying I would never class tenants at the same level as I do the BoE Monetary Policy Committee. I consider tenants honoured guests that have made a decision about their future and I am just a facilitator of their needs.

Whereas, I consider the BoE to have a severe lacking in forward predictive skills and therefore reckless control of the economy because of it. If it was based on their pure skills and knowledge then I could agree that they could be galactically clever, but if it is based on their predictive, forecasting and precautionary skill set then I have to disagree completely – as clearly they are lacking in this department having to always over correct.

What these guys need is a couple or three people on this policy committee that are known for predicting accurately, then they could combine that with their deep analytical view points and maybe, just maybe we’d have a BOE that could run the economy without continually having to over correct.

When they went up with 5 rises in a year, as I’ve said in previous articles I agreed with their first rise, I thought their second was needed but should have waited a couple more months – i.e. Make minor adjustments to the course and wait and see what happens, afterall they say they are not reactive, yet they clearly are with 5 rises in one year. Their third I totally disagreed with as they had not given it long enough to see what was happening, and then I was at a loss when they made their fourth and fifth rises as these were totally unnecessary then and thanks to this over correction report have now finally been proved to be.

Just a 0.25 point rise takes 2 years to really see the effect, and these guys rose it 5 times in a year and guess what their inflation report says this week…that the economy is going to experience a sharp downturn so we will be cutting rates 2 or 3 times over next year.

Now this on its own is what I’m talking about, they have now got and have had data for several months now which has shown what I’ve been saying for about a year, that they went up too high in the first place and they need to bring it down.

It’s clear data – they said so themselves, so what do they do, well in September they kept the rates on hold, and none of the MPC voted to lower them (i.e. no predictive/forecasting skills amongst the lot of them) and in October David Blanchflower was the only one of the nine of them to vote for a reduction – and he probably did it with an ulterior motive in mind.

You hear a lot about a lady called Kate Barker as she sits on the MPC and she wrote ‘The Barker Report’ on housing in the UK. Now I did hope following some of the things I read in her report that she would have a bit more of an understanding of the UK economy and its intrinsic link to housing, but obviously I was once again mistaken. I really would one day like to meet an expert that is in the media spotlight that is an expert, as I really would like to see an expert at the yolk.

I could go on for hours picking holes in this lot, as they are easy targets and they really do deserve it, but it just frustrates the hell out of me that I seem to be able to give more accurate predictions to the way the economy should head than the best experts the government can pull together.

I am not in anyway saying I’m cleverer than these guys, on the contrary they understand things that I only know to a very basic level, but they sure are bad at keeping us heading in the right direction. I keep saying they should be able to run this within a 0.75 point margin and yet they don’t seem to be able to.

Actually that brings up another point, I’ve never bothered asking before but why do they raise it 0.25 at a time as surely a better way to keep the economy on track would be minor rises like 0.10? The only thing I can think of is that the Mortgage lenders wouldn’t increase or decrease the rates if they were altered like that. And if that is the case then this is the change needed.

The governor said in the press conference that despite them raising the rates 5 times, only 50% of that actually filtered through into mortgage rate rises because of the squeezing of lending criteria. He sort of scoffed as he said well that won’t be happening in future, i.e. you’ll do as you are told. This guy is out of whack with modern & traditional business and clearly doesn’t understand a free market in the way he professes to.

When squeezed business finds a way to keep prices at the level they were before because they are in competition with others doing the same thing. I used to be in the manufacturing business and when I started in it a meter of glass sealed units cost me £19.25, when I left it 13 years later it cost £14.50 despite near constant raw material increases. Business finds a way by being squeezed to make the same or less money work.

Now if those banks had done as they were told then Mr King’s policies would have corrected far sharper and he would have probably been in the position of being able to say see I was right to raise rates at that pace. Unfortunately it doesn’t work like that Mr King, and as you don’t understand the free market then you went the wrong way too late, too far, too fast and for too long. That’s why we are in the mess now and why we have a sharp downturn in the economy coming in 2008.

When he spoke about where house price inflation would be he said that it was almost impossible to judge, well obviously then I am doing the near impossible then year after year. I can do it and I’m nowhere near as clever as those nine people. And they have more time to study it than I do :-)

Anyway following their now predicted 2 or 3 rate cuts next year they are still predicting that growth is still set to suffer a severe setback which was triggered by past rate increases. Now I don’t agree at all with the way America manages mortgage rates, cutting them by 0.50 in a day and then 0.25 a month later either, but at least these guys react when they realise they have got it wrong.

They new all this last month, they could have easily taken a precautionary cut by 0.25 in November, but they continued to head in the wrong direction. It infuriates me when experts can’t admit THEY GOT IT WRONG! Instead they persist heading in the wrong direction making their clients suffer ( while they are in the back room praying that something will happen to bring their heading back into the right direction without them needing to change course – I want to swear here but I won’t!

The key question was whether “the slowing we are going to see bigger than we had wanted to see”. Yes bloody yes, there’s a mountain we’re about to fly into, if you would just look out of the front window for once, rather than looking out of the rear one, then maybe we can still avoid it! Correct your damm course you buffoon! Don’t wait till next year, don’t wait for the data to be even more certain that you got it wrong, change the rate, move on and learn from it!

They won’t do that though, trying to predict what these people do is a nightmare as I seem to be looking at much the same info as them and reaching entirely different conclusions, so even though they’ve said they’ll cut the rates I don’t actually believe them right now, but if they do then this is what should happen. A rate cut of 0.25 in December and a rate cut of 0.25 in March, and then if they want to reduce it by a third one then this shouldn’t come in until June. But what do I know.

Knowing them one of their indicators will throw up an anomoly and that will indicate a rate increase :-) I am beginning to hear the Muppet Show theme tune when I think of the BoE now as well, and that is very disappointing.

The minutes of their last months meeting are out soon, so we’ll see if any more of them did actually vote for a rate cut this month.

Best wishes


Topics: Free Content, Government, The Economy | Comments Off

It Is Easier Now For First Time Buyers To Get On The Ladder Than It Has Been For Decades!

By Andy Shaw | January 23, 2010

Originally Posted 12th November 2007

Affordability is it really the issue the media makes out it is?

What I am attempting to do with this article is to show you that the media is taking individuals pieces of information and then adding them up in certain ways to give them a result that allows for a headline which they can take to the bank. In other words they are looking to take an arguable figure and hang their hat on it. And that the best headlines for the media are the bad news headlines, as nothing sells like bad news.

What brought this on was, I was thinking about the article I wrote the other day, ‘House Prices Are 40% Overvalued According To The IMF’, and the article from the previous day, ‘Second Worst House Price Crash In History’, and it made me think it was time I proved this affordability issue that is so commonly discussed by the media is the absolute rubbish that I know it is. When you read what’s below it should give you even more confidence in the market and help you to continue to act boldly.

First off I’m going to base it all on the averages. The info has been taken from: – Bank of England historical interest rate figures on the government’s website: – and the average gross weekly earnings 1938 – 2006 chart that I was sent by the National statistics office (this was really easy to get hold of Ray & Trevor…not!)


In 1990 the base rate was 14%, the average house price was £59,785, and the average wage was £13,681

That would mean that the average house price was 4.37 times the average wage.

Now if we said that the average mortgage was 85% LTV, we’ll also assume a mortgage of 0.75% above base rate (very achievable now, less achievable then). That would mean that in 1990 you would have a mortgage of £50,817 and an annual mortgage payment of £7,496. Which as a percentage of their gross income was 54.79%.

· 1990

· 14% base rate

· £59,785 Average House price

· £13,681 Average wage (income tax was higher then than today, but I haven’t factored that in)

· 4.37 House price x the average wage

· £50,817 Average mortgage (based on 85% mortgage)

· £7,496 annual mortgage payment

· 54.79% of the gross income

Now I’d say that is not affordable, well actually I know it wasn’t as I was on above the average wage at the time, and I had several months of arrears. You can see this is the primary reason why so many properties were reposed. Simply put they were not affordable, and yet we are being told today that houses are less affordable now than they ever have been. Are they right?


In 2007 the base rate is 5.75%, the average house price is £218,479, the average wage is £28,043 (2006 figure, my estimate for 2007 is £28,800 but we’ll stick with 2006’s figure). That would mean that the average house price was 7.79 times the average wage.

Let’s stop there for a second and look at the two figures so that I can demonstrate to you what I mean when I say they are taking isolated figures and adding them up for their own purposes.

1990 the average house price was 4.37 x the average wage

2007 the average house price is 7.79 x the average wage

In other words it is over 78% higher now than it was in 1990! Well that’s a headline grabber if ever I saw one… We’ll come back to this later!

Now if we said that the average mortgage was 85% LTV, we’ll also assume a mortgage of 0.75% above base rate (very achievable now, less achievable then). That would mean that in 2007 you would have a mortgage of £185,707 and an annual mortgage payment of £12,071. Which as a percentage of their gross income is 43.05%,

· 2007

· 5.75% base rate

· £218,479 Average House price

· £28,043 Average wage

· 7.79 House price x the average wage

· £185,707 Average mortgage (based on 85% mortgage)

· £12,071 annual mortgage payment

· 43.05% of the gross income

Now I’d say that is higher than where I’d like it to be, personally I’d like to see it around 30% of the gross income. But that said it is still 27% more affordable to buy property now than it was in 1990!

Now why isn’t that being said out loud? Why is it we are not being told that it is so affordable now compared to back then? The more I dig into this question the more I realise how easy it is to get wealthy in this country if you just continue to take steps in the right direction.

Surely it can’t just be because analysts can’t add up as I am only an amateur analyst and when I first pulled this article together I used the figures from the USA social security dept, so I’m definitely not perfect, but why is it that no one has said this stuff?

Remember these figures: -

1990 the average house price was 4.37 x the average wage

2007 the average house price is 7.79 x the average wage

Well here’s some new figures that are somewhat more headline worthy

In 1990 the average house price was 4.37 x the average wage and the mortgage was 54.79% of gross income.

In 2007 the average house price is 7.79 x the average wage and the mortgage is 43.05% of gross income.

In other words property is 27% more affordable today than it was 17 years ago!

Next time you watch the news or read a headline, that predicts doom and gloom, I suggest you count to 10, because they are nearly always wrong, and no I do not believe I am generalising here. I have yet to find someone in the media or an economist that really understands the property market, so they are commenting on something they really don’t understand, and you are basing your investment and life decisions on what they are saying – it really is that simple!

And if there was something terrible coming I would accurately be able to predict it far in advance of them anyway. The only way they could predict it before me was if they just happened to finally get it right, as Tommy Lee Jones said in the Men in Black, ‘yeah the papers get lucky occasionally’.

And even then it’s only a forecast not a prediction, the idea of this site is that I give you a warning if something’s about to happen, I can do this thanks to my unique perspective. These guys don’t have that perspective, and they are all trained in the same way and that’s why they don’t understand it. As the guy I met in Cyprus said, ‘They all copy each other, and the guy who did it first got it wrong!’

The reason I’m bragging like this is not to make my head any bigger, I have trouble getting it through doors as it is :-) No the reason is to keep you on track, on the right path.

It is this simple if you know the direct path to wealth then you will get there a lot quicker, that’s if you can take the most direct (straight-line) route to it!

All of this miss-information out there alters your direction, my goal is to keep you on track, and if you can handle the time commitment to keep re-tuning here on the site then we’ll get you there quicker. The problem is that when you do not re-tune by listening to something logical then what happens is you slowly come off the straight-line. Then you end up looking back and saying, ‘what happened? I was doing so well, then all of a sudden I stopped doing what I was doing!’ You know what I mean here, and that is the true essence of value here on this site. Why did you come off track? Because you let the subliminal programming by the media and other people around you change the direction that you have already accepted as the truth. This is why you really do need constant re-tuning.

One of the reasons I did this site was to force myself to get this stuff out of my head and onto paper. I knew by having committed myself to others that the end result for me would mean that I get moving in the right direction far quicker than I would have done if I didn’t need to keep adding things to a website. What would have happened is my time would have filled up with all sorts of other stuff and I just wouldn’t get round to it. This is the biggest thief of potential that there is and we have to fight it all the time if we really want to achieve that what we know we can.

I’m reading a book at the moment that really nut shelled this for me, when he said that the real skill is not to learn 4,000 different things and hope that one of them would be the key to it all. But it is to learn a dozen things and practice them 4,000 times with stubborn pig headedness.

Ok, let’s now go back to showing just how affordable property is now. Now I’m going to change tactics now and shift the property from the average property to the average first time buyer property.

A first time buyer should not be buying the average property either, they should be buying a one bed flat or a studio, and I know the average price of one of those in Worthing right now is £100k (I find Worthing’s prices are pretty much the same as the average property price figures), so someone on a salary of £14k (half the average wage) should easily be able to afford one. When I first bought, I bought the average house and it took me and two others to be able to do it, and we nearly failed to make the payments and keep the house.

So let’s say the first time buyer, had a little financial education. They would not become a first time buyer; they would become a first time property investor.

They would take a 85 – 90% mortgage and need to find a maximum of £15,000 deposit. We will assume that they pay at market price and not by below market value.

Their mortgage wouldn’t be based on income multiples but purely on a lenders criteria. I am going to use The Mortgage Businesses product here to demonstrate this, but if theirs isn’t quite right there are several others that will do the job.

85% LTV at 125% rental cover 6.99% interest = £5,942/anum – £495/mth

The cost to rent a studio in Worthing varies from £375 to £495; I think we are renting them at £450 – £460.

They borrow £25,000 preferably on credit cards at 0% and they make interest only payments. Year 1 = £0

Year 2 would probably = 9% (just by negotiating) = £1,350/anum – £113/mth. If this was a problem then they could always let the debt spiral for 5 years. Which would mean that they would owe approx £7k more. So they now owe £22k rather than the £15k but it hasn’t cost them anything. This could of course be sustained further if the market wouldn’t sustain a refinance.

Let’s say they had to get a loan instead of credit cards then they simply let the extra money raised pay the loan itself, and then refinance the loan back up to £25k after two years and continue.

So lets say they’ve owned the property for two months and made a couple of mortgage payments, and they wanted to use their new property to live in now, rather than let it out. How can they do this, well they’ve had a change of circumstances of course. They just let the lender know and the lender will convert it over to a residential mortgage. One little piece of direction like that could get how many first time buyers onto the property market? Can’t get on the ladder, what a load of rubbish, can’t be bothered to try and get on the ladder more like!

Now when we were first time buyers, we only had to come up with a 5% deposit. The only way I could come up with the 5% was getting the money off my Dad. We had to prove that our income would sustain the mortgage at 2.5 times for joint or 3.5 times for single, so I had to get all sorts of paperwork that wasn’t real to back this lie up. In today’s world 5 or even 6 times income for a single person is readily available, and upto 120% first time mortgages are available so it’s somewhat easier now than it was then!

In today’s world, I could simply go online, get a decision in principle from a mortgage lender, then go and find a studio or flat, then get a mortgage offer. Then apply and get either a £25k loan or several interest free credit cards. And I could buy my first home without having to lie, and without having to ask my family for money, other than maybe proof of deposit.

Oh and if you don’t like the idea of credit cards or personal loans, well what’s going on anyway? The media are telling you that the nation is in debt up to it’s eyeballs (which is very, very wrong as well by the way, but that’s for another time) so wouldn’t it be a good thing for first time buyers to use the credit available to them to create good debt instead of bad debt?

So let’s couple affordability into this, well even if the first time buyer. If we assume that the figures will be the same % of discount to the prices of today, then the first time buyer of today will have to commit 43.05% of their income to get on the ladder, whereas the first time buyer in 1990 would have had to commit 54.79% of their income.

In summary: -


So how does this help us, well this should give us confidence that despite what we are told about affordability the information they are telling us is bo**ocks, and what that means to you is that the property market will continue to rise, so buy with confidence. But remember you are not buying in the property market you are simply buying A property, and you have to make sure that you are buying that property hopefully below market value, but definitely no more than market value.

Best wishes


PS Oh there’s one last little thing, that I didn’t factor into the 1990 affordability calculation. It is pretty big though, so I suppose I could have easily used it to make my figures a lot more impressive. But I felt I’d already made the point. But here is the 14lb cherry to go on top of the cake: – Back then we were all on paying either capital repayment or endowment mortgages! I’m surprised after I received my wages after tax, paid my mortgage which included capital repayment that I actually had any money left for food. I hardly think it was surprising that so many people went under!

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Oh Happy Days!

By Andy Shaw | January 23, 2010

Originally Posted 3rd November 2007

This is a good time to be a buy to let investor, or should I say it is a good time to be an informed buy to let investor

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Doom And Gloom Mongers Are Enjoying Their Day In The Limelight

By Andy Shaw | January 23, 2010

Originally Posted 25th October 2007

BBC News 24 is one of the three news channels I watch daily and there was a guy on this morning from the business House Price Crash

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