Elections in France and Greece over the weekend and, in the UK, last Thursday, have changed the political landscape across Europe and may be the beginning of the end of the Eurozone as we currently know it. In a nutshell, anti-austerity won the day.

The markets have reacted badly to the news. As a direct consequence, the Greek stockmarket is at a 20 year low and Greek 10 year bond yields are extremely high (23% today). The effect of the fallout on the euro is a windfall for British tourists this summer, however, as sterling is at its highest since 2008. Even the UK government is benefitting from the crisis, as borrowing costs plummet because investors are buying UK government bonds in the quest for a safe haven. This morning, the UK’s current cost of borrowing over ten years is 1.93%.

So what?

Well, since the onset of the Credit Crunch, the world has faced one financial crisis after another. The contagion has spread from private sector debt to sovereign debt, particularly in Europe. Countries such as Greece (there are others), which never should have been welcomed into the EU, are now seen as its Achilles Heel.

Unless Greece and others countries leave the Euro, then the economic malaise affecting the UK, Europe and beyond will continue indefinitely. Bail outs, fiscal pacts and summits, will not fix what is, essentially, a flawed system that was designed, developed and encouraged with a Franco-German political agenda in mind.

I, for one, welcome the outcome in Greece and wish it God speed in exiting the Euro. Until this happens, we will continue to move from crisis to crisis. As Churchill said after the famous victory at El Alamein, “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Best wishes

Dominic Farrell ]]> http://www.boldspirit.co.uk/2012/05/a-greek-tragedy-or-is-it/feed/ 0 http://www.boldspirit.co.uk/2012/05/distressed-assets-an-opportunity-amongst-the-gloom/ http://www.boldspirit.co.uk/2012/05/distressed-assets-an-opportunity-amongst-the-gloom/#comments Tue, 01 May 2012 15:40:26 +0000 Ian http://www.boldspirit.co.uk/?p=4533 Dear Investor

I was interested to note that the subject matter of my newsletter of 2 weeks ago regarding Detroit property investment was taken up five days later by the Financial Times and others. Here’s me thinking that only my mother reads these missives!

Anyway, onto more pressing matters, it’s certainly not been a good week for the Eurozone. Unemployment figures from Spain are incredibly bad, with 25% unemployment overall,  50% for young people and Spanish bond yields currently peaking at 6%; this is likely to be the next major challenge for the EU. In the meantime, the usual suspects continue to struggle. Greek bond yields are currently at 20.5% rather resembling a rugby score, whilst the Portuguese government pays 6 times more than Germany to borrow money over ten years. It’s a complete mess and the problems are not going away anytime soon.

Over the weekend, David Cameron said, that he thought we were halfway through the Eurozone crisis, but I think he’s either being very optimistic or, worse, rather naïve. The truth is, just as nobody predicted the credit crunch, nobody knows how long it will last.

My firm view is that those people who purchased property and land in these countries, need to stick it out and try to utilise the system to best advantage:

- If you’re in difficulty with the bank, speak to someone who has authority to make a decision. Ask to have your payments reduced or put on hold for a period. I have seen some people been offered 12 months respite and sometimes more. Remember that you will not be the first, and certainly not the last, to seek the bank’s help in these historic times. Although many banks are in turmoil themselves, most understand that they need to help borrowers if the banks and borrowers are to get through the crisis.

- UK taxpayers who let their properties in the EEA (European Economic Area) are entitled to a very generous tax relief from HMRC for furnished holiday lettings. Losses can be offset against other income, thus reducing your tax burden. There are qualifying periods, determined by the availability and actual rentals, but the benefits are significant. These benefits also apply to UK holiday lets. Don’t underestimate this tax relief; it puts actual cash into your pocket.   As the rules are complex and have changed recently, any specific questions you have regarding this tax relief will need, however, to be directed to your accountant.

Back in the UK, we are in the worst economic crisis for 100 years. Some people are calling it the Great Depression 2. Whether the Office for National Statistics (ONS) has its GDP figures right or wrong really amounts to just semantics, played out by politicians and journalists.

If it looks like a recession, feels like a recession and smells like a recession; it is a recession.

On a more positive note, the benefits of recession in the distressed assets market are there for all to see. Bold Spirit has acquired some incredible deals recently for investors and, indeed, last Friday we placed a bid on another entire development on behalf of a fund.

It’s easy to feel depressed with all the bad economic news, job losses and general problems around the world, but if you focus on the opportunities which arise as a result, then you will appreciate that that now is the time to maximise on acquisitions and portfolio building which, I believe, will reap huge dividends for the investor in the future as well as significant income today.

I am presently overseas, but will be in the office all day Thursday if you wish to discuss your property investment requirements.

Best wishes

Dominic Farrell ]]> http://www.boldspirit.co.uk/2012/05/distressed-assets-an-opportunity-amongst-the-gloom/feed/ 0 http://www.boldspirit.co.uk/2012/04/repossessed-property-the-holy-grail/ http://www.boldspirit.co.uk/2012/04/repossessed-property-the-holy-grail/#comments Mon, 23 Apr 2012 12:49:23 +0000 Alex http://www.boldspirit.co.uk/?p=4523 The on-going Credit Crunch, recession (de facto) and sovereign debt crisis have given rise to a new class of buy-to-let property investor, which I call the ‘repossession chaser’ after the lawyers who follow ambulances in the hope of welcoming a new client as he is rushed into A&E on a stretcher to make a quick buck out of their misery. Is this analogy fair?

It isn’t, but the word ‘chaser’ is what I wish to focus on.

Sadly, many developers have gone bankrupt as a consequence of the economic crisis and individuals have been repossessed as a result of defaulting on mortgages or other loans secured on property. Banks, building societies or other financial institutions attempt to sell these properties through receivers or other insolvency agents, in order to set off losses on the mortgage debt. The clear aim is to receive as much as possible from the sale of the development or individual property in order to recoup any losses for the bank.

And there’s the point. The aim is not to give a huge potential profit on a plate to a potential investor. The aim is also not to take any offer in the pursuit of a sale. In many cases the marketing of repossessed properties can take some time as the banks have an obligation to achieve the best possible price, although the highest bid is not necessarily the winner (the subject of another newsletter).

For example, we will be completing on a small development in the next week or so, which has been in and out of the trade publications for repossessions as the offers, including ours, were not considered sufficient by the bank. It’s not a given that any bid is accepted at the ‘best and finals’ stage. This particular development went to ‘best and finals’ three times! I will discuss this in greater detail when the deal has completed legally and use it as a case study on how to beat the competition, as interest in this scheme was intense.

Further, not all repossessed properties are good value; many are not. I have baulked at some of the guide prices published by receivers or their agents. Additionally, guide prices at some auctions for many repossessed properties display no sense of reality in the current market. However, many auctions are rooted in the real world and their percentage sales achieved are testament to that. We have our preferred auction houses and those we avoid, based on efficiency and guide prices. Auction houses with poor sales as a percentage of lots, should review their pricing and reasons for underperforming their peers.

There are some great opportunities in the UK repossessed property sector, but not all properties are equal. We have seen many properties over the past 4 years which, when the refurbishment is taken into consideration, plus fees and taxes, are not bargains at all.

Further, why would anyone expect a bargain property to be on a list? Lists are for properties which haven’t sold, but many inexperienced investors don’t see that. As we keep telling people who phone Bold Spirit House asking for our repossessed property list, we don’t have one. As we receive properties and conduct thorough due diligence, they are sent directly to clients without advertising.

We have been in this distressed property market since 2008 and have a wealth of experience and many notable successes. But equally, for the properties we bid on, either through receivers or at auction, we reject about 90% during the research phase! Because a property is tagged as a ‘repossession’ it doesn’t mean that you’re getting a fantastic deal. But fantastic deals are out there. It’s just knowing where to look and not always chasing the repossessed tag.

If you would like to discuss how Bold Spirit can help you find, secure, tenant and manage repossessed investment property, fill in the form here, or call 0151 243 5432 from UK or +44 151 243 5432 from overseas.

Best wishes

Dominic Farrell

But what surprises me most, is why any UK based investor would want to invest in Detroit, when there are fantastic investment opportunities at home? So, some background.

Prior to the Credit Crunch and the collapse of Lehman Brothers in September 2008, investing in overseas property was a national pastime, as UK buy-to-let was in the preceding years and Tech Stocks before that. Trains, planes and automobiles carried advertisements for villas and apartments in far-flung lands and property shows extolled their virtues. I invested myself as at that time, it was a sensible thing to do and I don’t regret it.

Although markets move in cycles no one foresaw the meltdown in the global economy and the on-going credit squeeze and European Sovereign Debt crisis which in 2012 continue to weigh heavily on economies, property markets and banks. Ironically, it is this fact and the aftermath of 2008 which has made UK property the bargain it is today and the investor pendulum has swung again to buy-to-let.

Pre Credit Crunch – Swing from UK Buy-to-Let to Jet-to-Let

• UK property values during the mid-2000s were stretched and overseas markets opened up, buoyed by easier credit and the expansion of the European Union.

• Investors were wealthy on the back of rising UK property prices and equity release fuelled consumerism and real estate markets

• Governments taxed, borrowed and spent, further exacerbating the situation.

• Bank lending went unchecked as market share became more important than the security of the loan.

Post Credit Crunch – Swing back Jet-to-Let to UK Buy-to-Let

However, the biggest economic downturn since the Wall Street Crash of 1929 put a dramatic and devastating stop on jet-to-let property investment as buyers defaulted, commercial tenants folded or changed plans, developers were foreclosed or had their cash accounts ransacked by banks, themselves under siege from depositors, and countries, once elevated by the markets as sound AAA bets, came crashing down on a mountain of debt.

The World has changed in many, many ways over the past 4 years and you would have to have been living in a cave to fail to recognise this.

Current position

In terms of property investment, nowhere on the planet now beats the UK as a secure, transparent market at the lower end of the risk spectrum. The weight of foreign capital hitting these shores is testament to that.

I received a telephone call from India last Friday from a client wishing to bid on a very large development in the UK. He was in and out of signal, as he is ‘off the beaten track’ but I’m expecting to continue the conversation today. We take enquiries from around the globe every week. The UK is seen as a blue chip investment in a very turbulent world; a safe haven for foreign capital.

Detroit USA

So what’s the fascination with Detroit (USA) property investment? It’s easily explainable.

My company, Bold Spirit, was offered last year a very generous commission to sell Detroit property to our clients. The proposal was that on a USD 39,000 property, we would receive USD 10,000 in agent’s commission – at 26% that is huge by anyone’s standards; indeed in the 8 years we’ve been trading, I’ve never heard of such a ridiculous amount. So if the agent makes 26% and the developer would clearly not be making any less, and probably a lot more, then what is the ‘real’ value of the property? And how can it be such a great investment for the buyer?

The show stopper for me was that the case for Detroit property investment didn’t stack up and still doesn’t do so today.

To quote Trevor Brunckhorst at Michigan Property Managers as reported in The Detroit News 22nd February 2012:

“As a local property manager that has a sizable Detroit portfolio, this article needs to go international. Too many foreign investors are buying junk right now on false promises from some slick salespeople. Too often, they’re left with a worthless property, stripped of anything of any value, and too high property taxes. Only then are a lot of them deciding to call a property manager to help get the situation corrected. Often, it’s too late at this point, because they don’t have the additional $10-$20k needed to make the property tenantable again. Also, why are people spending $45,000 on a property in Detroit? You can buy 3 properties for that amount! If people want to over pay for properties, feel free to call me. I am sure I have at least 100 properties that my clients would LOVE to sell for $45,000! As someone already said “if it sounds too good to be true; IT IS!”

I couldn’t sum it up better than Mr Brunckhorst.

One of the key reasons to invest in low-cost (but clearly relatively highly priced) Detroit property was that the tenancies would be guaranteed by the state. But it appears the state doesn’t agree:

Any housing investment claiming it can guarantee a Section 8 housing tenant should raise red flags, said Eugene Jones, an executive director of the city of Detroit’s Housing Commission. “It just doesn’t work that way. It’s a lengthy process for any property to be qualified, and there is no guarantee that the property will be chosen,” Jones said.

While the city of Detroit has 6,000 housing vouchers for people under the Section 8 housing program and a waiting list of 40,000 people, he said, “there are not many people with Section 8 housing vouchers that are looking for residences.”

In conclusion, I fail to see the investment case for Detroit. I didn’t see it when first approached and definitely don’t see it today. Further, why aren’t American nationals flocking to buy these investments and ‘crowding out’ foreigners? Doesn’t the fact they are not doing so send out a warning signal?

My advice is stick to the UK market as there are tremendous bargains to be had. Properties can be purchased significantly below market value, with high yields and in sterling. There are reputable UK property companies that will charge a relatively small fee (eg, 2.95%) for sourcing UK investment property on your behalf which is a steal by anybody’s reckoning compared to 26% commissions for buying property in the US. Value indeed!

We continue to see a wide gulf between prices in the South and those further afield, dare I say it, north of the M25. Investor fixation with London remains, but as prices are forced up through enthusiasm and the sheer weight of cash (often foreign), many investors are missing fantastic opportunities elsewhere.

Bold Spirit distressed assets formed at the height of the financial crisis, in September 2008, as Lehman Brothers went to the wall. Very quickly, we were acquiring properties in London, via receivers and administrators as well as by auction. The deals, some of which you’ll see on our website were outstanding and clearly our clients were and remain very happy.

However, as prices rose and yields compressed, we looked outside London for better returns and have been concentrating in the main on the NW of England for the past 12 months. With two of the UKs’ major cities, Manchester and Liverpool and a host of wealth creating industries and services, this is a prime area for undervalued property investment with strong income.

Bold Spirit acquired 3 properties/developments for clients last week all of which are more than 50% below a realistic valuation.

The first property was acquired at auction, a great source for undervalued stock, particularly if the property in question has issues such as planning, unlimited liabilities on completion, structural etc…For the casual observer these issues are show stoppers, but for those who know what they are doing, they present an opportunity. This property is over 50% below market value and yields 26% – yes 26%! When a property yields 26%, you have options.

The second property, a development, had a formal valuation where unusually the valuer commented on the price being paid. He spoke in terms of ‘doubling your money overnight’ a sentiment which was not news to me. This property has been acquired through a receiver and is part of a wider portfolio of a development company which has folded. An impressive period building, fully refurbished to a very high standard, with the potential for further development and quality professional tenants.

And finally, on behalf of a trust fund, we completed on a development on Friday, where the average price per unit is £83,000 whilst units in a less prestigious scheme 100m away are on Rightmove now being sold at £185,000, £189,000 etc….This was a long complex negotiation involving one of the leading insolvency partnerships in the UK and even at the last minute looked like being pulled, due to the price we were paying. The fund has asked us to bid on another 3 developments I have on my desk.

I think you would agree that all 3 examples illustrate the considerable value which can be secured in this present market, all outside of London. Not all insolvency properties are 50% below a realistic market valuation, but many are 25% plus with strong yields.

Further, auctions are a great source of value, but only if you know what you are doing. Bold Spirit provides an auction service where we can guide you through the entire process and even bid on your behalf. You can secure a fantastic bargain at auction from as little as £30,000. If you would like to speak to us about anything we’ve mentioned in today’s newsletter, then please feel free to fill in the contact form on the website or telephone 0151 243 5431 from UK or +44 151 243 5431 from overseas.

Best wishes

Dominic Farrell

We’ve had a busy week at Bold Spirit taking enquiries from as far afield as Australia, India and the Middle East to a bit closer to home, about 300m from our central Liverpool offices. All of the enquirers are seeking income (with security) from property investment in the UK.

The key to the security requirement is the ‘UK.’ We have seen over the past few years a series of crises around the globe, emanating from the credit crunch and collapse of Lehman Brothers in 2008. The crisis within the financial sector led to a full blown sovereign debt crisis, with Greece just the tip of the iceberg and that country as well as other EU states will no doubt continue to make the headlines in the coming months and possibly years ahead.

I think the UK is viewed as a safe haven for property investors primarily due to:
• A stable, democratic political system
• An independent, sovereign currency and the ability to control its own monetary policy
• Property ownership has the backing of a robust, well tested legal system
• Tenants, who fail to pay, can be evicted relatively quickly, unlike in many other countries
• A continuing imbalance between the demand for property and its supply

Indeed, this supply/demand imbalance was also highlighted yesterday in The Daily Telegraph newspaper. David Miles, one of the Bank of England’s nine rate-setters, said in an official paper that the desire for space caused by the UK’s rising population would reinforce planning restrictions and make it more difficult for house builders to keep up with demand. As a result, he said: “We should anticipate a rising trajectory for real house prices over the longer term. This is particularly likely in a country like the UK where population density looks set to rise relatively fast. The model also suggests that the upwards trajectory in house values may ultimately become steeper than the rise in real incomes.”
Mr Miles is not really telling us anything we don’t already know. A growing population, changing demographics and a restricted supply of property underpins capital values and rental returns. Cash investors have been drawn to the relative returns from UK property.

Today, we have submitted a bid to a receiver on behalf of a client for a well tenanted development with strong leases, yielding 11%. In a good location and condition, the return – compared to other options such as cash, gilts or the stock market – and the relative ‘security’ of this investment, puts it in the ‘blue chip’ category. The quality of property investments available through receivers, administrators and sometimes auctions, combined with the stability of the UK, despite widespread economic turmoil, is attracting large amounts of overseas capital which is the envy of other countries.

Receivership Properties

Bold Spirit presently has available the following stock:
• 6 apartments in a city centre location with a total guide price of £300,000. Fully tenanted at over 9% yield.
• 7 new build houses with a guide price of £500,000 and a yield of 9%.
• Portfolio of houses with a guide price of £1 million and a yield of 13%.
• 3 prestigious developments ranging from £500,000 to £2 million with yields in excess of 9%.
• Commercial development in Manchester yielding 12% with a guide price of £500,000

Please note that we are only able to send details to registered clients with proof of funds. If you would like to register as a client, please click here

I am conscious that we have a lot of investors who are looking to buy individual properties, not just whole developments, and we will shortly have a stock of strong yielding, tenanted apartments for sale. Further details will follow shortly.
Finally, for those of us who live in the UK, it’s Budget Day tomorrow, when the Chancellor of the Exchequer (Finance Minister) sets out the government’s budget. As ever, we all wait with bated breath!

Best wishes

Dominic Farrell

Watch Our Video

It was a surprise and a pleasure to open The Daily Telegraph property supplement last weekend to find that my personal twitter account had been included in ‘The top ten property sites for tweeters.’ The top ten included household names such as Phil Spencer, Grant Shapps, Kirstie Allsopp and Martha Stewart and one or two of us lesser known mortals.

Click here to view the article and follow the twitter accounts:

http://www.telegraph.co.uk/property/9116029/Top-10-home-and-property-Twitter-accounts.html

Modern technology such as iPads and smart phones or social networking with Facebook, Twitter, YouTube have changed the way we work and live as well as how we sell and rent property.

As well as following us on Twitter you can view a new short video on our website designed to give a snapshot of what we do without having to read reams of material. It’s just over 2 minutes long so click here to view it:

http://www.boldspirit.co.uk/2012/02/bold-spirit-uk-property-investment/

Whether you are in property sales, an investor wishing to buy, sell or rent a buy-to-let property, then utilising modern methods is a must, if you wish to be successful. As a percentage of the sales price, a quality video, optimised for the web, will give your property an advantage over similar properties, in an increasingly crowded market place. Food for thought?

Come and meet us in London on Wednesday 14th March 2012.

We will be at the Institute of Directors, Pall Mall, London for the day next Wednesday (14th March) for a series of investor meetings. If you would like to come along then we have a few slots left. These meetings are principally aimed at portfolio investors or those wishing to partner Bold Spirit in joint venture projects. To book a place, please fill in your contact details on this form. Alternatively, telephone Alex on 0151 243 5433.

Best wishes,

Dominic Farrell

For many years we have held seminars and face-to-face meetings with investors in the UK as well as overseas. The next opportunity to meet us will be at the Institute of Directors, Pall Mall, London, on Wednesday 14th March 2012.
Meetings are by appointment only and will be during the day.

If any of the following are of interest to you, then it would be worth booking an appointment through our Liverpool office.

1. The purchase of developments from £500,000 to £20 million via receivers and administrators at substantial discounts.

2. Joint venture opportunities with a fixed return on capital with a minimum contribution of £50,000.

3. Building a buy-to-let portfolio of high yielding properties.

If you are not free for a meeting, then please call the office to discuss any of the above, or alternatively you are most welcome to visit us at Bold Spirit House in Liverpool.

I presently have 3 residential developments and 1 commercial and also a portfolio with excellent discounts and strong yields. I also have a JV opportunity shortly, with a strong return on cash relatively quickly and the prospect of further opportunities for the right investor partner.

Please fill in the form or telephone 0151 243 5433 to book an appointment.

Best wishes,

Dominic Farrell

I have just arrived at Bold Spirit House having viewed a property this morning which didn’t sell in a recent auction. I was not the only person viewing the property and some people turned up with their trusty builder in tow to get an instant quotation for the renovation, others with their partners and just me. There were builders’ vans, German cars and a motorbike. Some had suits on, whilst others had the boiler variety. I was wearing my ubiquitous property viewing uniform; jeans, rugby shirt and a smile.

Although on the surface everyone was different, the reason we were all there, was the same; the income relative to the potential purchase price is excellent. It represents great value for money in a world where people need to live somewhere and buying is not an option for the masses as deposits and mortgages are more difficult to find. This explains the explosion in buy-to-let in recent years.

Here are a few facts:

• Applications by new tenants hit 275,000 in 2011, an increase of almost 25% on 2010
• 2011 had the lowest number of new properties built since 1923, driving up rents
• Couples under 35 made up the largest proportion of new tenants during 2011
• Homes were let in 13.6 days on average
• Landlords have increased their share of the country’s residential stock by 42% since 2007
• 124,000 buy-to-let mortgages were advanced in 2011, up 32% on the previous year
• Buy-to-let represented 10% of total mortgage lending in 2011, compared to 7.5% in 2010

Source: Financial Times

In a world of uncertainty, property remains a very safe, reliable and predictable investment. Invest in a property which people wish to live in, either as a homebuyer or a tenant, and you’re on to a winner. As pensions continue to fall short, and are unlikely do to anything other than that for the foreseeable future, people are turning to property.
What’s also interesting about the present market in the UK is the absence of the completely amateur, get rich quick investor of yester year. Phrases such as ‘no money down’ usually associated with people who don’t have any cash, and BMV, the much used acronym for a decent deal, are not in the vocabulary of investors we speak to today. The shake out of the market, with sensible purchase prices and rising rents/returns, have encouraged the rise of the cash buyer seeking a positive real return on their money.

At Bold Spirit we deal with properties of all types. We have predominantly secured entire developments for our clients from receivers, administrators and banks, but we also have access to individual properties with strong yields from as little as £50,000.

If you wish to discuss buy-to-let property investment or add to your portfolio, then please fill in the FORM at or telephone 0151 243 5433 for an informal chat.

If you wish to speak with a mortgage broker from Bold Spirit Financial Services about raising finance, call 0151 243 5434.

Best wishes,

Dominic Farrell

We’ve had a busy start to the year with visits to our offices in Liverpool by an investment company based in Hong Kong and also one based in Johannesburg in addition to a series of UK based investors.

The theme of all investors is value and income, both of which we have an enviable track record in this marketplace.
On this theme, we have three investments this week which match both criteria:

Commercial Property Investment – 12% gross yield
This property is in receivership and comprises a hotel and ground floor retail units. The tenancies are strong and recent. Location is excellent and the would provide an excellent long-term investment at a guide price of £450,000 to £500,000.

Residential Investment – 14% gross yield
This property is also in receivership, with an excellent location in the heart of a city, producing a gross yield of 14% at a guide price of £475,000 to £525,000.

London Student Investment – £75,700, gross yield 11%
We have a number of cash only investments in London which have been very popular with investors looking for a home for their cash as inflation eats away at its value.

If you wish to discuss these investments or your own personal requirements, then please call us on 0151 243 5433.

Best wishes

Dominic Farrell