CONTENTS: 1 - THE PROPERTY CLOCK’S EXISTENCE, 2 - GROWTH, 3 - YIELD, 4 - PROPERTY PRICES: ACTUAL PRICES, REAL PRICES & BUBBLES, 5 - 12PM TO 3PM (HOTSPOT), 6 - 3PM TO 6PM (COOLING SPOT), 7 - 6PM TO 9PM (COLD SPOT), 8 - 9PM TO 12PM (WARM SPOT), 9 - STRATEGY SUMMARY, 10 - LIFETIME PROPERTY CLOCK, 11 - INTERACTION BETWEEN THE PROPERTY CLOCK AND THE LIFETIME PROPERTY CLOCK
Since I have dissected the property cycle in to four distinct sections, let me put all four quadrants together so we all can understand it better:
As a result of the actions by us and others we can simplify the strategies within each spot as:
So we can see that if you are a true professional investor you will only ever be interested in warm and hot spots. The reasons being:
- Hotspot – you are prompted to buy. Buying is the only true way to participating in the property market. If the strategy was to sell then it is a sure way to get out of the property market. So finding hotspot areas is key if you want to grow within the property market.
- Cooling spot – you are prompted to trade. Trading is buying and then selling. So in effect you dip in and out of the market. No professional investor would do this as it exposes you to massive gains as well as massive losses. Massive gains are acceptable (and well received!) but massive losses are possible and potentially bankruptable which is definitely unacceptable.
- Coldspot – you are prompted to hold. How exciting is that! No buying or selling is required so no real strategy is required here.
- Warmspot – you are prompted to buy. Again this is the only way to grow as you are prompted to buy just like a hotspot. If you can find a warm spot then it will only turn in to a hotspot so massive gains are inevitable.
So in a nutshell you should only ever be interested when an area is either a hotspot or a warmspot as it prompts you to buy. So how do you find both of these? Read on….
How to find a hot or warm spot
I have never found a warmspot in my time in property investment. I started property investment in 1996 so there has always been a hotspot to be found. The principles in finding a warmspot are the same as finding a hotspot. One should only ever seek a warmspot when there are no more hotspots. Currently there are hotspots in the UK, but there will be a time when there will be no hotspots and warmspots are the only places to invest.
The way I have found hotspots are:
|The easiest way to travel the world without leaving your desk! I owe a substantial amount of my success to the internet as I was able to discover areas that I had never heard of. These unknown areas now form a significant part of my portfolio!
I hope you would have gathered from reading this book that you have to find cheap properties. Generally its properties under £60,000. All you do is visit these 4 sites:
Type in any town or city you can think of and search the widest radius possible. Put in maximum price £60,000 and see what comes up! If nothing has come up then the town or city you entered is not a hotspot or any town surrounding. If something comes up then check it out further. If quite a few come up then BINGO!
Once you have found an area then visit www.ukpropertyshop.com. Here you have ALL the individual estate agents in that area. Check all their websites to see what they’ve got also. If it looks good then get in your car, drive down and buy everything you can!
|Always look in agents windows
|If you visit an area then ALWAYS check estate agents windows. I do this out of habit and interest. I am interested in property even if it isn’t going to make me any money. Its good to get an idea of property prices of wherever you visit. You never know you may stumble across a bargain.
|Get local press
|Don’t just stop at agent’s windows. Get the local press and scan the property section. Here you can gauge the whole market in that area. You may find that there is an agent that specialises in low value properties.
|Look for areas that are self sufficient
|Areas with bad transport links or that are a bit isolated make perfect hotspots. They are sometimes valued low due to lack of demand by buyers(because unless you work there there is no point in living there) but have high tenant demand due to people wishing to rent there. One of my areas that I have a significant portfolio is Corby which meets this criteria. It has no train station, 30 miles from anywhere significant but has a large Scottish community who wish to live there.
|Get out there!
|Go visit places. If you haven’t seen a friend because they’ve moved to another area then go and see them! if you’ve always wondered what Stoke-on-Trent is like then take your other half and visit. Look at a map of the UK, pick an area that you like the sound of and go and visit it, stopping off at all the towns on route to check out the estate agents. See it as a mini adventure – go on have some fun!
If all of that seems like hard work then visit my site, www.propertyhotspots.net, where you will find out all the hotspots that I could find and areas that are soon to be hotspots (and a hell of a lot more!)