Michael Aglony interviewed me for his website at www.mortgagesforbusiness.co.uk about my thoughts on the foreseeable future of the Buy to Let market. I think the interview is a revealing one and will help a lot of readers thinking about buying to let. i would like to thank Michael for posting the interview and asking some insightful questions.

Forecast for the Buy to Let market

1. What do you believe will happen in the Buy to Let and wider property market in 2008?

Prices stagnating. Maybe even some regional falls in price. Some fire sales from developers as they clear stock that isn’t moving easily to owner occupiers, means very attractive discounts and buying opportunities for astute investors.

2. What are main factors currently affecting the Buy to Let market?

Perceived long term growth, availability of finance, interest rates, rental demand and rental yields, ability to buy below market value.

3. What are your views on legalisation currently affecting the Buy to Let market?

Neutral. Main legislation relates to landlord and tenant and I believe it is about the right balance.

4. What affect do you believe the Northern Rock and current money market situation will have on Buy to Let mortgage lending?

Very little impact on lenders except possibly for slightly higher short term rates. Longer term fixed rates are already falling. Potential landlords with poor credit history who might have been marginal before may find it more difficult to get competitive mortgages.

Higher interest rates for BTL make it more difficult for investors borrowing the maximum amount to cover the mortgage payments with current rental yields. So in a strange way higher interest rates favour cash rich investors who can afford to put more money into the deal, and make it more difficult for cash poor investors who are trying to get maximum leverage on their money.

5. What is your biggest source of frustration relating to the Buy to Let market?

A lack of understanding from most financial commentators who in general don’t understand the huge benefit of leverage through using other people’s money to purchase property, and other people’s money to pay the mortgage. Shares are still mooted as a good investment when any thoughtful analysis clearly points to them being a poor second (or third) choice!

6. Any pearls of wisdom for Buy to Let investors?

Yes. I help investors build multi-million pound portfolios though intelligent and thoughtful investing. There are five key steps for profitable property investment which are fully explained in PIPS: The Property Investment Profit System - available as a home study course. I’ll outline the principles here:

a) Always buy Below Market Value - lock in instant equity and reduce risk
b) Focus on Little or No Money Down deals - the higher the leverage, the higher the ROI (return on investment)
c) Aim for neutral or positive Cash Flow - investors hate a monthly deficit so try to cover your expenses.
d) Find a Special Situation -what makes this investment HOT? Location, quality, local demand etc. Every good deal has at least one, usually more, positive attributes.
e) Do your Due Diligence - check out the facts thoroughly. In the UK make sure you visit the site.

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