Tim Hilkhuijsen holds Degrees from Aims Community College in Greeley, Colorado as well as from Southern Illinois University and has 25 years of experience in the field of architecture. With a strong knowledge of both residential and commercial design, including construction methods and materials, Tim’s ability to see a project through, from conception to completion is unsurpassed, as he has been involved in architecture since 1989. His work can be seen throughout the United States such as, South Carolina, Colorado, Missouri, Texas, North Carolina, Utah, including the islands of St. Kitts and Antigua. Tim’s distinguished work has been published and can be found in various books and magazines for which he has received several “Prism” awards for outstanding designs, as well as a SARA award for exemplary graphic representation.

Having a spirited understanding of accrual management, Tim has owned, operated and directed several Architecture firms throughout his career, and is regarded to be one of the top sought after designers in the South Carolina low country. His primary goal has always been customer service and satisfaction and he prides himself to be “only as good as his last job”.

A member of the American Institute of Architects, the Royal Institute of British Architects, as well as the Society of American Registered Architects, Tim and his partner, Kevin Whalley, established Architecture Plus sc, llc in January of 2012. Architecture Plus sc, llc recently partnered with Aaron Ede in order to provide unparalleled services in a challenging market to their discriminating custom residential clients. Here he tells us more about the company’s beginnings, priority toward their clients and recent projects they’ve worked on.

How did the idea about Architecture + come about? How did the company develop into the company it is today?

Kevin Whalley and I struck out on our own back in 2012, when the economic landscape in the United States was a much different, scarier place than it is today. While we understood the risks of starting a business in the middle of the worst recession in recent memory, we also knew it was a chance for us to design and manage projects the way we wanted and the way we needed them to be managed.

We saw an opportunity to combine our 50 years of architecture experience in the Charleston, SC region and grow it together. The combination of our experience allows us to complement each other.

Another major factor in our company’s success is that we learned to be diverse. We’ve learned how to get into new markets and how to address and implement the creation of such new market services.

How has technology changed the architecture sector in recent years?

Technological advancements have made it easier to convey design ideas and executions to clients. Flat, two-dimensional drawings and renderings are no longer the only way to show the scope and scale of a project. Now, we as architects display our creations in three-dimensional graphic presentations that are much more photo-realistic and easier for our clients and their contractors to understand. These tools also enable us to work more closely with general contractors and their estimating departments. It helps them become more accurate during the bidding process and when they are on target with budget, it results into a satisfying reflection of our firm. Drawings are simply much more understandable to read and ideas are more easily conveyed. Not just to our clients, but also to the entire project team that is turning a vision into a reality.

Can you detail any current projects that Architecture + is working on? What are some of the key issues that you are facing in the process?

Some of our most recent projects include a Starbucks, a mixed-use facility, retail and office building, a restaurants and an industrial building. The biggest hurdle we are continuously challenged with is learning to work with local governments. Time equals money and having to go through the rigorous requirement of city review and submittal processes tends to add 6 months to our project timeline. We find that roughly 18 to 20% of a projects’ expense ends up being allocated towards governing regulations. So the challenge for us in the industry is how can we, as professionals of our industry, provide more affordable projects. Whether it’s a multi-family housing project or a commercial project. Average salaries simply do not run parallel to the average wage earner, so we must continue finding a solution, as this is just not a developer problem. It’s going to take work from multiple parties in our industry to band together in search of viable solutions. Finishes that were deemed as upgrades a decade ago, have now become expected standards today.

Website: http://architectureplusllc.com

Our July Investment Insight section looks at the work of Jeff Evans, who is a Partner & Managing Director at Volta Global - a diversified private investment group focused on direct investments in venture capital, private equity, and real estate. Volta was formed in 2015 to manage the proprietary and permanent capital of its founder and partners of the firm. Prior to joining Volta, Jeff had over a decade of multi-faceted experience as an active investor in both public and private companies, and as a co-founder of a venture-backed technology company.

Tell us a bit about what makes Volta Global’s philosophy and company culture unique?

Everything about our investment philosophy and corporate culture stems from our permanent capital base. Because we don’t manage a fund or have external investors to answer to, every investment decision we make is viewed through a long-term lens and must pass the test of being undoubtedly the best usage of the two resources we care about most - our capital and our time. Because we are active in so many different areas and maintain a relatively small headcount at the corporate office, our culture remains very entrepreneurial and filled with intellectual curiosity.

Can you give an example of how your personal investment approach has evolved during your career?

Like many people drawn into this field, I’ve always considered myself to be a value-oriented investor. The idea of being one of the first to discover a business with an underappreciated competitive advantage (or “moat”), and that was currently mispriced by other investors, was an idea that captured my interest very early in my life even before I started doing this professionally. As my career has progressed and involved making investments in many different markets, I think realizing how the characteristics of competitive moats themselves can change or adapt over time has been an important evolution. Many elements that defined what a sustainable and durable competitive advantage looked like 10 or 15 years ago may have been drastically altered over time by factors like technology and changing consumer behaviour. Think about large incumbent businesses in the consumer goods space as a good example. For many decades there existed a hugely profitable moat versus smaller upstart competitors – big barriers to entry built up over time thanks to distribution being incredibly expensive and difficult to accomplish at scale, and the advertising dollars necessary to match brand recognition and awareness with the big players being prohibitively costly for most. Fast forward back to today, and businesses like Dollar Shave Club and Harry’s have leveraged direct-to-consumer distribution models and extremely low-cost (but equally effective) marketing efforts to steal almost one-fifth of the razor market from the big incumbents in only a matter of years. I still believe that investing with a focus on the original value principles is the best path to long-term success today, but investors need to be aware and attentive to how sources of competitive advantage can evolve and erode over time.

What types of businesses does Volta look for in your private equity strategy and can you share one lesson you’ve learned from your activity in the lower middle market buyout space so far?

From a high level, in our control investments we are seeking to acquire profitable and durable businesses, each with between $3-10 million in annual cash flow at time of purchase. We tend to like businesses that most people find boring and unexciting, and where we can make them just a bit more exciting. We also prefer situations with an existing management team in place to stay on and operate the business after a transaction, or where we are facilitating a transfer of the business from one generation of family to the next.

The quality of the relationship developed with the sellers or controlling shareholders of the target business is hard to overstate. Not having a proper alignment of incentives in place, or expecting something that starts out as a poor relationship to eventually sort itself out after you have acquired and taken over the business, can be recipes for disaster. For this reason, we choose our partners very carefully based on their track record of displaying integrity and honesty, and we make sure there is personality fit and proper alignment early on in the process process to avoid pitfalls down the road.

Do you have any guidance for how the average investor can improve the quality of their investment decision-making?

Learn from the best. Find great investors throughout history and be an avid reader of their writings, teachings, and experiences. A strong sense of financial market history is also important - what tends to be “new” is often just an old idea that has been repackaged in a different form. Mental models and internalizing a few big ideas from multiple disciplines beyond finance can also be quite useful as an investor. The idea of compounding is powerful, and how continuous, minor self-improvements every day accumulate over time – simple math tells you that a 1% improvement in a skill compounded every day equates to an almost 38-fold total improvement in that skill over one year. Lastly, surrounding yourself with intellectually curious people that ask a lot of questions is a great way to test your own assumptions about the world and continue to expand your own mental framework.

The biggest investment most people make in their lives is usually buying a home. It has always been however, an ambitious thing to do, and now, in 2017, more so than ever. Below Finance Monthly hears more on the risks of a lifetime ISA from Stefano Giudici, Marketing Manager at Money Farm.

For young people aspiring to buy their first home, speculation about a future slump in house prices could be good news, but for those people who have only just started saving for a deposit, a fall in house prices in the immediate future will come too early.

Average property prices and minimum mortgage deposits

Generally speaking, the smallest deposit to secure a mortgage is 5%. Most lenders are currently asking for a minimum deposit of 10%. According to Halifax, and as reported on the BBC website, the average UK house price fell to £218,390 in June. This means that as a minimum, a deposit of nearly £22,000 would be required.

Of course the larger the deposit you can put down, the small the mortgage; so it’s advisable to save as much, as quickly as you can in order to make mortgage repayments affordable. The best mortgage deals you can make at present require a whopping 40% deposit.

The new lifetime ISA

The government has stepped into the picture to try and help first time buyers by launching the Lifetime ISA or LISA for short. This is a new platform that is designed to take over from the current Help to Buy ISA. To be eligible for the new LISA you must be aged between 18 and 39 years old.

If you do use your LISA to help you to buy a house valued at up to £450,000, the government will add a 25% bonus. The only problem is that if you have to withdraw anything from your LISA for emergency expenditure before you buy a property, the penalty is severe. It amounts to 25%, all of which has to be paid to HMRC.

Beware of accessing LISA investments before you buy a house

The problem for many people who want to invest in their future is that they do not have much disposable income. If all their savings are tied up in a LISA they will have no choice but to access them if an emergency or unforeseen situation arises. This could cost them dear and make a big hole in their home purchase plans.

It is because of this that the FCA advises that investors should only opt for a LISA when they are confident they will not need to access their investment before buying a first home.

LISAs can also be used as an investment for retirement. However, in this context, this 25% penalty can also catch you out if you have to access your savings before you’re 60.

Advice from the FCA

What this means is that for many people, investing in a LISA might not be wise. They would be far better off by using another platform such as a stocks and shares ISA. Although there is no government bonus, the gross total AER would, over a period of time, probably exceed what you would have been given in the way of the government bonus.

The beauty of a stock and shares ISA also is the fact that you can access your investment if you need it, without penalty, in something like 5 to 7 days on average.

What it all amounts to is that you need to be aware of the advantages and the pit-falls that the various investment platforms have. The best thing to do before you commit yourself is to seek advice from an IFA.

Today, the 5^th July 2017, marks the ten year anniversary of the last time there was an interest rate rise in the UK.

On this date in 2007, the Monetary Policy Committee voted to increase rates to 5.75%, just as the wheels were about to come off the global economy. A decade on from the last interest rise, the Bank of England is once again mulling a rate hike, though the current level of consumer debt leaves the central bank facing a tightrope walk on interest rate policy.

• 8 million Britons haven’t seen an interest rate rise in their adult life
• £1,000 cash in the bank is now worth £878 after accounting for inflation
• This compares to £1,323 from £1,000 invested in the stock market
• Money in non-interest bearing accounts has risen almost eightfold to £179 billion
• UK consumer borrowing is higher than on the eve of the financial crisis… and rising
• The Bank of England bind
• Charts and tables

Laith Khalaf, Senior Analyst, Hargreaves Lansdown: “It’s been a decade since the last interest rate rise, so it’s little wonder that borrowers have got used to the idea of cheap money. Indeed around 8 million Britons haven’t witnessed an interest rate rise from the Bank of England in their adult lives.

Low interest rates undoubtedly helped to prop up the economy in the wake of the financial crisis, by lowering the cost of debt for UK consumers and companies. However the burden of loose monetary policy has very much fallen on those with cash in the bank, who have seen the interest they receive wither away to virtually nothing.

Meanwhile the UK consumer has even more borrowing now than ten years ago, thanks to weak wage growth and the addictive nature of low interest rates. Rising house prices and the increased cost of a university education mean that the current generation of young adults are particularly accustomed to eye-watering amounts of debt.

There has been a sharp rise in consumer borrowing over the last year, and current conditions of weak wage growth coupled with rising inflation are likely to exacerbate the use of credit to fund living expenses. Indeed the savings ratio has now fallen to a record low, highlighting the squeeze currently facing UK consumers.

The fragile debt dynamics of the UK economy put the Bank of England in a bind, because while a rate hike would help to curb consumer borrowing, it will also make the existing debt mountain less affordable. The central bank therefore faces a tightrope walk between keeping borrowing levels in check, without putting too big a dent in consumer activity, which would have a damaging effect on the UK economy.

The Monetary Policy Committee has turned more hawkish recently, and expectations of a rate rise have built up considerably in recent weeks. However the large amount of consumer debt means that even when the Bank of England does finally decide to wean the UK off low interest rates, it will be a very slow and steady process.”

The cost for cash savers

Those with cash in the bank have now seen a decade of falling returns. £1,000 stashed in a typical instant access account in July 2007 would now be worth £1,107. However after factoring in inflation, which has risen 26% over the period, the real value would today be £878. By comparison the same £1,000 investment in the UK stock market in July 2007 would now be worth £1,666, or £1,323 after adjusting for inflation. (Returns calculated with interest and dividends re-invested).

This is a pretty astonishing result, seeing as this investment would have been made just as the UK stock market was about to fall by almost 50% as a result of the financial crisis. These figures highlight the healing power of time on stock market returns, even if you happen to be unlucky enough to invest just as conditions take a turn for the worse. The figures also demonstrate the toll taken on cash in the bank by such an extended period of low interest rates.

Indeed, over the last ten years the amount of money held in non-interest bearing accounts has risen almost eightfold, from £23 billion in 2007 to £179 billion today. At the same time the average rate on the typical instant access account has fallen from 3.3% to 0.4%, and the average rate on non-instant access accounts (including cash ISAs) has fallen from 5% to 0.9%.

(Sources: Bank of England, Thomson Reuters Lipper, Moneyfacts)

The benefit for borrowers

While cash savers have undoubtedly felt the pinch from lower interest rates, there have been benefits for borrowers which have helped support the economy. The typical mortgage rate has fallen from 5.8% in July 2007 to 2.6% today, helping to support household incomes and the housing market in the wake of the financial crisis. Unsecured consumer borrowing rates have fallen too. The result is much lower levels of consumer loan defaults. UK lenders have written off £2.5 billion of bad consumer loans over the last year, this compares to £6.8 billion in 2007.

Borrowing costs have also fallen for UK companies. The typical borrowing cost for a large company with a good credit rating has fallen from 6.4% in July 2007 to 2.8% now. This has allowed companies to gain access to funds cheaply, thereby supporting them in making investments and profits, and providing employment.

Low interest rates have therefore helped the economy by reducing the burden on UK consumers and companies. However it seems consumers are now increasingly taking advantage of low interest rates to load up on debt, which is causing concern at the Bank of England. Only last week the ONS published data which showed that the UK savings ratio has fallen to a record level of 1.7%, which suggests the consumer squeeze is beginning to hit home.

(Sources: Bank of England, Markit iBoxx)

Consumer credit warning signs

The Bank of England recently warned that consumer credit and mortgage lending were a key risk to financial stability in the UK. This is because there has been a rapid increase in consumer credit of late, which rose 10% over the last year. As a result the central bank is bringing forward an assessment of the banking sector’s exposure to potential losses stemming from stressed conditions in the consumer credit market.

In absolute terms, levels of UK consumer debt are actually higher now than they were on the eve of the financial crisis, a point in history when it is widely recognised that the UK was living beyond its means. Consumer borrowing (including credit cards, overdrafts and loans) now stands at £199 billion, compared with £191 billion in July 2007, and a highest ever level of £209 billion recorded in September 2008. Mortgage borrowing now stands at £1.3 trillion, up from £1.1 trillion in July 2007.

The good news is household income has also risen over this period, which along with low interest rates make this debt more affordable. In 2007, the household debt to disposable income ratio peaked at 159.7%. This fell back in the years following the financial crisis as consumers tightened their belts and banks became more reluctant to lend. However it has recently started to head in the wrong direction again, rising from 139.9% in 2015 to 142.6% in 2016.

The Brexit-induced currency crunch facing consumers at the moment can be expected to put further upward pressure on this ratio. With wage growth weak and inflation rising, consumers are more likely to rely on debt, while their disposable household income is likely to come under pressure. Indeed in its latest forecasts the Office for Budget Responsibility predicts this ratio will hit 153% in 2022.

(Sources: Bank of England, ONS, Office for Budget Responsibility)

The Bank of England bind

This all underlines the very difficult situation the Bank of England finds itself in. Raising rates will help to wean investors off borrowing, however it will also make the large existing stock of debt more expensive, which will eat into monthly budgets, putting downward pressure on spending and weighing on economic growth.

This is perhaps why the bank has so far chosen to use more specialised tools to deal with the sharp rise in consumer credit, such as tightening up mortgage lending rules and increasing bank capital requirements to deal with any downturn in credit conditions, rather than wielding the sledgehammer of an interest rate rise.

However, more members of the monetary policy committee appear to be in favour of a rate rise, which may mean we could soon be in for the first hike since 2007.  Markets are now pricing in a 55% chance of a rate rise by the end of the year. However the fragile debt dynamics of the UK economy mean that even when the Bank does decide to raise rates, it’s going to tread very carefully indeed.

It’s also worth pointing out that this wouldn’t be the first time that expectations of a rate hike have risen only to be subsequently quashed. At the beginning of 2011, two years after rates had been cut to the emergency level of 0.5%, the market was expecting interest rates to be at 3% by 2014.

Charts and tables

The data behind these charts is available on request.

Here’s a summary of interest rate data:

The stock market fell sharply in 2007 and 2008, but has since staged a significant recovery, while cash has been left in the doldrums:

Consumer credit fell in the wake of the financial crisis, but has started to pick up again and is approaching a record level; weak wage growth and rising inflation are likely to stoke the borrowing binge further:

Low interest rates have helpd the economy in a number of ways, not least by making mortgage payments more affordable, which has helped to underpin the housing market:

Sources: Bank of England, Thomson Reuters Lipper, Nationwide, ONS

(Source: Hargreaves Lansdown)

Dr Stavros Siokos is the Managing Partner of Astarte Capital Partners - a specialist alternative co-investment platform with a focus on the real assets space. The company, whose team is spread between London, NYC, Zurich and Sydney, identifies and partners with experienced real asset operators, establishing institutional standard specialist asset management businesses in niche real asset strategies that target private equity-type returns. Astarte’s team combines their experience of building multi-billion niche asset management businesses with the know-how of established real asset operators with strong track record in the specific sector. Astarte’s target is full alignment of interests and transparency with only success-based fees. Here Dr Siokos talked to Finance Monthly about the future of international finance and Astarte’s beginnings, achievements and goals for the future.

How did your career path lead you to your current role as a Managing Partner at Astarte Capital Partners?

I was originally educated as a Computer engineer. My first two degrees were pure Computer Engineering while my Ph.D. from the University of Massachusetts focused more on Financial Engineering. Structured approach to the solution of any problem was the best skill that my education gave me.  My non-academic career started as a quantitative analyst at Salomon Brothers (later Citigroup) in the mid-nineties. I quickly became managing director, responsible for the global portfolio trading strategies and all pension fund solutions. This period of my career was the best education that I ever received.

My career on the sell side lasted for almost fifteen years. Before the crisis, I decided to move to the buy side, recognizing that the sell side was ready to move into a different stage where entrepreneurship was to be challenged. Later on, I became the CEO of a small boutique asset management firm where, together with the team, we managed to build innovative alternative investment platforms and grow the assets exponentially – from a few hundred million to several billion within a few years. All the above was achieved by raising long term capital from global institutional investors. In early 2015, we decided to create a new platform, based on an innovative and disruptive model. We managed to establish this ambitious plan within a few months.

As a co-founder of Astarte, how did the idea about the company come about?

As an entrepreneur, I am constantly trying to expand my horizons. Our initial goal with Astarte was to create something that was fairer to the investors and will have a significant impact in the world of investing. We were eager to bring together the best professionals under an umbrella of full alignment and transparency. For a number of months, we worked on identifying the optimal team and the fairest structure for co-investments, and the outcome of this hard work was Astarte.

What have been the company’s biggest achievements in the past two years?

For a newly established firm, no matter how experienced the team is, the first couple of years are very challenging. I’d say that our first big achievement is managing to stay on track, since building an innovative and disruptive business in a highly competitive environment is a challenge. However, we managed to launch the firm by simultaneously attracting top talent, long term capital and excellent deal flow, which I think are the key components of any asset management business. Currently, I’m delighted to say that we are in a position where all the important ingredients are in place.

What is your vision for the future of Astarte? What do you hope to accomplish in the next three years?

Our aim, although quite ambitious, is to establish Astarte as one of the leading co-investment platforms for niche real assets. We hope to see private capital working smarter and fairer in the future, with Astarte playing a significant role on this.

What is your brief outlook on the future of international finance?

We are living in an ever-increasing regulated environment where restrictions and regulations are creating a very controlled environment that supports large firms and kills entrepreneurship. Margins are shrinking and opportunities are reduced. Thus, it is my belief that in a decade the asset management market will only consist of huge players and a limited number of niche strategy participants.

With the changes to mortgage interest relief for buy-to-let landlords, many are now considering transferring their properties and are actively looking at ways to reduce their tax burden.

Below, Jonathan Amponsah of The Tax Guys looks at the pros of cons of establishing a buy-to-let business as a limited company and the tax implications you need to be aware of.

Tax rules for buy-to-let (BTL) landlords are changing – and this could mean higher tax bills.

Landlords will no longer be able to deduct all of their finance costs from their property income. The changes are being phased in between April 2017 and 2020.

However, this change doesn‘t apply to limited companies. So, unsurprisingly many BTL landlords are considering transferring their properties into a limited company, enabling them to continue to claim tax relief on all the interest and finance costs.

On the surface this decision appears to make business and financial sense. But… you may find yourself landed with unnecessary tax bills and costs.

Here are five common pitfalls to be aware of:

• Capital Gains Tax. If you transfer the property to the company, this will be treated as if you’ve sold the property to the company. If the property has gone up in value since you originally bought it, you’ll have to pay up to 28% capital gains tax on the difference, subject to any tax reliefs and allowances. If you have a few properties to transfer, seek advice about a relief you could claim to defer your capital gains tax.
• Stamp Duty Land Tax. If you transfer the property from yourself to the company (effectively the company buys the property) then the company could become liable to pay stamp duty land tax. So while you reduce income tax, you may wind up paying the same amount or more in stamp duty land tax.

These two main tax pitfalls could potentially wipe out any short term tax savings.

• Once the property is transferred, it is owned by the company, not the landlord. If something happens to the company, all its assets will be exposed including the property that you put in it.
• Your Mortgage. If your company needs a mortgage to buy the property from you then watch out as in most cases the interest rate is higher for commercial or company mortgages than it is for individuals. So, you could end up paying a lot more over the full term of the mortgage.
• At some point in the future if you sell the property the company will pay Corporation Tax on the profits and the balance of the money from the sale will remain in the company. In order to get access to the funds to enjoy you’d need to take it out of the company either as salary or dividends or other means. You’d then pay additional tax on that income. When you take the above into account the idea of transferring your BTL property into a limited company starts to sound rather bleak.

But there are some situations where you can reduce or eliminate the pitfalls above and enjoy some of the benefits of holding your properties through a limited company.

• If you’re buying a new property then a limited company could be a good idea. But if it’s an existing property and you’re only managing one or two properties, I’d say: don’t bother. You’re better off paying just a little bit of tax now instead of triggering all these taxes and then having to pay additional double tax if you sell the property in the future.
• Partnerships – If you currently run your BTL through a properly arranged partnership business, then transferring into a limited company could be a good idea because some of the tax burdens above could be reduced.
• Legacy planning. Landlords who want to leave their BTL properties to their children could consider the pros and cons of a Family Investment Company as an alternative to a Trust.

Clearly the message here is; don’t rush into it. It’s extremely unwise to move BTL properties into a company without taking professional advice. Whilst there’s no simple answer to the question and it all depends on your circumstances, as a general ‘rule of thumb’ I would say that if it‘s only one or two existing properties in your name, it‘s not a good idea. If you‘ve got 6-10 properties, it‘ might be worth your while to look at how you can enjoy the benefits of a limited company without triggering unnecssary taxes and costs.

Below Rob Moore Co-founder at Progressive Property discusses with Finance Monthly how to buy property the correct way, how to get a bang for your buck, and how to avoid risk.

There are two types of BMV properties: those that can make you money, and those that have been ignored because they are money-draining duds. This second kind are the BMV properties that you should never buy, of course, but it’s easy to get drawn into buying something cheap which will in fact cost you far more of your time, money and effort than it is worth.

The below market value properties you want to find are those that other investors haven’t ignored, but have missed. These are the properties that have fallen under other less observant investors’ radars, and which are ready for you to swoop in, sweep up, and make huge profits on.

First off, what does “Below Market Value” actually mean?

“BMV” properties and the valuation process

According to the Royal Institute of Chartered Surveyors (RICS), market value is “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in arm’s-length transaction after property marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

Now that’s a hell of a mouthful!

In principle, a valuer will compare the property to other similar properties in the area, alongside its estimated level of demand, transferability, scarcity, and whether it can fulfil its duties as a comfortable environment in which to live, and come up with a price estimate using this combined evidence.

Investor Peter Jones hosted a recent Progressive Property podcast on the subject, and during the episode he suggested that the current valuation system in the UK may be flawed. Peter said that the properties which valuers will compare the property they are valuing to have often been sold “with compulsion”. Distressed sellers who have a property on the market for reasons such as divorce, job loss or financial difficulties are among the reasons as to why a property may be sold through compulsion – which contradicts the RICS’s definition.

For this reason, consider the market value alongside the questions, “What price am I willing to pay for this property?” and “How much money will this property make me?”

1.  Make sure that it is a cash-flowing property

Not all properties on sale or that are buyable at a value below the market price are going to be great investments. Some of them are cheap as chips for a reason!

For example, it is very possible to pick up cheap, high-quality properties in rural villages in isolated parts of the UK. These could have the most enchanting views and most beautiful designs, but the likelihood of you selling them on or renting them out easily is unlikely. Even properties in apparently desirable areas can cause unexpected selling problems, such as a lack of hungry tenants or low rent prices in the area failing to cover the mortgage.

A good investment property needs to pay its own way, so make sure that any property you consider purchasing is going to be cash-flowing – or have a very good reason if you don’t.

2. Do your due diligence

Without evidence for a property’s profitable potential, you’re basing your purchases on your gut and hearsay.

Risky business.

To find evidence of a property’s potential, put in your due diligence by visiting the property and checking out the nearby area – or at the very least, send a business partner, colleague or peer you trust. Use a property app to check the price of properties that have been sold in the same postcode over the past year. You can also check rental prices in the same area, and consider employing a solicitor before committing to a contract.

3. Make sure there isrental demand

No rental demand, no tenants.

No tenants, no rent.

No rent, no money, and a big black hole where the cash you invested used to be.

To give you an idea if there is rental demand in the area for properties such as the one you are considering buying, monitor websites and apps such as Zoopla and Rightmove to check, a) how many properties are currently available to rent, and b) how often the adverts disappear and new ones appear. Too many available properties can suggest oversaturation, and not enough change in the listings can suggest a lack of demand.

4. Seek out motivated sellers

Property that has been on the market a long time is likely to have a motivated seller.

On an app, such as Zoopla, check the “most recent” listing, but backwards. 

If you combine evidence that similar properties are being successfully rented in the local area with the fact that the property on sale has been listed for a long time, you are likely to find a motivated seller. Any property that has not been viewed on a property website or app for a month or more suggests that the seller is going to be more open to lower offers, because the longer their property is on sale for, the more it will cost the seller.

A seller’s keenness – or even desperation – to sell their property offers you plenty of leverage.

5. Advertise locally

Another way to find below market value properties is also another way to find motivated sellers, but includes the potential for finding properties that haven’t been marketed yet too, thereby accessing them before other property investors in the area.

A targeted advert can appear online, in newspapers, in newsagent windows, or even leaflets if you want to go old-school. Ideally, any adverts should appear in an area that you have already identified as a potentially lucrative spot for buying properties. If you let local property owners know that you are looking to buy properties in the area in this way, generating leads should be simple and turn you into the first point of contact for any property owner who is even tempted to sell, let alone those who suddenly find themselves pressured by unforeseen circumstances.

6. Don’t take “BMV” at face value

It is hard to prove that a property is “BMV” from a technical standpoint, which is why you must consider other investment fundamentals. It doesn’t matter how cheaply you purchase a property if it isn’t going to make you a profit.

Getting price blinkers can cost you dearly, so make sure to consider your profit expectations, whether it is a short-term or a long-term commitment, how much work needs doing to the property, and so on, before getting fixated on how much cheaper the place is than others nearby.

7. Don’t buy in the Bronx

Buying in the wrong area is one of the most common mistakes that first-time property investors are likely to make. Many areas may have a reputation for being “up and coming”, with plans for better transport, a new shopping centre, greater funding, and many other exciting possibilities. However, unless plans such as these become concrete – and sometimes, even if they are – they can easily fall through.

Every investment carries risks, of course, but it is your role to minimise the likelihood of loss and increase the likelihood of profits. For that reason, avoid buying property in the reputed “bad” areas of town simply because of their low price tag, unless you have some serious evidence that it is going to make a worthy investment.

8. Don’t buy properties that need too much work done

Some property investors are so excited by the price that they neglect to consider how much extra work a property is going to take before it can be rented or re-sold.

If you have great builder contacts, then a property that requires some TLC can be a great way to create extra profit. However, there are risks involved when buying a run-down property, so make sure to hire a reliable surveyor to inspect the place and detail any major repairs or alterations needed.

9. Don’t go through “middle men”

There are often companies and entrepreneurs that claim to be able to provide you with a range of below market value properties. In general, if you allow someone else to source your property for you, you are going to have to pay for the property itself and this person or company’s commission. There is also a question you should be asking yourself: why isn’t this company snatching up this deal-of-a-lifetime for themselves? Is it because there is a catch, and the deal isn’t as fantastic as it is being made out to be? Are there unseen structural problems that even surveyors will find difficult to identify?

For these reasons, try to avoid being taken for a ride by intermediaries and, in the process, maximise your profits.

10. Don’t be afraid to haggle

The owner of any property being advertised for a price that seems surprisingly low is likely to be keen on a quick sale – otherwise, they would bump the price to a more reasonable level and wait until they found someone to pay it. This offers you some leverage that you should utilise.

Even with low prices, if you are keen to make as much profit as you can – and you should be – then make an offer that’s even lower. If they don’t accept it, you can always take them up on their original offer if the deal is hot enough.

Final thoughts

While some argue that there is technically no way to buy BMV, because as soon as a property is sold then the market price becomes whatever it was sold for, this is splitting hairs and an unhelpful way of viewing the property market.

Buying below market value is finding a property for a lower price than other property owners are selling their own similar properties for. If you can find a distressed seller, or any property that has been overlooked by other buyers due to lack of advertising or some other neglect on the seller’s part, keep the knowledge to yourself, do your due diligence, and get ready to make some serious money.

Gordon Dadds, the legal and professional services firm, is urging the UK property sector to get to grips on the 4^th EU Anti-Money Laundering Directive or face receiving a hefty financial penalty which could be unlimited.

The Directive which comes into force from today (26^th June 2017), combined with the new investigation power being introduced by the Criminal Finance Act 2017, is going to impact the UK property industry significantly with banks and estate agents having to carry out further due diligence on both the buyers and sellers of property which will slow down the buying process by up to 186 days. There will also need to be formal risk assessments and nominated officers will have to be re-appointed if not currently an executive sitting on a board (or equivalent) of the business.

Gordon Dadds predicts that the new regime will increase workloads due to the required volume of administration with all polices now needing to be tailored to each client case and for the usual terms of business to be updated. This doubling of the workloads will increase company costs with existing staff requiring training and in a high proportion of cases, estate agents needing to recruit staff in order to help with the administration burden. We estimate this could cost the largest estate agents a combined additional cost of £6million.

Alex Ktorides, Partner at Gordon Dadds, says: “The Directive is a shake-up of the way that banks, estate agents and other parts of the regulated sector apply a risk based approach to customers. They will now have to consider the characteristics of the customer, the product and its distribution and the jurisdictions involved in determining the lengths that they have to now go to in terms of conducting due diligence on their clients. There is even a new requirement to force overseas branches of UK parent companies to apply UK standards. This will cause huge concerns to international businesses and even encourage moving head office from the UK.”

The property sector now has to act quickly in order to ensure it complies with the Directive. The purchasers and the seller are both now included in the application of customer due diligence, meaning additional checks will need to be carried out by estate agents, auctioneers and surveyors.

Alex Ktorides continues: “This is going to create substantial challenges for the property sector especially given the final version of the directive has only been made public today which has left no time for banks, estate agents and the lending sectors among others to update their policies and processes alongside training staff on the new regime. Some agents have in excess of 100 branches and have received no prior time to implement the new processes in order to comply.

“For many smaller estate agents (and surveyors) this will be the first time they will have carried out checks on both the buyers and sellers and they are going to have to get up to speed with the regime as quickly as possible or risk facing an unannounced visit from the HM Treasury.”

Gordon Dadds is calling on the UK property sector to act fast and to start to get to grips with the Directive from today. For many medium to large sized estate agents Gordon Dadds recommend they appoint a money laundering officer and a deputy to help with the increased work load and to ensure they are compliant and not falling foul of the regime which could spark a warning or fine from the HM Treasury.

(Source: Gordon Dadds)

American household debt totalled a record $12.73 trillion as of March 2017, so cost of living concerns are more pertinent than ever.

Personal finance news and features website GOBankingRates conducted a study to identify which cities across America have seen the largest increase in cost of living expenses from 2016 to 2017. The study evaluated US cities based on two principal metrics:

• The increase in a city's cost of living index, which includes food, rent, utilities and transportation.
• The Increase in the amount of income required to "live comfortably," a concept used in GOBankingRates studies that combines the money needed to pay for necessities — including food, rent, utilities, transportation and healthcare — with the amount one should budget toward discretionary spending and savings.

GOBankingRates identified the cities where the cost of living index had increased by at least two points (out of a total 100) and the amount of income required to live comfortably had also risen. Combining these two metrics provides both the objective and more subjective side of cost of living expenses. Most cost of living indices do not account for the ability to save or pay for unnecessary purchases, and yet they're both important parts of people's financial lives.

5. Jacksonville, Fla. 

• Live Comfortably Amount Increase: $2,095
• Cost of Living Index Increase: 3.36 points

4. Austin, Texas

• Live Comfortably Amount Increase: $1,407
• Cost of Living Index Increase: 3.84 points

3. Louisville, Ky.

• Live Comfortably Amount Increase: $2,066
• Cost of Living Index Increase: 4.49 points

2. Seattle

• Live Comfortably Amount Increase: $3,190
• Cost of Living Index Increase: 7.32 points

1. Nashville, Tenn.

• Live Comfortably Amount Increase: $9,135
• Cost of Living Index Increase: 8.61 points

Additional Study Insights

• Home prices have been surging in Nashville. From April 2015 to April 2017, the median list price for a home rose by almost 30 percent, from under $260,000 to nearly $340,000.
• According to new income limits set by HUD, an individual earning $50,500 a year in Los Angeles County (#6 on the list) is now considered low-income.
• The cost of living has actually gone down in New York, San Francisco, and Honolulu — cities with notoriously high expenses.

(Source: GOBankingRates)

ONS figures show that the typical home in the UK cost £220,100 in April, with a rise of £3,500 on the previous month.

This equates to a £12,000 increase from the same month a year ago, the Office for National Statistics (ONS) says, despite banks and lenders reporting a stagnant property market period.

This does however oppose figures from Nationwide Building Society and Halifax Bank, which have proved a stalling housing market over the past few months.

This week Finance Monthly has heard Your Thoughts on the housing market and gathered some insight from the experts below.

John Eastgate, Sales and Marketing Director, OneSavings Bank:

House prices have been galloping upwards for the past five years, but it seems that softening demand might be starting to rein-in the pace of that growth. Mortgage approvals fell once again in April, reflecting falling consumer confidence that will hardly have been helped by the election outcome.

Until we get some clarity around how the political landscape will unfold, it is difficult to envisage a material change in consumer confidence, so we should expect the pattern of reducing house price growth to continue.  Falling real incomes will remain a challenge for affordability although we should expect to see mortgage rates remaining at record lows for some time to come and this will no doubt support a core level of demand and ensure a modest level of house price growth in the medium term.

Luke Somerset, Business Development Director, Contractor Mortgages Made Easy:

Whist housing sales are reported to have dropped by 19% across the UK since this time last year, there remains an overwhelming sentiment that we remain in a sellers’ market.  House prices remain incredibly resilient despite of Brexit uncertainty and the stamp duty levy introduced in April 2016. This has led to a substantial increase in the cost of an average house in the UK putting further pressure on first time buyers and next time movers. However, it is not all doom and gloom.

The number of mortgages that require just a 5% deposit have increased by 14% over the last 12 months and there are now 287 mortgage products available to these borrowers with minimal deposit. With increased competition amongst lenders, interest rates for younger borrowers are starting to fall, so in spite of an increase in house prices, the actual cost of funding a mortgage hasn’t increased proportionally, thanks to the drop in mortgage rates. This doesn’t however help young borrowers when it comes to saving a deposit and more should be done to assist young borrowers onto the property ladder.

Mark Noble, Managing Director, Castles Residential Sales and Lettings:

If you listen to media coverage, believe everything you read in the papers and listen to some local estate agents, you could be fooled into thinking that the housing market is in the doldrums and there seems to be surprise that house prices have risen fairly dramatically over the last 24 months.

However, if you are in the housing sector or scratch under the surface, you will quickly realise that the lack of good property inventory coming to the market in the right numbers has created a huge supply and demand problem, creating a situation of more buyers than property and ultimately, pushing house prices upwards.

At Castles we have sold 2 properties in the last few weeks at over the asking price, one came to the market at £189,995 and sold (stc) for £197,000 and the other came to the market at £200,000 and eventually sold (stc) at £212,000, this was as a result of mini open houses and best and final offers.

The simple facts remain, if you put your house on the market with the wrong agent, at the wrong price the property will remain on the market for weeks, if not months, creating the false impression of a stagnant market place.

Should you decide to employ the services of an agent with a proven track record in selling property in your area and price your home correctly, then a sale can be achieved in a reasonable timescale, some properties are still selling within days and before reaching the internet.

There is always a period of reflection before and after events like the recent election but we envisage the market will continue in the same vein for the foreseeable future, so if you are thinking of selling, chose your agent wisely as they really can make the difference to the price you achieve for your property and in some cases, whether your property sells at all.

Mark Homer, Co-Founder, Progressive Property:

Despite stories of a recent cooling in the UK property market the longer-term trend for U.K. Property prices is rosier. As the typical house price has increased by £12,000 in a year (ONS) it is clear that a lack of supply and continued population increases are still pushing prices higher.

As 2017 has developed it has become clear that a 2-step market has materialised as a result of government policy.

Coming off the back of seeds that were Sewn in 2016 when the government increased stamp duty on more expensive and buy to let properties sales of these types of properties have stalled. Many properties over £937k (on which stamp duty has increased with some now attracting 12%) are now sitting on the market and sellers are having to reduce the prices by up to 20% to get a sale. As interest rates are low however many are choosing to just sit on them hoping for a buyer to come along making this part of the market “gummed up”.

At the same time big incentives for first time buyers through the help to buy scheme coupled with low interest rates is fuelling demand from those looking to get on the first rung of the ladder. Small new build houses and flats are selling well because of this and have provided support to the lower end of the market. As these types of purchases are making up an increasing large proportion of sales they are contributing increasingly to transaction volumes which have faltered in many other parts of the market.

We expect once Britain’s place in Europe becomes clearer and uncertainty around a lack of government majority subsides the market will grow around 5% per annum overall once again.

David Martin, Chief Operating Officer, Hatched.co.uk:

Understandably, people casting an eye over the UK property market in recent months would be forgiven for being somewhat confused. Conflicting news stories are released on what seems like a daily basis. The difficulties start when we all compare house prices around the UK. When you look at a regional level, many parts of the north of England are still showing steady growth – Rightmove reported in their June 2017 House Price Index a 3% annual price change in Yorkshire and the Humber, compared with a 1.8% increase in the South East and an overall decline in London of -1.4%.

Here at Hatched, we cover the whole of England and Wales and we’ve seen recent figures more comparative with the banks and building societies, rather than many of the ONS. For year-on-year activity to the end of May, we’ve seen a 18.5% increase in viewings booked, a 27.4% increase in the number of offers made and our average house price at point of sale-agreed is up 3% to £271,632.

Our number of house completions is up by 19.7% for the same period, with the average house price of those completions being £236,801 in 2016. Interestingly our average sale-agreed price in the same time period this year is £271,632, an increase of nearly 15%.

In June, we’ve continued to see a steady stream of viewing requests, in-line with the year so far. Ultimately if a property is priced correctly, presented in the best way possible and shown to as many buyers as possible, the best price for the client will be achieved more often than not.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Mortgage debt increased by 11%¹ to $201,000 last year and more than half (52%) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78% of Canadians having made debt freedom a top priority.

The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.

"The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income," says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. "However, building flexibility into how they structure their debt can help ease the burden."

Overall, nearly one quarter (24%) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70% of mortgage holders are not able to manage a ten% increase in their payments. Half (51%) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.

¹ The percentage change in average mortgage debt controlled for regional, age and income differences between the samples. However, different research providers were used for each wave of the study which may impact trended results.

Millennials not alone

Despite generally having more equity in their homes, many Baby Boomers face the same challenges as Millennial homeowners. Some 41% of Baby Boomers said that home equity accounted for more than 60% of their household wealth and for one in five (21%) it makes up more than 80%.

This indicates Boomers may need to rely on the sale of their primary residence to fund retirement, since much of their household wealth is wrapped up in home equity. However, more than three quarters (77%) of Baby Boomer respondents want to remain in their current homes when they retire.

"Many Boomers approaching retirement share the same lack of financial flexibility as Millennials," said Lunny. "They want to remain in their current homes, but their home makes up a big part of their net worth. Instead of downsizing, or even selling and renting, homeowners in this situation could consider using a flexible mortgage to access their home equity to supplement their retirement income."

Helped into the housing market

Almost half (45%) of Millennial homeowners reported that they received a financial gift or loan from their family when purchasing their first home. By comparison, just 37% of Generation X and 31% of Baby Boomers received help from family members when they purchased their first home. Conversely,  almost two in five (39%) Boomers, many of whom are the parents of Millennials, still have mortgage debt.

The generational increase in new homeowners requiring family support comes despite a long-term trend toward two-income households. The number of Canadian families with two employed parents has doubled in the last 40 years, but housing costs are growing faster than incomes².

"With higher home prices and larger mortgages, it's more important than ever to find the mortgage that's right for you," says Lunny.  "A flexible mortgage that offers the ability to change or skip payments, or even withdraw money if your circumstances change, can help you ride out financial difficulties more easily."

Manulife Bank recommends that Canadians have access to enough money to cover three to six months of expenses.

² Statistics Canada. May 30^th 2016

Quebec homeowners most at risk

In addition, the Manulife Bank survey found that:

• Mortgage holders in Quebec (76%) would have the most difficulty with an increase of 10% to their mortgage payment and are more likely to be impacted should they have a fiscal emergency, as almost 30% have no emergency funds.
• British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45%) saying they either borrowed or were given money.
• Compared with other regions, homeowners in Manitoba and Saskatchewan (73%) prefer most to own and live in their current home when they retire.

Debt management should begin at an early age

More than two in five (44%) learned "a little" or nothing about debt management from their parents—and were also most likely to have been caught short financially in the past 12 months (28%).

"Kids who learn about money and debt management are more likely to become financially healthy adults," says Lunny. "One of the best lessons we can teach our children is the importance of saving for a rainy day. Being prepared for unexpected expenses is good for our financial health, good for our mental health and gives us the freedom and confidence to deal with the unexpected expenses and opportunities that come our way."

(Source: Manulife Bank)

There were increased signs of a slowdown in the UK property market last month, as the number of sales has fallen dramatically and even less are taking out mortgages. Analysis by data firm Equifax claims mortgage sales dropped by over 15% between March and April. But why is this happening? Here Mark Homer, Co-Founder of Progressive Property explains more for Finance Monthly.

Mortgage transaction volumes have continued to reduce, dropping in excess of 15% in most regions of the UK in April 2017 versus March 2017. As new mortgages tend to mirror overall property transaction volumes the whole market appears to be taking a breather. Continuing uncertainty caused by Brexit, Britain’s relationship with the EU and more immediately the general election appears to have put buyers off at least for the short term.

House prices have continued to fall in Prime London and growth has continued to moderate outside of the M25 with the Midlands and North showing reduced growth too. Overall UK house price growth has slowed to 4.1% in the year to March 2017. With much of the rest of the UK playing catch up to the huge growth in Central London since 2010 the market appears to be taking a breather.

Increased Stamp duty on buy to let properties, 2nd homes and higher end properties from March 2016 has had had a further dampening effect on the market with many taking a “wait and see” approach to moving house. A new buy to let tax which sees mortgage interest become not 100% off settable against rent for many from April 17 has also contributed to a more negative mood.

Interestingly, first time buyer purchases have increased since the stamp duty changes showing that the government’s policies to encourage these purchases over those of landlords appear to be working. With some lender’s mortgage rates now reaching their lowest ever rates sub 1% buying a home has become more attractive.

House price growth seems set to return to trend with 5%+ growth once these uncertainties subside and wage growth catches up with prices following a period of increased inflation after sterling devalued immediately after the vote to leave the EU.