A housing cycle is under way across the UK, said Richard Donnell, director of housing market analyst Hometrack, told a packed marquee of FT Money readers at the festival. But depending on where you are in the UK, it could either be coming to an end or it is just getting going.
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There are other parts of the UK that are still to see the ripple effects of formerly stratospheric growth in London and the Southeast — a trend that stalled roughly three years ago. The decidedly mixed picture he set out is reflected by lacklustre levels of activity in the housing market. The number of housing transactions has been stuck at the same level for four years — around 1. But some of those sellers are not yet willing to acknowledge that a material change in sentiment has taken place.
One indicator of this is the gap between asking and selling prices, which stands at 10 per cent in central London, said Mr Donnell. In Manchester and Birmingham it has narrowed to about 2. It takes a couple of years for sellers to take that on. Among asset classes, housing often carries a strong emotional connection for its owner-occupiers — a connection that few would ascribe to the equity funds sitting in their Isa. To ask the question whether property remains a good investment may have been uncontroversial in the FT Money tent, but Mr Mead, an industry veteran, said it marked a long-term and lamentable shift in public attitudes over the function of housing and the development of a national obsession with house prices.
I do wish people would stop worrying about their inherent value being associated with their house. He was bullish, nonetheless, on the logic of pressing ahead with a purchase today. Pricing may be hard to pinpoint in a sluggish market with low turnover, he said, but the fact that everyone in an area was in the same position meant losses on one side of a transaction can easily become gains on the other. Sometimes people are selling for less than they might have been able to get and in other cases other people are sitting tight. The difficulty of finding the right price in this climate of uncertainty, however, has brought interesting developments in the way people are marketing their homes.
These allow them to put the word out among selected potential buyers, without publicly advertising the sale. For owner-occupiers, investing in property can mean stretching oneself on a mortgage in the belief that a house is undervalued, or will rise in value following a revamp. There, the experts agreed, the outlook is not rosy.
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Landlord investors have been in high dudgeon after a series of tax and regulatory changes that have hit profits and raised the costs of investment. Extra stamp duty in the form of a three percentage point surcharge on buy-to-let purchases introduced two years ago is one drag on the sector. Arguably, the more damaging move for highly leveraged landlords is the loss of higher rate tax relief on their mortgage interest, which is being eradicated in stages, disappearing for good in The hit to higher-rate taxpayers has come together with the prospect of higher interest rates on buy-to-let mortgages after base rate rises, causing landlord owners to question their underlying rationale for investment and squeezing out those who pin their hopes on a short-term return via capital growth.
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Mr Donnell offered a glimmer of hope in urging a different mindset on landlord investors. In western countries, we mistakenly believe that nothing truly bad will ever happen here, so when something like Brexit shakes that sense of stability, we tend to panic. Insurance guarantees that some kind of expense or loss will be covered in the event of an accident or unforeseen circumstance. You pay in a certain amount, and in exchange, you get protection. As anyone who has ever been in a car accident will tell you, insurance is important.
However, while most financially savvy people see the value in having car, health, and homeowners insurance, very few people take out an insurance policy against their own country. If all of their wealth is invested in the UK, for instance, then they could suffer tremendously if the British economy takes a tumble.
You know that you have the ability to easily leave the country if things go belly-up. And, investing in international real estate is one of the best ways to get this kind of government insurance. International real estate allows you to establish a second residency abroad while giving you a permanent place to go in case you need to leave your home, and in some cases, it will also give you a second passport.
Additionally, unlike regular insurance, the premium you pay can actually earn you money through rental yields and value appreciation. Owning international real estate can also enhance your tax strategy regardless of your country of citizenship. While you can claim some exemptions if you live abroad, they only exclude a small portion of your income from the IRS, and you still need to pay full tax on all of your passive income, such as capital gains.
Essentially, this means that you can park your money in a foreign real estate investment and allow it to accrue appreciation value without paying a dime in taxes. It would practically take a declaration of war for the US government to demand your property. For US investors, the rules on capital gains taxes from personal residences are the same, no matter where the property is located. To qualify, you must live in the house as your primary residence for two of the five years prior to selling it. The idea is capital gains tax deferral.
We frequently talk about the power of compound interest and how it applies to offshore investing. Quite simply, paying tax on every transaction along the way can cost you a fortune. Put another way, taxes on your investments are probably the difference between a luxurious oceanfront retirement and barely scraping by. Just as US real estate can be used in a like-kind exchange, so can foreign real estate. Including foreign real estate in a self-directed offshore IRA can create several tax advantages.
If you already have a retirement account, moving it to a cooperative custodian overseas can be your gateway to investing in all sorts of products that your US custodian would never let you touch. However, you can own foreign real estate in your government approved Self-Directed IRA, and you can enjoy ongoing rental income as well as capital appreciation. Real estate held in your IRA is treated the same way other investments in your IRA are treated; it is taxed when you take the money out.
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The difficulty of this may be actually getting a mortgage as many foreign banks will not want to deal with expats. Additionally, things like depreciation and other home-ownership expenses may or may not be deductible. Because Singapore is a territorial tax country , you only need to pay tax on money that you make in Singapore, so any income that you earn from foreign investments is not taxed.
While you will need to pay a 4. International real estate can therefore be an important component of your tax strategy. With proper planning, you can use these investments to potentially reduce your tax rate to the single digits. Therefore, regardless of your country of citizenship, buying foreign real estate can help you legally reduce your tax burden.
Overall, investing in international real estate can help you diversify your life in many ways. When you own property in another country, you can reasonably plan to live there part-time or in the future. Additionally, many countries will allow you to obtain a residence permit by investing in property there. Although residence by investment programs vary, many countries allow you to obtain a residence permit for a year or more with a large enough investment, and a substantial number of them will allow you to apply for permanent residence or citizenship after you spend a certain amount of time there.
Therefore, getting residence or citizenship by investing in international real estate can benefit you in a number of ways. On the other hand, you may want to own property in a place where you spend a large portion of your time. Recently, I worked with a couple who fell in love with the idea of spending their summers on the coast of Montenegro.
Instead of spending money on hotels every summer, they decided to buy a more permanent home, which allows them to save money on rentals and earn money while their property accrues value. To put it simply, investing in international real estate allows you to create home bases in various countries and begin to craft a more diversified and internationalized lifestyle. Knowing the benefits of foreign real estate is one thing, but obtaining that real estate is an entirely different animal.
If you want the results to change drastically, then the work that goes along with that is going to be substantially different. In the US, there is a very large and regulated real estate market. In most cases, there is an inverse relationship between the accessibility of data and professionals with the quality of the investment. That being said, you will find a thousand real estate agents in Los Angeles waiting to take your call.
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A good example of this principle is in areas like Latin America where people from the US and Canada are willing to go. These properties are often overpriced, turnkey investments that are set up for second residences or offshore conferences. If you could just go to a website, sort through the listings, and figure out the yield for a potential property, the yields would be lower.
You can see this in Cambodia.
As the country is developing, prices are going up and yields are being squeezed, partially because of the amount of foreign investment. If you had bought property in Cambodia five or six years ago, you would have bought that property at a lower price and sold it for much more because of the amount of Chinese investment in the country over the last few years.
So, how do you find a good deal? The great myth that real estate works the same all around the world is dangerous. If you're a passive investor who wants to be smarter and in syndicated commercial real estate, specifically multifamily real estate, this book may be for you.
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It breaks down barriers of knowledge "cocoon" in different groups while revealing hidden secrets on how to achieve massive success in commercial real estate. Covered in this book are nuances of getting started, aspects of different deals, choosing the right deal sponsors, risk management, market cycles, investment process, investment metrics and capital sources. Eddy Moore, the author, inherited several real estate properties upon his father's death. After some errors due to inexperience, he has developed experience in the real estate business. In the first book, Moore shows how to make profit from buying and selling properties to finance investments, and strategies to follow to create steady business.
In the second, he teaches the basics about rental real estate, and how to maximize rental income. According to the author, by reading both books, you can learn what elements are necessary to be a successful investor in real estate and how to manage rental property, to make profit from passive income. Sam Mitchell, a Wisconsin native, has been working in real estate for the past 20 years. His goal in writing books is to help others with their own investments, teaching them how to avoid common pitfalls and make money as well. According to Mitchell, some of the wealthiest people on the planet made their money through investing in real estate.
He points out it is one of the few ways an investor is almost guaranteed a return. According to author Jordan Riches, real estate is "The King" of all investments. Massive profits can be gained with a little knowledge about sales with a house and all sorts of other properties. This book is intended to help readers understand all the tips and tricks of " house flipping ," and how to understand the basics of real estate evaluation and re-evaluation - "even if you start from zero.
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Chris Prefontaine, an industry leader in the lease-purchase, owner financing and subject-to-terms business, shares his secrets from more than 25 years in real estate that he contends can be applied to any niche. Along with his son, Nick, and son-in-law Zach Beach, Chris Prefontaine offers easy-to-follow advice for starting or scaling your real estate business.
He also has Joe Fairless, AirBnB innovator Brian Page, and a host of other industry leaders share their wisdom, compassion, and proven formulas for success in business and in life. Of all the potential investment vehicles these days, the most popular is real estate. Tony Toson promises in this book to provide you with all you need to know about real estate investing in a simple way to help both beginners and experienced investors "learn the nitty-gritty of the business. You will learn about wholesaling and "flipping" houses; you will also learn the difference between commercial real estate and retail property investing, and other concepts such as turnkey, REIT investing , vacation and apartment rentals.
Having learned the different intricacies, you will learn different ways to earn passive income through real estate investing.