Dear Investor

Another busy week or so with a radio slot to discuss Jet-to-Let in Cyprus , the pitfalls of investing in the North and the latest hotspots. I also spent last Saturday discussing property investment with students on the Bewarethesharks.com course in London and as ever a great turnout and a good spread of experienced investors, novices and a few full-blown property and land developers. Monday evening we had a very well attended investment seminar again in London attracting another wide selection of investors.

In line with other courses we have conducted since 2003, there were investors on the course who had already invested in a couple of units and by the end of the course wished that they hadn't. Property investing is actually not that difficult to get right and armed with a strategy, economic and financial guidelines and a risk management matrix, you're off.

Cashflow negative investing, based on the "promise" of capital growth in the future is NOT the way for a novice investor to proceed. I have banged on about this for some time now and indeed there is further material in the latest Jet to Let Magazine which you will receive in the post next week. At the weekend I advised one student, as I have also done many times in the past, to walk away from a reservation fee, put it down to education and try again based on the principles we teach.

I argued a few weeks ago that "investor" led markets can attribute some of the headline capital gains to developers raising prices, because they can, as more and more investors are attracted by glitzy and in some cases misleading sales hype. Spurious reasons to invest are becoming increasingly elaborate.

In the next edition of the magazine, I outline a simple checklist to use when analysing investment appraisals (sales brochures with numbers) and the tricks that are used to make a potential investment stack up, when in reality if the correct figures were used the sales company wouldn't sell too many.

Forget developer led price increases when appraising how well your investments have done -

Reality check:

Your profit is what you can sell for in the re-sale market, after ALL costs (including voids) and taxes

Some people kid themselves because it makes them feel good. Live in the real world, not fantasyland.

A real world example from yesterday's Liverpool Daily Post, which highlights something I wrote about a few weeks ago.

I stated that House Prices to Earnings where critical when assessing the viability of a property market, because as investors withdraw, there needs to be sufficient "locals" to buy and rent the investment properties. Whether investing in the investor driven markets of Eastern Europe or UK city centres, the principle is exactly the same.

Liverpool has recently had in excess of £1bn invested to regenerate the city centre and create jobs. It has special events such as the Capital of Culture 2008 and has seen net migration for the first time in decades.

With very high levels of investment, even a special event, why all the empty apartments?

Because the wrong types of jobs are being created.

If you are investing in apartments targeted (by price) to professionals, then professional jobs need to be created - car factories, football tournaments, Capital of Culture and Retail Parks are irrelevant. Wages and salaries are too low for people to buy or rent relatively expensive apartments.

Again common sense must prevail and I reproduce an extract of the article here which whether you are buying in Liverpool, Manchester or Leeds, or Bucharest , Dubai or Bulgaria may be worth considering when you look at risk:

35% of city centre flats are empty

UP TO 35% of Liverpool's new city centre apartments are lying empty, as an already flooded property market struggles to attract buyers, housing market experts claimed last night.

Analysts, MPs and councillors said they feared the city centre could become a "ghost town" of empty flats.

With so many apartments already lying vacant, they called on the city council to review its planning policy urgently and stop more apartment developments going ahead before the city centre became a "wasteland of surplus developments".

It is estimated that 4,756 apartments are to come onto the city centre market in the next 12 months, and a further 3,653 apartments are in the system awaiting planning approval.

Developers embracing this trend have been able to increase the average off-plan cost of a one bedroom flat by £240 per sq ft while the cost of the same apartment completed has fallen by £230 per sq ft.

Steven Beilin, managing director of one of Liverpool 's largest estate agents, BE Property Services, said this problem was becoming increasingly obvious, as fully sold apartment blocks have hardly any lights on in the evening.

He said: "There are around 27,000 new-build apartments in Liverpool and around 15,000 of these are not occupied. There are more and more being built and I estimate that we are going to end up with around 25,000 unoccupied flats in the city centre.

"By giving everybody the right to build, they are flooding the market with one and two bedroomed apartments and there is simply no demand for them.

"These apartments are being purchased by investors - often from the south or from overseas - who never have any intention of living in them.

"But the surplus has reached a level now where even these investors are losing out. For example, The Reach development, in Leeds Street . The flats were sold off-plan in 2004 but when they were ready two years later in 2006 investors had lost around 12%.

"Those investors have ended up in a position where the rent their apartment can generate is not enough to cover their mortgage repayment.

He said: " Liverpool was similar to other major cities with around 30% of new build apartments being sold but without tenants going in to them.

"A report by Liverpool's New Heartland's pathfinder project showed that speculators from as far away as Spain were buying these apartments.

"These councils must realise that these are the wrong types of property to be flooding the city with.

"There is no demand. If these properties are left empty there will be no sustainable community to feed local shopkeepers and the local infrastructure in general."

Source: Liverpool Daily Post

Poland's central bank raises rates by 0.25%

Poland's central bank raised interest rates by a quarter of a percentage point Wednesday, its first increase in nearly three years as high economic growth fuels wage pressure.

The National Bank of Poland said it was raising the bank's benchmark seven-day intervention rate to 4.25 percent from an all-time low of 4 percent.

The bank said in a statement that "domestic demand will continue to grow at a fast pace in the next few quarters, most likely exceeding the growth rate of potential gross domestic product, and thus fostering a gradual increase in wage and inflation pressure."

Comment : We will see more rate rises as wage pressure, fuelled by a shortage of labour which is exacerbated by migration, and domestic demand growing in excess of GDP (growth), feeds through to higher prices. The strengthening Zloty will require investors to have a sound currency strategy.

FREE Jet-to-Let investment seminar focusing on Cyprus Thursday 3rd May - Liverpool Wednesday 16th May - Bahrain Dominic Farrell will discuss investing overseas in general and investing in Cyprus specifically at this FREE 2 hour seminar in Liverpool and Bahrain next month. He will look at the wider influences which investors should consider and examine some up-and-coming investment opportunities. These events are always full and entry is by ticket only. We operate a first-come-first-served system and tickets are limited to two per applicant. To apply, please call us free on 08000 277 336 or fill in the form at http://www.jet-to-let-magazine.com/events.html