Good advice guys but beware gloating or knocking the competition too much. Concentrate on getting things right yourselves.
Huw

Hey Huw - thanks - actually, this is a salient reminder for all of us to keep focussed on the fundamentals...

... at the end of the day, only good deals will keep us going...

Cheers
Neil

I'm stunned Neil.

You did 3 deals with the same developer and in the same 'Holiday spot' as Inside Track recent deals, they may have copied you, infact I think alot of us know who and why, but the truth is that you have not been so perfect. You are quite right that you warned about the holiday and retiree market and the difference to other CEE markets and you did quickly follow the deals with these warnings, but it didn't stop you doing them.

You keep saying that you should be judged by your performance but you haven't been doing these deals for long enough yet for people to see how they perform. The figures you quote on these deals are mostly only on paper, the earlier deals are only just hitting the market and a surprising number of people have found that they are not quite realising the gains and returns that you quoted. You may even have forgotton your that awful early deal in Bristol, I haven't.

I feel for anyone who got taken in by Inside Track and may be suffering from negative equity, I take no pleasure in this and don't think it helps to start telling people that they are not 'serious investors' as though you think you have some sort of elite club going here. There are alot of serious investors who don't actually need any other organisation to find their property for them because they are pretty good at it themselves. I think you should drop the arrogance as I don't think it does you any favours.

Jo

Yep Jo - the Cyprus beach investments did not cover us in glory.

I recalled being patched into a phone call when one of our (experienced) Cyprus investors was talking to Richard (our then deal broker) about how excited he was about Cyprus. He told me he'd just met with a local lawyer and been told of all the exciting plans for marina's, golf courses etc...

He was so excited that he'd just bought a bunch of villas! On the basis of this call, I let another Cyprus beach deal go ahead.

With hindsight I recognise that his was a bad call and I should have stood my ground.

The thing was, we had investors who wanted this type of property, we had a deal broker who wanted to run this deal and had good (unpublishable) evidence that this was a good investment.

Still, as you know, we have retrospectively put in place a completion service and are now finalising a re-sale service for Cyprus. As and when these re-sales take place we will be able to see the real value/ return created. We know some investors have managed to exit and to exit with a profit, so things could have been considerably worse (as they have for many other investors in other clubs).

I know we have debated and written about property valuations - but currently (on pre-completion deals) we have a least 3 different and conflicting ways to measure valuations.

You are also right that until we are further down the line our 'estiamted' valuations of property prices will not become harded up.

We are doing more work on valuations - and have plans for a fuller more analytical report shortly - but please don't ask me to commit to dates - because I don't want us to rush the data this time.

Part of the reason for wanting to provide a re-sale service in Cyprus and other countries is so that we can really see what the units have sold for and what the returns are.

It is worth noting that this issue around valuations doesn't just affect us. It is, actually, the root cause for the current banking crisis. That is, bonds issued on the basis of assets (houses) assume that the value of those houses is stable. But as an investor knows the value of a house varies from month to month (May high, November low) and according to how many houses are currently on sale (lots - and prices soften, few and they harded) and how quickly you want to sell.

Therefore, it might be wise for all property valuations to be +/- 20% - as this is the margin between a distressed seller (I have to sell now and in November) vs a non-distressed seller - I'll sell when I have found the right buyer.

Equally, we have invested heavily into the tremendously difficult business of property management to ensure that we can offer rental as well as re-sale exits - as this is a cornerstone of any successful investment. We're not where we want to be with this business - but we're surely a long way further forward than anyone else in the market.

The other great challenge with the property game is that most people are on a commission of one sort of another. Therefore, all advice is biased and at the heat of the moment people's behaviour is largely driven by greed (not all - but many) - this includes lawyers, developers and yes, some of our own clients.

This is, again, no different from any other 'investment' business.

We have had vociferous investors demanding that we publish our 'results' - and to do so as quickly as possible. They then took these results to their creditors to ask for more loans.

I recall that most of last year we have investors insisting that we do more deals in the UK. In the Autumn we relented - did what looked like one good deal - but then pulled two other deals we were looking at once it was clear what was happening in the UK market.

To be honest Jo, I don't think I could ever have imagined how difficult running a company like Property Secrets could be. We are constantly hit by demands and opinions that are in conflict and driven by fear and greed. Unpicking the truth from fiction is a very tough job.

And I do believe that the vast majority of the Property Secrets team are dedicated people who really do believe in delivering the best possible service and the best possible results.

I recall only recently that you were taking me to task on this forum for my view on the UK propety market and you were getting quite heated (so it appeared at least) that I had shifted my position on the UK market.

Shortly afterwards I found myself at the wrong end of a panel on the UK when I said that the UK property market would go nowhere for 3 years - and this is the very point you took me to task on.

To tell you the truth, it isn't much fun being painted as the only neg-head around and I note that not many people give you credit when it is due - even if you have messed up on the way. Still, I agree, I feel sorry for the Insider Trackers, but yes, I do all also feel that the answers were out there all along, if only they were willing to look for them.

You call us arrogant - which is fair enough, you are welcome to your opinion. It is not our intention to come across this way, but many great people and organisations have been called arrogant before being revered for being ground breaking.

I believe this is especially true of people and organisations who believe in doing things differently. It is extremely hard to do things differently - and to clearly get that message across - without also appearing conceited or arrogant.

It is not our intention to be arrogant - appologies if it comes across that way.

I still believe that Property Secrets embodies values - not perfectly - but values nevertheless, that set it apart.

We need to use this change in the market to see how we can do what we do better. That is why I think you are right to say we didn't do our best on the Cyprus holiday front and I accept that criticism. Nevertheless, our deals were still considerably better than most other holiday property investments.

The Inside Track story is both an opportunity and a threat. We need to have confidence in what we do here in Property Secrets, and we need to do it better.

I still believe we were right to publish the story and give our opinion on it, tho'.

Cheers
Neil

Hi Jo (and others)

Following the debate around the Inside Track article - let me ask you - to honestly (and fairly) say how you think Property Secrets could learn from the demise of Inside Track?

Please - I'm not asking for flamming material here (or for people to use this as an opportunity to repeat old debates) - but we are very open to hearing constructive criticism?

Anyone?

cheers
Neil

Phew, that really was cards on the table Neil - you'll be Prime Minister before we know it!

There is an awful lot in your post which you have taken alot of time and trouble to think about so I would like to thank you for what I believe is an honest and well thought out response.

I haven't gone in for criticism of PS as much as you may feel - where credit is due I have given it, but where I believe you have failed me I have been as honest as possible without unnecessary or unfair criticism. If it wasn't for your books and newsletters I wouldn't have got into Buy to Let, I would have gone on with Property Development - what I have always known and although lucrative was wearing me out (and is once again!).

I hope my posts were clear - I had moved on from the issues of snagging, completion and contractual disputes. I believe that the investors in Cyprus need your marketing skills to help sell or rent their apartments due to lack of a Professional approach out there and lack of completion certificate and deeds. I was contacted 'off forum' by over 2/3 of the owners who welcomed some sort of package being put together and some pressure from yourselves for the Local Authority Completion Certificate. I still haven't seen anything on this and noone to date has answered my constant questions regarding the Completion Certificate and Deeds.

I do worry that if/when we get presented with this package it will just mean paying out more money before results - I hope that you at least work something out where payment is only made on results as noone will take it up for sure after all the paying out we've done already.

When I took you to task on the UK market it was because of the fundamentals of Buy to Let as explained in your early literature - they will always be there as long as people need to rent or buy houses so I can't see why anything has changed. Investing in offplan, newbuild doesn't do it for me, so even in the UK I doubt if I would sign up to such a deal, but that's just me.

I don't want to sound critical, most of what I post is intended to be proactive (or provocative?!) but I keep reading posts from PS representatives saying you are 'looking into this' or 'investigating that' or 'trying to improve' but for me and my investment - and the others in Cyprus we don't see results as here we are a year later and the very same issues are being raised again by others on the latest deals.

I know it's tough running a company Neil, especially with this forum and I was not a fan of Inside Track, but we all learn from mistakes don't we? and none of us are perfect, so if you wanted to take an opportunity from this it would have been more helpful to try and attract some of the 'fallout' rather than insult their intelligence. I found your post insulted my intelligence as I invested in a 'holiday' destination but as it was one of your deals it was like a red rag to a bull I'm afraid.

It is difficult to see how you can get everything right, noone can in my view (even Richard!!!) but the one thing I have stressed before is that you could get feedback on sales and rents achieved directly from your clients rather than your partners. I get bombarded with emails from you in my inbox, launching deals or selling publications so how much effort would it be to send Clients an email now and again to ask what Sale or rent they have achieved from their investment? I'm sure alot of people would oblige as long as you only used it for statistical purposes and didn't actually publish their personal annual income on the board! If you haven't got sufficient results yet then maybe it's too soon to be publishing data which leaves you open to criticism from clients who are struggling to achieve any return.

Jo

My "Lessons" from Inside Track and similar ( not all apply to them I should add!):-

1. Property is an investment but estate agents are not investment advisers even though they sell property as an "investment"
2. Their advice is biased since they work on commission basis
3. Always have a valuation on off plan purchase prior to exchange and make sure the valuer uses existing stock as comparator - not other offplans which may also be overvalued.
4. NEVER, NEVER believe the rental yield that agents say you can achieve. Have 3 LOCAL rental agents provide rental estimates.
5. Ignore rental guaranatees - they are there to confuse the economics
6. Establish what % of properties in an area are going to investors rather than people who are buying to live there. If it is > 50% then you should worry! Are local investors buying in the development - if not then WORRY!
7. Obtain an in principal mortgage before exchange even if completion is a long way off. Finance may be a lot more difficult than the agent implies ( especially now)
8. Do not buy in holiday destinations unless you plan to live in the property for several months each year.
9. If buying City Centre compare it with flats 2 or 3 miles out. If it > 50% more expensive ask yourself if this differential is sustainable
10. Make sure that your contract ensure that all infrastructure is in place before you have to complete and that all deeds etc are provided
11. NEVER pay more than 30% before completion. Too much (potential) incentive for the builder to leave the property half built and run off with whatever is left in his bank.
12. Track record and size of builder - the smaller then the riskier (obvious but worth mentioning)

Good advice Bulbasaurus and pertinent comments as ever Savvy. I too was somewhat irritated by the holiday property comment as another investor in a failed Cyprus property.

I just wanted to add that it's impossible to generalise, even about holiday locations. As in any property investment there are good and bad and there are some niches which can be very profitable. I've had better luck with other "holiday" investments than in Cyprus elsewhere thankfully.

For example, a couple of years ago I bought a "chateau" (really the main house in the village) in France as I saw a niche for that type of property. Family groups and groups of friends like to holiday together and there's a demand for "special" place to hold birthday or anniversary celebrations etc. And it's worked. Capital value has increased following refurb and it's now booked 25 plus weeks of the year so it's profitable (see www.chateaudelaplace.com - Neil hope you don't mind a bit of personal advertising!)

The other "holiday" investment I made which I think will turn out to be the best of all my investments is land in St Kitts. I have land with permission for 11 villas on a hill overlooking the caribbean. But the really important factors are a government push for high end tourism, having closed the sugar plants, leading to a new high end marina, golf course, Auberge Resort and Mandarin Oriental being built adjacent to the land within 3 years (http: / /www .christopheharbour .com /vision .shtml)

So my point is pick the right place at the right time and with a bit of luck it can work out, whatever it is.
Huw

Hi Jo

Thanks for you comments.

I agree about asking our members for their property sale values and rents achieved.

We have to remember though, that many members may also have an incentive to over-value (if they are trying to sell, for instance) too.

We do have a rental agency project - via i-propertyassets - and our belief is that this will form the basis of this information.

The trick is to gather this information in a structured and valid way - which off-sets the risk of ramping. Clearly, getting sight of the legal sale documents would confirm the price - and in fact, this is principally what a local valuer will do by visiting the local property registry.

Still - it is absolutely a valid measure though - or at least as valid as any other.

Cheers
Neil

Great tips Bulbasaurus

But like Huw says the exceptions prove the rule.

For instance - smaller developer are more risky? Well, we've been looking at a Fadesa deal (huge Spanish developer) with a big exposure to Spain - and therefore significant risk - certainly much greater risk/ complexity in understanding the risk than a small local developer.

Also, your >50% rule will apply to UK cities - but not to post communist ones - like Sofia for instance - or even Moscow. In these cities the suburbs are developing first and therefore have far higher prices than in the centre. The centre's often also include a lot of derilict ex-industrial land which prevent the centre from growing in value. So, the advice is good - but curiously, the opposite applies to many post communist cities.

Cheers
Neil