I always struggled to decide on the best investment strategy. On the one hand I had Property Secrets advising me to invest in CEE and that Eastern Europe is the next big thing with huge returns. They also advised against investing in the UK because of high prices, affordability issues, etc.

On the other hand I had professional property investors in the UK advising me to buy cash flow positive terraced houses in affordable UK areas at 20% below market value. These professional property investors have between 50-200 properties each. They also advised me against investing in Eastern Europe.

The advice could not have been further apart. In the end I have decided to follow PS advice and ignore the advice of the professional UK investors. The carrot that was dangled in front of me in Eastern Europe was just too juicy to resist. PS quoted returns of 400%-500% in several of their investment reports. I jumped in and bought several properties in CEE (all through different sourcing companies).

This is a time to reflect and ask the question “Who was right”.

I recently connected with the professional UK property investors again. They say that their cash flow has gone through the roof with the lower interest rates in the UK. When I asked them if they are worried about the fact that the market fell by 15-20% their reaction was “Not at all, we bought the properties at 20% below market value in the first place. The properties we bought over the last 2 years is now probably worth what we paid for them. Besides, these properties are treated as income generating assets. The current value is less important”. These invertors are currently buying UK properties every week. I have a UK buy to let property that is rented out for £775/month. My mortgage has just gone down from £605/month to £225/month (2.25% interest). I can just imagine what this does to your cash flow if it happens on 100 properties.

On the other hand we have the investments in CEE. Firstly, the properties seem to be worth significantly less than quoted in the PS investment reports. Secondly, the rental yields and cash flow seem to be significantly worse than quoted in the PS investment reports. Romania was tipped by PS to be the best location to invest in (next big thing). I jumped in and purchased from developers. Some investors that followed the advice of PS and/or purchased through PS seem to be really suffering now. It is an absolute blood bath in countries like Romania at the moment. Just read the discussions on PS investments in Romania to see what I mean. I personally stand to loose tens of thousands of pounds.

So I ask again “Who was right”. Maybe this is a time for PS to reflect on their advice, admit they were wrong and apologise to investors.

i think there was some good analysis underlying PS's overall view of CEE - witness the resiliance of the polish economy compared to anywhere in the EU. but their analysis of the property market was obviously flawed - e.g. underestimating growth of supply and its effect on prices, something that started to happen well before the credit crunch. PS were also guilty of underestimating the importance of cashflow, if only as security in case capital values failed to behave as predicted. i think we investors were similarly guilty on the last count. greed (for capital gain) was probably our problem. was it PS's? (nice sales commissions).

but erik has hit on a key feature for me, and one relevant for future rather than past. is PS the sort of company that is secure and long-term focussed enough to admit where it has made mistakes and show that it has learnt from them. this is something that you can see warren buffett able to do, and m&s. it will be a shame if we have to categorise PS with gordon brown, as entities unable to admit error (despite evidence) and hence less worthy of trust.

like erik, i certainly try to focus on my own mistakes, and try to learn from them. several CEE property investments in 2007 offer some generous raw material for this in my case. i'm sure i'll be investing further in property in the future, but it's not yet clear who is the right sort of professional partner to use.

This thread has raised a fundamental question that clearly needs to be addressed.

Thanks for that, Erik – we never shirk from open debate, so long as it is civil and rational.

However, we believe passionately that this question, while understandable, is ultimately flawed – and we believe we can explain why this is. But, rather than start a never-ending dialogue on the forum, we think the best course is for us to explain our current view and to answer the question raised by Erik and Dan in an article, which we will publish in the next few days. Obviously, as usual, we invite any and all discussion following publication.

Many thanks.

Hi

Please take a look at Neil Lewis' answer to this question..

http: / /www .propertysecrets .net /article /the _big _chill _as _eastern _europes _economies _struggle _was _our _investment _strategy _the _right _one /2593 .html

cheers