15 months ago the property market was a different place.

Whilst the Northern Rock fiasco had rocked the financial sector and sowed the seeds of doubt over cross-collaterization loans and sub-prime mortgage swaps; the main buy-to-let lenders were still happy lending on good solid property deals. That coupled with general optimism in the market that we could ride out the crisis and get back to a solid footing meant that some investors were taking greater risks than perhaps was necessary when considering a long-term strategic investment plan.

Around this time, I had about £0.85 million pounds worth of deals that were sewn up that would have yielded in excess of £1,500 cashflow per month after all costs. Then rumours started to circulate; the banks were finding it tough, they didn’t have the money to lend, they needed to tighten criteria to only lend to “responsible” borrowers (although who knows what a bank terms a “responsible borrower” given their past exhuberence in lending to every man and his dog) and to add fuel to the fire, surveyors were being warned about over-valuing property as it may come back to bite them.

Sadly, one by one by one, the deals started to fold. One was an administrative error by my broker which ended in the offer being withdrawn; one was a solicitor misunderstanding the terms of the deal; one was a surveyor who refused to increase his rental figures despite AST proof and being 25 miles out of area. It was painful, it was costly and the opportunity cost probably runs into tens of thousands if not hundreds of thousands in the long-term.

One did complete based on a refurbishment model which actually was ready within 6 weeks but by that time, the market had completely changed again.

Mortgage Express had ceased all instant remortgages; most lenders now asked for 6 months minimum before remortgage (even if you had added thousands in value by refurbishing a property), lenders now wanted to fine-toothcomb applications and surveys to make sure they were not being exposed, surveyors were automatically down-valuing 10%, available mortgage products dropped by 50%, mortgage brokers didn’t know WHAT was going on; new “no money down” schemes were popping up everywhere; the list went on and on and on.

So, what does this mean for you and me 15 months on?

1) No money down is dead (see July’s YPN article)

2) Lenders want to lend to borrowers who can prove income and deposit

3) LTV’s are down to 70% on average with discounts averaging through now at 25%-30%

4) The amateur investors have left the market

5) Development and refurbishment finance is practically non-existent but with significant conditions attached

6) Lenders are still charging around 6% interest in real terms with arrangement fees and exit penalties increasing significantly

7) Cash is being held within the banking system but not released to the general market

8) Surveyors are routinely down-valuing any private sales by 10-2%

9) The latest craze is buying houses for a £1 but you’re not buying, you’re “controlling” and it only works on some deals

10) Everyone is jittery and nobody really knows what is going to happen

Now that we’ve tackled these issues and got them out in the open, then what can we do to carry on growing our businesses?

There is only one way – and that’s to change our mindset + look elsewhere.

This is what I started doing back in January of this year. I was fed up of the constant battle to get deals through, valuations to stack and lenders who treated me like a second-class citizen. I knew there must be a better way but where was it and how did I find it?

The answer dropped into my lap one day from a contact of mine who had properties for sale in Michigan in the U.S.A. On paper, the deals seemed too good to be true with $50,000 houses renting for $800+ per month. I knew I had to get out there and do some due diligence.

Several trips later, several thousand pounds of research invested and with a much better understanding of the USA market, I drew several conclusions that I want to share with you.

1) There are lenders who wish to lend to non-US nationals rather than Americans

2) Self-certification is still possible

3) Deposit and closing costs can generally be covered through a variety of methods

4) There are thousands of deals for the taking

5) Cashflow is between $100 to $200 per month from off-the-shelf packages

6) There are certain tax and occupancy benefits to owning through a US corporation

7) The US market is about 2 years ahead of where we are today in the UK – both from a property fall-out and a lending-freeze perspective

8) Tenant laws are far stricter in the US which allows for fewer voids and damage

9) It is far easier for a UK national to buy in the USA than it is over here – bizarre!

10) It is possible to extract some cash on some deals and get all of your costs covered in year 1

So for now, I’ve refocused my energies and time on purchasing properties within the US. Despite the distance, it’s no different to me than the properties I own in Yorkshire which are a 300 mile trip from my house. I haven’t visited them in years and the letting agents manage any issues for me.

It’s a curious thing property investing but I would recommend that you take a look at your current strategy and ask yourself truthfully; are you doing as well as you’d like to – and is there another way?

I did this 7 months ago and decided that the better way was to carry on investing in cashflow positive properties where I could attain finance with lenders who wanted to work with me.

Due to the buying power our group now has in the USA, we are able to offer ready-made portfolios of 5 units for £3,000 and a $million-dollar value portfolio for just £7,500 with all costs covered in year one and a cashback bonus. For more details and to register your interest, go to www.stanfordknight.com/usadeal.html.