Managing personal wealth in a growing risk market is a challenge for all real estate investors. Thus, those who have chosen residential real estate as their arsenal to accumulate wealth and multiply their income streams are aware that the UK residential property market is perhaps the last place to put their money. For a few, clearly, the writing is on the wall. For the astute, overseas emerging markets are enormously appealling.
If you have read the papers this weekend, you would have noticed that inflation has jumped to 3.5%. Thus, anyone who would have put their hard earn money into an ISA, a Savings Account or Residential Property, would need to generate at least 4.5% yield before they can be in the positive. Are residential property producing a rental yield above 4.5% in the U.K.? Only if you had put down a deposit of say 30%-35%.
The Robin Tax is on the agenda of all policy makers and weary investment bankers. However, like all taxes, they all come back to bite the consumers and average investors in the you know what. And this is just the start of a wrath of taxes to come after the election to recoup the bailout money. With regards to residential property, owners are already liable to pay rental income tax, capital gains tax, council tax, (sometimes, inheritance tax) plus cover all the silly little costs, such as Gas Certificate Registration, Energy Efficientcy Tax, Building Insurance, Repairs cost and more. Does any investor out there still consider this an asset?
In the words of the Rich Dad, Poor Dad author, Robert Kiyosaki, your home is a liability. A liability is any item that takes money out of your pocket".
I believe that many investors coming into the market today have missed the boat and will struggle to make money from investing in reisdential real estate in the U.K.
Ponder on the above for a moment...
Sunday, 21 February 2010
Friday, 12 February 2010
Cinemas: An asset that is reinventing itself.
This is the decade of 3D and cinemas are spear heading the revolution in the way in which we watch movies, sports, cartoons and so on. 3D viewing are popping up everywhere (on home TV, in pubs etc) yet the cinema seems to be the ideal place to broadcast 3D content to a large audience simultaneously.
What's more, advertisers have gone wild, as they all want to be associated with something mind blowing and absolutely phenomenal that creates a buzz and pull in huge crowds: Mass marketing. In this month, phone giant O2 paid out 100 of thousands to broadcast 2 of England's Rugby games across 40 cinemas in the UK for games in February 2010. Now, that is what you call printing money or creating cash flow, if you are a cinema owner.
For those looking for serious positive cash flow and want to jump ahead of the pact, let me share a tip with you. 3 Dimensional viewing makes it almost impossible for pirates to copy films. That means more bums back in the cinema than buying cheap DVDs. Further, most home viewers or households will take a couple of years before they upgrade their TV to 3D, which means that the early birds will rake in the most cash flow. Currently, there are approximately 30 million households in the U.K. Of which only 2 million have HD viewing, so you can roughly calculate how long it will take them all to upgrade to 3D. Most cinemas nowadays are switching to 3D screens quickly to capitalise on this new found gold rush. Avata, a recent 3D release in cinemas holds the record for the highest cinema ticket sales in the world.
So, are cinema assets succeeding in reinventing itself?
Watch this space. In fact, invest in this space.
What's more, advertisers have gone wild, as they all want to be associated with something mind blowing and absolutely phenomenal that creates a buzz and pull in huge crowds: Mass marketing. In this month, phone giant O2 paid out 100 of thousands to broadcast 2 of England's Rugby games across 40 cinemas in the UK for games in February 2010. Now, that is what you call printing money or creating cash flow, if you are a cinema owner.
For those looking for serious positive cash flow and want to jump ahead of the pact, let me share a tip with you. 3 Dimensional viewing makes it almost impossible for pirates to copy films. That means more bums back in the cinema than buying cheap DVDs. Further, most home viewers or households will take a couple of years before they upgrade their TV to 3D, which means that the early birds will rake in the most cash flow. Currently, there are approximately 30 million households in the U.K. Of which only 2 million have HD viewing, so you can roughly calculate how long it will take them all to upgrade to 3D. Most cinemas nowadays are switching to 3D screens quickly to capitalise on this new found gold rush. Avata, a recent 3D release in cinemas holds the record for the highest cinema ticket sales in the world.
So, are cinema assets succeeding in reinventing itself?
Watch this space. In fact, invest in this space.
Monday, 1 February 2010
Risk: To take or not to take is the million pound question!
Human beings behave in very strange and contradictory ways. For example, in the context of investing, most investors’ mindset, behavioural patterns or decision making abilities are influenced by two opposite poles, either: Greed or Fear.
This observation is precisely the point I want to debate on. Weirdly, in today's market, consumers and investors appetite for risk is almost non-existent. Risk aversion among investors has become the flavour of the year. Over the past 18 months investors’ reluctance to invest is somewhat equivalent to their greed before the credit crunch. So, why tighten up on risk management now? Why lock the barn doors after the horse has already bolted? Even portfolio managers and banks have been employing stringent risk control strategies after the damage have already been done. Would we see is difference in 2010?
Well, most investment decisions today are made on the basis of fear. Humans have a tendency to go into fear mode when uncertainty rears it ugly head. But this makes no sense to me, as the fear of the unknown, unknown has already passed. Now is the opportune time to be greedy. Instead of looking for a bargain with more certainty, but possibly lower, expected payoff than an uncertain bargain that comes with uncertainty yet offer the prospect of significantly high payoff, investors are choosing the latter. Not many are prepared to take a gamble or follow a hunch.
Conversely, everyone, particularly the banks are all being tight when, now, they should actually be greedy. What an odd way to respond? Who in their right mind (not emotions) should be averse to taking risk now, when the market is packed with lucrative opportunities and superb bargains? Sadly, nowadays, only a few are prepared to go out there, lasso the horse and bring it back to the barn.
Which side of the pole do you want to be? This is the million pound question.
This observation is precisely the point I want to debate on. Weirdly, in today's market, consumers and investors appetite for risk is almost non-existent. Risk aversion among investors has become the flavour of the year. Over the past 18 months investors’ reluctance to invest is somewhat equivalent to their greed before the credit crunch. So, why tighten up on risk management now? Why lock the barn doors after the horse has already bolted? Even portfolio managers and banks have been employing stringent risk control strategies after the damage have already been done. Would we see is difference in 2010?
Well, most investment decisions today are made on the basis of fear. Humans have a tendency to go into fear mode when uncertainty rears it ugly head. But this makes no sense to me, as the fear of the unknown, unknown has already passed. Now is the opportune time to be greedy. Instead of looking for a bargain with more certainty, but possibly lower, expected payoff than an uncertain bargain that comes with uncertainty yet offer the prospect of significantly high payoff, investors are choosing the latter. Not many are prepared to take a gamble or follow a hunch.
Conversely, everyone, particularly the banks are all being tight when, now, they should actually be greedy. What an odd way to respond? Who in their right mind (not emotions) should be averse to taking risk now, when the market is packed with lucrative opportunities and superb bargains? Sadly, nowadays, only a few are prepared to go out there, lasso the horse and bring it back to the barn.
Which side of the pole do you want to be? This is the million pound question.
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