* Do your research

Before you commit to using the first company you find that offers packaged property deals, do your research. Search the Internet, check websites, ask for recommendations amongst other property investors and read the small print.

* Do the maths

One of the key benefits of buying a packaged property deal is that you’ll save money. Before you commit to a deal, do the maths and check the figures really do add up. If there doesn’t seem to be much of a saving, or discount, then you may want to look elsewhere.

* Speak to the company

Your instinct and gut feelings are often really useful for determining whether a company is legitimate or not and offering deals that really are good, but you can back this up by phoning up and speaking to them. If a company doesn’t have a number for you to call, tries to fob you off, or doesn’t seem happy to answer your queries, then alarm bells may ring.

* Be wary of paying the full fee upfront

Check what fees the company are asking for and be wary if they expect you to pay the whole fee upfront. It’s very acceptable to pay a sourcing fee, which may include legal and purchase costs, but paying a large, full fee upfront is risky.  To this end, HBF Investments now offer a reduced £3K upfron fee versus the usual £5995 fee  -please call for further details

* See the property before you buy

Whilst it’s possible to buy packaged properties without ever seeing them first, when it’s your first time buying this way, or first time using a company, it can help put your mind at rest to see the property before you part with your hard earned cash.

If there’s no option to do this, and the company are reluctant to let you view the property, then you may want to think again.

* Be clear about the terms and conditions

A good company will clearly present their terms and conditions, so make sure you read them and take them in. To be fully keyed up, it helps to know exactly what your obligations are and what will happen if for any reason the deal doesn’t go through.

The pros of investing with friends or family

* Being able to buy a better property than you could afford on your own. And hopefully making a good profit on it if you decide to sell!
* The extra financial support is good, but it’s also useful to be able to share other expertise too. For example, one of you might have good investing knowledge, whilst the other might have experience with letting properties.
* For first-time property investors, it can be beneficial to be able to share the responsibility, especially with big decisions.
* When things are tough, or you’re having a difficult period with letting the property, it’s good to have someone in the know to talk things through with and brainstorm new ideas with.
* It can help to able to be able to split the tasks between you, rather than one person having to do everything.

The cons of investing with friends or family

* Business doesn’t always mix well with friendship or families. It may put an extra strain on your relationship to enter into a business arrangement together.
* Any emotional attachments you have with the other investor can affect your business judgement.
* If they don’t have exactly the same property investing objectives as you from the outset, things could get tricky further down the line.
* Difficulties can occur when one investor wants to sell a property and the other doesn’t (and can’t afford to buy them out).
* Tension can be created if one partner owns a greater share than the other.
* If the other person defaults on payments, or suddenly pulls out of the deal, you’re left in the lurch.
* If anything goes wrong, or the property investing venture doesn’t work out, then you could end up losing a friend as well as a business.

Going into a business partnership like property investing, with a friend or family member, isn’t a decision to be taking lightly. You need to be clear from the outset as to what is expected from each of you, what your views are on managing the property and on long-term expectations. For some people, it can work well; for others, it’s disastrous.

What do you think? Would you go into business and buy a property with a friend or relation?

Some £50 billion out of £280 million of loans arranged in the markets during the 2004 to 2007 boom are now worth more than the underlying properties, according to property consultants Savills.

‘My guess is that at least 75% of all loans are in breach of at least the LTV (loan to value) covenant,’ warned William Newsom, head of valuation at Savills UK.

He added that around half of existing lenders also plan to decrease their loans to the sector this year so foreclosing on the debts of property owners may not be an option because the lack of financing makes it difficult to find new buyers. Banks are also reluctant to sell into a falling market.

As an alternative to calling in the debt, most lenders are extending repayment periods, in some cases by as much as eight years, while renegotiating loan terms at higher margins, Newsom said.

He believes that the next five to ten years will be about managing existing loans for the banks who are effectively the new property owners, in partnership with their borrowers.

However banks in Germany and the UK in particular are willing to lend. Of 22 banks willing to originate loans of above £10 million in value, 10 are German lenders and eight are from the UK, including Barclays, Lloyds, and HSBC. Just two German banks, DG Hyp and Eurohypo are willing to make loans of above £100 million pounds.

Mat Oakley, head of commercial property research at Savills, expects UK investment sales for the first six months of 2009 to be higher than in the second half of last year, and reckoned this signals the property market has turned the corner.

While buyers have so far concentrated on top-end buildings with long leases and strong tenants, he expects to see a new wave of risk-loving investors, keen to take advantage of the massive discounts currently available.

‘We will start to see the opportunistic deals coming in, and the best deals will be done before the herd returns in 2010, 2011,’ he said.

source – property wire