PPB Guide To Property Investment in 2012 V9

Guide to Property
Investment in 2012
and how you can profit in this market

By The Award-Winning Platinum Portfolio Builder

Learn why, where and how smart investors are working with professional property
experts to safeguard their future and pension provisions in 2012 and beyond

Written By Nick Carlile, Founder
A PROPERTY INVESTMENT STRATEGY
THAT ACTUALLY DELIVERS

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Platinum Portfolio Builder Telephone: 01226 732606 www.platinumportfoliobuilder.co.uk

While every attempt has been made to verify information contained in this guide, neither the author nor participants in the content assume
any responsibility for errors, omissions or accuracies. The advice given here is general educational advice and is not advice of any other
entity or business associates of the author. An individual or entity is urged to seek independent advice before taking any financial decisions
based on information in this guide. Any slights of people or organisations is unintentional; the services of a property qualified professional
should be sought by the reader for any legal, financial or tax advice.

The author specifically disclaims responsibility for any liability, loss or risk personal or otherwise which has occurred as the direct result
of the publication of this guide. Neither the author nor the publisher shall be liable for damages arising herein.

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Contents

Foreword by Philip Easter FCCA
Client and now Chairman of Platinum Portfolio Builder
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About The Author and Platinum Portfolio Builder
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Section One: Property Prices

The History of Successful Property Investment 7
What Factors Caused Property Prices to Increase up to 2007? 9
What Factors Caused Property Prices to Decrease from 2007? 13
What Happened to Property Prices in 2009? 15
What Happened to Property Prices in 2010 and 2011? 16
The Inevitable Boom and Bust of the UK Property Market 17

Section Two: Investment Strategies for 2012 and Beyond

Why Invest in Property? 22
The Five Fundamental Principles of Property Investing 29
Professional Investment Strategy: The PPB Strategy 30

Section Three: What to Do Next?

The Platinum Portfolio Builder Guide to Property Investment 41
Want to Know More about Platinum Portfolio Builder? 44

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Foreword by Philip Easter FCCA
Client and now Chairman of Platinum Portfolio Builder

Welcome to the 2012 edition of Platinum Portfolio Builders
professional Guide to Property Investing. This guide is written by
the founder, Nick Carlile, whom I first met when a colleague and
leading UK franchise lawyer made me aware of the award-winning
Platinum Portfolio Builder opportunity.

Having enjoyed a long career as a Board level Executive with Aviva plc, working with the Groups plc Board, key
shareholders and investors to optimise the value of the worldwide Group, I was looking to build a personal
portfolio of business investments and interests that I could invest in for my future and that of my family. With a
love of property and having experienced considerable personal success in my own property investments over the
years, the Platinum proposition quickly began to stand out for me, for the following reasons:

The opportunity that Platinum Portfolio Builder provides as an alternative pension provision strategy,
which compliments my existing provision

The quality and professionalism of the people in particular, the complimentary skill sets demonstrated
by Nick Carlile and the Platinum Portfolio Builder team

The passive nature of the Platinum Portfolio Builder model, which allows me to concentrate on other
interests

The opportunity to take advantage of the prime conditions in the property market now

The opportunity to deploy surplus capital in a way that is very cleverly leveraged

The ability to add a property diversification to my pension provision

This guide contains Platinum Portfolio Builders review of the recent history of the UK property market and
projections for the future, based on Nicks own experience and expertise, together with first-class independent
market analysis. It also gives you more details about the Platinum Portfolio Builder proposition, and how it is best
placed to guide you in your next property investment venture.

Enjoy the read!

Philip

Philip Easter FCCA

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About The Author
and Platinum Portfolio Builder

This essential investors guide is written by Nick Carlile, the Founder of
Platinum Portfolio Builder and an investor since the age of 19.

Says Nick, I love investing in property - for me, its the best investment I
can make. Its something I understand, its tangible and, whatever
happens, unlike many other forms of investment, property always retains
an intrinsic value.

Nick is a qualified Quantity Surveyor, who has worked in the property
construction and investment industry since the age of 16. His skills lay in
being able to identify, manage and overcome the risk of investing in large-
scale UK and international property projects and he has headed a number
of such projects alongside investing in safe, solid and sustainable housing
stock in the UK.

It is this safe and solid housing that is at the core of what Platinum Portfolio Builder does. Nick developed and
now manages the business, which is based in South Yorkshire, along with his team of expert property
professionals.

Platinum Portfolio Builder is for those who dont have either the time, skill or desire to be active in property but
who still want to create or diversify an investment portfolio. It allows passive investors to have a UK property
portfolio built and managed on their behalf by an experienced, knowledgeable team. There are also additional
joint venture opportunities, where clients can partner with Platinum Portfolio Builder on an entirely passive
basis.

The business has in-house teams of expert buyers, project managers, builders and letting agents. They buy
discounted property, using their extensive knowledge and contacts, to secure an instant profit for clients. The
properties are then let and managed for clients on an ongoing basis, until such time as they want to sell them
and cash in their profits.

Platinum Portfolio Builder only buys properties where they can achieve a minimum discount of 25% against an
independent RICS valuation. Last year, an average discount of 26% was achieved for the benefit of clients.

They work with clients who have between 75,000 and 1,000,000 to invest and can offer great returns.

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At a time when many people are unhappy with the poor returns, high fees and uncertainty associated with
traditional investments and pensions, Platinum Portfolio Builder only uses proven business models to
consistently achieve great returns and security through intelligent property investment.

Platinum Portfolio Builder works responsibly and with integrity in all areas of business, and dedicates a significant
portion of its time and profits to charitable causes, both in the UK and overseas.

We hope you find this information useful.

Kind Regards,

Nick Carlile
Founder and Managing Director

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Section One: Property Prices

If you want to be a successful investor, then it is important to understand why people have invested in property
for decades and what factors cause property prices to rise and to fall. It is also crucial that you understand why it
has been said that over 90% of peoples wealth in the world has either been made or is held in property.

Over 90% of the worlds wealth is made or held in property

The History of Successful Property Investment

People have been making money out of land and property for decades. However, this type of investment was
initially reserved for royalty and nobility, and mass home ownership in the UK only began after the Second World
War. In 1953, for example, only 32% of people in the UK owned their home, whereas today home ownership has
more than doubled, to nearly 69%. In contrast, in 1991, fewer than 6% of people lived in the private rented
sector, whereas today it is at its highest level: nearly 15%.

In the last 60 years property has helped make many people wealthy, whether they are property investors or not.
The first generation of home owners from the Second World War started to leave homes which were owned
outright to their children. These children moved into the properties, rented them out, or sold them.

Secondly, buy-to-let mortgages, introduced in 1995, have enabled people to purchase more than one property
and now there are over 1.5 million buy-to-let mortgages across the UK (source: CML). The Governments Survey
of English Housing for the period 2008/9, reported 14.6 million homes to be owner-occupied with just over three
million private renters (up from the previous year). There are estimated to be around 1.2 million landlords in the
UK at present.

Individuals that can continue to buy with confidence, irrespective of the current market cycle, need to aim to
either purchase properties at least 25% below their surveyed value that make a reasonable profit, or secure
properties that deliver a substantial, positive rental income, so the property investment is not only self-
funding, but also delivers on-going monthly profits, Sarah Walker, former presenter of the BBCs To Buy or Not
to Buy programme.

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This general growth in property wealth, coupled with rising wages and a continued shortage of the right
properties in the right locations, has led to dramatic increases in the value of property since the 1970s, as the
Real House Prices chart on this page shows. Over the past 50 years, on average, the UK market has doubled in
value around every seven or eight years.

Although many appear to be shocked at the drop in property prices in 2008, experienced property investors
knew it was coming and either stopped buying, bought at a calculated discount or purchased because there was
a further compelling reason to buy. This chart clearly shows that property prices move up and down cyclically,
just as economies do. These peaks and troughs typically occur every ten to twenty years.

The key to being a successful property investor is to invest using a proven and robust strategy that will achieve
your objectives in the right way for the market conditions. Working with experts who understand how to track
and evaluate the causes of these peaks and troughs, and understand how to make money, irrespective of what
the market is doing, will greatly enhance your chances of success.

Ask yourself if you want to be a gambler or an investor many dont know the difference. By following a
proven system you can make the transition from gambler to investor, Nick Carlile.

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What Factors Caused Property Prices to Increase up to 2007?

Up until 2000, demand for property typically fell when the average house price rose above three to three and
half times someones yearly income. For example, if the average income was 20,000 and the average house
price increased beyond 60,000 to 70,000, the demand dropped back and prices would follow, until people
could afford to buy again.

However, various factors caused house prices to continue rising over and above this average from 2000 to 2007.
These factors include:

Shortage of Properties
The UK population has been growing, year on year, especially in terms of single and small households. There are
many reasons for this, including: couples getting married later and living on their own for longer; an increase in
the number of split/divorced households; people living longer, and the inward migration of people from EU
countries, such as the influx of Polish people across the UK in 2004.

In the meantime, despite the resulting need for over 240,000 new properties to be built in the UK every year, this
target has been missed by a long way. In the last 3 years, only around 90,000 to 130,000 new homes have been
provided per annum.

The current building rate is 90,000 homes per year,
against a target of 240,000

It was in the interest of UK property developers to build only the most profitable homes, such as 1, 2 and 3
bedroom city centre flats or expensive large homes, rather than the type of housing stock that was required. A
shortage of the right properties in the right locations meant that demand for properties usually outstripped
supply, adding to the rise in property prices.

Historically Low Interest Rates
In the early 1990s, the property market correction in the UK was partly caused by a massive rise in interest rates
to as much as 16%. From 2000, interest rates have been historically low, hovering around 5-7% and making the
average mortgage payment a lot more affordable, fuelling house price growth even further.

Lending Not Based on Affordability
Historically, lenders allowed you to borrow either 2.5 times joint salaries or 3.5 times one salary to purchase a
home and really examined the affordability of the mortgage for borrowers.

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However, lenders recognised that some people had higher disposable incomes than others, despite being on the
same salary. For example, those with a household income of 50,000 and no children could afford higher
mortgage payments than those with two children to look after.

During the boom times, lenders increased the multiples, relaxed the affordability criteria and increased the
amount that they would lend. In some cases this was as much as seven times the yearly income, which meant
that people could afford to carry on paying ever-increasing prices.

Then came the self-certified mortgages, where a lender would allow you to state your income without it being
checked. Surely they knew that many people would stretch the truth, bend the rules and, in some cases, lie
about their incomes. This led to many people upsizing their property purchases due to the availability of easy
credit.

Surely the lenders knew that many people would
stretch the truth, bend the rules and, in some cases,
lie about their incomes

Although these lending practices didnt cause a house price bubble, it did take away one of the reasons that
might have stopped property prices rising so quickly. First Time Buyers, who, historically, might not have been
eligible for a higher mortgage, could now continue to afford properties, even when they were much higher than
three and a half times their income.

Gifted Deposits
As property prices rose, even with mortgages based on affordability, the inability to find a large deposit would
have stopped the market rising too quickly and prevented buyers from offering more and more for properties.
However, this didnt happen in many cases, for two key reasons:

Firstly, many parents and grandparents that had made a lot of money from their own home, lent or
gifted the money for a deposit to their children so they could carry on buying.

Secondly, developers often used gifted deposits of up to 15% to attract buyers. Although, from 2004,
the Financial Services Authority rules limited gifted deposits to 5% of the purchase price, developers still
found ways around the rules which would allow them to give more. There were cases of First Time
Buyers and novice property investors being offered up to 20% deposits and some developers even threw
in legal fees, stamp duty costs and any surveyors fees. In other words, every barrier to entry or way for
the market to naturally correct itself was removed.

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These practices helped to create a whole band of novice investors who bought overpriced properties from
developers, because they were free i.e. they didnt have to put any of their own money into the property.
Sound too good to be true?

The biggest winners of UK city centre flat developments were the developers and property investment
companies who initially made a fortune; the losers were - and are - novice investors, many of whom are in
serious financial difficulty and are only being saved by the current low interest rates, Sarah Walker, former
presenter of the BBCs To Buy or Not to Buy programme.

Irresponsible Lending
Now that they were into what appeared to be an ever-increasing property price market, lenders wanted to carry
on growing and delivering higher and higher profits. Some did this by lending on a self-certification basis, where
the buyer didnt have to prove their income; others did it by securitizing mortgages, or using a combination of
the two. This meant that, all too often, they were lending to people with low or no income and a poor financial
history who would have been rejected just a few years earlier. These are the sub-prime mortgages we hear so
much about. The lenders that took part in this activity did so because they had planned not to hold the
mortgages for long: they repackaged sub-prime mortgages and sold them on to another institution, with a
supposedly highly secure investment rating.

GMAC, the finance arm of General Motors, was a classic example of this. Between 2005 and 2007, almost anyone
could get a 95% mortgage with GMAC and, as only one in ten mortgage applications was investigated in full; it
was easy to pass their scoring system. GMAC then sold on their sub-prime mortgages to companies such as
Mortgage Express. Northern Rock thought prices would continue to rise, and nearly a third of their mortgage
book was based on 125% mortgages. It was inevitable that these companies would be hard hit when people
started to default, and it was this kind of irresponsible lending that led to the credit crunch.

We often hear at the moment that finance is tough to get. This tends to be stated by people who used to tap into
the free-flowing easy credit that the lenders offered. When you come from a culture of easy money, self-certified
mortgages, seven times earning to lending ratios and free property, its no wonder that things now seem tough.

We continue to be able to secure finance for our clients, although mortgage applications typically take a little
longer and the lenders ask more questions. This is simply good lending practice, where many of the timeless and
recently forgotten principles and rules have been reinstated. In these times, lenders will lend to good credit
scoring clients who invest into solid property investments.

In these times, lenders will lend to good credit scoring clients
who invest into solid property investments

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The Buy-to-Let Brigade
In the early 2000s, following the introduction of buy-to-let mortgages in 1995, companies started to market and
sell property education seminars and, subsequently, investments to an eager public. People living in nice homes,
in nice areas, started to be bombarded with direct mail, inviting them to a free two-hour property investment
seminar.

At the same time, there was an explosion of property TV shows like Property Ladder and Homes Under the
Hammer, and a huge growth in property investment books, magazines and weekend newspaper supplements.
All of this media exposure, combined with slick marketing, attracted people who were concerned about a lack of
pension provision and those that wanted to be a millionaire in minutes. And so the buy-to-let boom began!

Finance became easy to obtain, investment properties were offered with a supposed 15% or greater discount
and the dinner table conversation of choice was property investment. The property companies wanted to find
ways of making more and more money, so, when natural price growth started slowing, they began to artificially
inflate prices, creating a huge bubble for buy-to-let investors.

The most prolific company of this era was Inside Track. They primarily sold city centre flats to investors and, in
2004, proudly announced that they were responsible for buying over 8% of ALL new build city centre apartments
in England. These were then sold to investors who were so dazzled by the figures that they rarely did any
research of their own, not even visiting the properties or the area in which they were buying. Sadly, it was these
kinds of properties that were hardest hit by the price falls.

In many of these developments, over 90% of the flats were sold to investors. When these all came to the market
at the same time, it created massive competition from these novice investors, who all wanted to sell for quick
profit or rent to a willing tenant. Imagine 400 apartments in the same area coming onto the rental market on the
same day what would that do to the rental prices?

In many cases, novice investors bought these types of properties with the
intention of making a quick profit. While many did in the early days, in the
mid to late 2000s the prices bombed and others were left holding a
massive mortgage and still competing with many other investors.
Although this created problems for many investors, it also created
opportunities for others to buy at significantly reduced prices, as
illustrated below.

In 2007, a site of over 40 properties was being marketed (and some sold)
at highly inflated prices. This was a site of apartments and 3 bed town
houses in Yorkshire, where we buy for our clients.

2 bed flats were being marketed and sold for around 100,000
An independent surveyor valued them at 85,000
We bought 5 for our clients at a price of just 60,000
Thats a genuine discount from current market prices of over 29%

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On the same site:
3 bed town houses were being marketed and sold for around 120,000-130,000
An independent surveyor valued them at 110,000
We bought 5 for our clients at a price of just 78,000
Thats a genuine discount from current market prices of 29%

The noughties will be remembered as the decade when property investment became the get rich quick
scheme for the masses and poor investment decisions and lack of due diligence meant tens of thousands of
people lost their money, Nick Carlile.

Confidence That Property Prices Would Rise
As property prices increased rapidly, peoples confidence that they would continue to rise increased. As they
continued to buy, it became a self-fulfilling prophecy. Their confidence was the only thing driving the market up
and, as a vicious spiral emerged, it gave the final boost to creating the biggest housing price bubble we have ever
seen.

Unfortunately, you didnt need to be a genius to realise that the market would eventually crash. Fuelled by
greed, some very impressive marketing and the desperation to not miss out, many gambled (not invested) on the
market and lost!

What Factors Caused Property Prices to Decrease from 2007?

In basic terms, house prices fall when there are more sellers than buyers for a property. Its a bit more complex
than that, but it certainly isnt rocket science.

This can happen to any property at any time, irrespective of whats happening in the wider market. Indeed,
prices for one property that is in high demand can increase, while at the same time, prices for another less
popular property can fall.

In short, this is what started to happen in 2007. In some areas, the sheer volume of new property stock coming
onto the market (such as city centre flats) meant that demand was matched and then overtaken by supply. So
many developers were selling town and city centre apartments that the market became flooded and there were
simply not enough buyers for the units.

This oversupply of property further increased with the first failed introduction of the Home Information Pack
(HIP) in June 2007. Many homeowners who were thinking about selling in the next six months decided to put
their properties on the market right away to avoid paying for a HIP, leading to supply overtaking demand in the
resale property market across the UK.

Where there was still a shortage of certain types of properties, this increased supply was soaked up, but in other
areas prices started to stagnate. As people couldnt sell, they were forced to drop their asking price and reports
of the housing market slowdown started to hit the media.

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Then things really started to change. The Northern Rock crisis kicked in during August 2007 and by September it
was apparent that we were in a serious credit crunch, which meant good value mortgages started to disappear.
This, coupled with rumours of a pending house price crash, meant that the vast majority of buyers either
couldnt purchase or decided to hold off.

In the last three months of 2007, things went from bad to worse, as there was more news of doom and gloom
and a liquidity crisis emerged. Large price increases on utility bills, petrol and diesel and - for the first time in ten
years - food, put more of a squeeze on household income. As the number of potential buyers in the market
dropped further, developers were the first to feel the impact of the fall in demand. Those who wanted to buy
couldnt secure a mortgage, rising household costs had reduced affordability for many people, and buyers
confidence was low. By March 2008, developers and estate agents realised transactions had halved.

Six months later there was a backlog of properties for sale. Those happy and able to purchase did so from
motivated sellers who agreed to sell at reduced prices. These falls in transaction values were reflected in
property price reports and the media continued to broadcast the bad news, reducing buyers confidence even
more.

During August 2008, rumours started that Stamp Duty was to be suspended. Buyers held off, causing sellers to
drop their prices even further during that month. Although the eventual raising of the Stamp Duty bottom
threshold triggered some increased purchases in October, the financial crisis had hit hard, with even those who
wanted to buy struggling to raise a 20%+ deposit.

First Time Buyers and highly geared or cash poor buy-to-let investors were left high and dry with hardly any
lending products available and generally high interest rates. Prices continued to fall.

Buy when others are selling and sell when others are buying
Warren Buffett, the second richest man in the world (you would think he knows his stuff)

The quote above from Warren Buffett demonstrates what is happening now. Because almost all of the novice
investors and gamblers have disappeared from the property market, now is a great time to buy. They have been
scared off by the apparent lack of finance, uncertainty, and scaremongery in the press. It is without a doubt the
best time that I can remember to buy property and I've been buying since 1993!

The novice investors and gamblers will be back in a few years though, driving up the prices and helping to create
yet another boom that will eventually lead to the inevitable bust. This may be another 15-20 year cycle before
we are back into another property market correction, and therefore its the property that you buy now and sell in
years to come that will increase your financial security significantly.

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What Happened to Property Prices in 2009?

Many so-called property gurus especially economic forecasters predicted further falls of up to 30% in 2009.
Our forecast was much more accurate as our on the ground experience and in-depth understanding of the
statistics meant we could more or less forecast that demand and supply was starting to match, and we were
right! Buyers who had held off moving in 2008 started to realise that:

Properties previously for sale were being taken off the market

Some properties that had been for sale for a while were now selling

They could save on stamp duty if buying between 125,000 and 175,000

Property prices had fallen enough for people to be able to afford certain property types and in areas
previously out of their reach

For new build buyers, instead of having a plethora of properties to choose from, as there had been in 2008,
developers were hardly building at all. In fact, the industry only built around 90,000 units in 2009, versus in
excess of 200,000 over previous years.

Demand remained high (in comparison to 2008) for the rest of 2009 and, as supply had fallen so much and there
was more encouraging news about the economy picking up, property prices started to stagnate and even show
small rises against the previous year. Nevertheless, prices didnt rise everywhere and in areas where prices had
increased year on year, they only recovered half of the falls experienced from 2007 heights.

Novice investors and most First Time Buyers in 2009 were swayed by the media. When the media reported
prices rising, novice buyers believed the market had bottomed out, so, in fear of prices rising out of their reach
again, they starting buying and didnt negotiate as hard. This, coupled with a lack of property supply meant
finding properties below market value in the second half of 2009 was only really possible for professional
investors, Nick Carlile.

From a property investment perspective, this meant that the first half of 2009 during which very few people
were buying personal homes offered great opportunities for acquiring property below its surveyed value.
However, because the media were talking up the property market and stock was so low, sourcing properties at
low prices became very difficult. In the property industry this meant several prominent property investment
companies that promised people bargain properties went bust, as they couldnt deliver many taking peoples
hard-earned cash with them!

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What Happened to Property Prices in 2010 and 2011?

Many of the doom and gloom forecasters who were disappointed that the predicted falls didnt happen in 2009,
continued to predict that more falls would take place in 2010/2011.

With the market being so fragile and erratic, we prepared our 2011 strategy based on three different scenarios:

Scenario One: Property Prices Falling 10% or More
The properties in our portfolios are typically 2 and 3 bedroom family houses which are bought at 25% or more
below market value and rented to tenants. Whilst these properties were bought at a discount, in the short term,
capital growth is less important to us than ensuring the properties truly are assets and servicing their own debt.
Our strategy therefore was (and still is) to:

1. Create cashflow positive investments that are safe and secure

2. Purchase properties that we are confident will have grown significantly in value in five or more years

3. Utilise investment funds that could be used for other retirement planning and put this into property

Even if property prices fell by more than 10%, the properties in our group portfolio have proved such a safe
investment that there would be no need to consider selling. Negative equity is only a real issue if you are forced
to sell, so as long as a property remains profitable and is continuing to give returns as expected, the capital value
certainly in the short to medium term is not of major concern.

For us, what happened to rental prices was more important. Unfortunately, these are rarely reported by the
media but, looking at the figures across our clients portfolios, the quality of our accommodation, and our
understanding of what was happening in the rental market; we rightly predicted that rental prices for Platinum
Portfolio Builder properties would remain stable. They did, with many even rising in some areas.

Scenario Two: Property Prices Rising by 5% or More
If prices had risen in 2011, the value of our property portfolio would also have grown but, as our core investment
strategy is to generate long-term pension provision, we would have viewed any short-term capital growth as a
bonus, not a necessity. What capital growth allows us to do is recycle some or all of our invested capital by re-
mortgaging properties that we have owned for more than six months*. We would then be able to reinvest the
money in more income-generating deals.

*Following the credit crunch to prevent amateur property investors from being allowed to buy properties,
immediately re-value them, take out equity and then buy more properties, putting in little or none of their own
money the six month mortgage rule was reinforced. This is a rule to protect YOU, so, although some property
investment clubs offer work-arounds, you should be aware that the vast majority of these strategies are illegal.
We have consulted a number of top lawyers on the subject and have yet to find one who would be prepared to
defend any of these no money down deal structures.

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To be a true property investor you have to play the long game. Property
is not a get rich quick scheme its a get very rich steadily scheme
Nick Carlile Founder of Platinum Portfolio Builder

Scenario Three: Property Prices Staying the Same
Of the three scenarios moving forward we felt the most likely was that, nationally, property prices would stay the
same through 2011, unless there were more economic shocks to hit the UK or worldwide economy.

What actually happened was the media reported property prices growing for the first half of the year, when, in
reality, prices hardly rose at all in most areas. It was just that the year on year figures showed prices in 2011 to
have been up by 10% or even 20% higher compared with 2010, but that was from a very low transaction base
and still 10% behind the heights of 2008.

By the summer, though, the same surveys showed prices were on a par with the previous year. This led the
media to start reporting that the market was falling. The truth is that the growth year on year was falling, not the
current prices up to that point, they had been relatively stagnant. However, once the media starts reporting the
property market is slowing or prices are falling, there is an immediate knock-on effect and the bulk of buyers
hang back and delay offers. Motivated sellers then drop their prices, so it becomes a self-perpetuating truth!

For everyday sellers this is a tough time. As mortgage lending continues to be restricted, people who want to buy
find it tough to raise the deposit and secure an affordable mortgage, so prices have to drop to secure the few
buyers who are willing to proceed. From an investors perspective, and as history has shown to us, when the
market is in this state it is a great time to buy for the medium to long term.

As professional investors, with the addition of an extremely powerful network of investors, we are always
confident that we can make money in any market. So instead of worrying about whats happening with the
property market today, we continue to concentrate on our robust investment strategies that have been proven
to continue to work in a rising AND falling market, while providing a solid basis for future growth. This allows us
to focus on the boom that will inevitably come again.

The Inevitable Boom and Bust of the UK Property Market

Whilst we cant predict the future with 100% certainty, we can look at the previous cycles of boom and bust that
have existed for years with house prices in the UK - and I'm pleased to say that it appears this boom and bust
culture is here to stay!

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Its pleasing because it allows you to learn from the past and invest for the future. This statement comes with a
number of caveats, not least The Five Fundamental Principles of Property Investing, which are explained later in
this guide.

When we talk about boom and bust, what we actually mean is boom and correction.
The correction is often absolutely vital to bring back some order from
the stupidity that ensues throughout the periods of bust.

There are lots of reasons - including political, economic and psychological - that mean booms and busts will
continue to happen and the inevitable cycle of price rises and falls will continue. These include:

Governments Are Only Certain To Be in Power for a 4-5 Year Term
This isnt a political soapbox, but the truth is that Governments come to power for a term of 4-5 years. Yes, they
can be re-elected but the short-term nature of their current term of office determines many of their policies and
how they make their decisions. Many of the decisions that they take, particularly in the later years of their term,
are focused on winning votes and not necessarily doing the right thing for the long-term good of the country.
Take the current Government for example. They are proposing to sell off more council housing stock in a Right
To Buy scheme similar to the one that contributed massively to the property boom in the Thatcher years.

As with everything, there are positives and negatives to this. On the positive side:

This is a vote winner for the Government as it will benefit one of the society sectors who traditionally vote

It will allow more people in the UK to become homeowners, thus increasing their overall financial security

It will kick-start the housing market on the first and second rungs of the ladder

Whilst there are rules governing when these properties can be re-sold, some will inevitably find their way
to the market in the future at affordable prices

It will improve confidence within the overall economy

It will give the Government a much-needed short-term cash injection

There are currently around 5 million people that need affordable housing in the UK. By selling off more of
its stock, the Government wont be able to provide this. This figure will surely rise through the life of this
policy, which will be a positive for the professional landlord who can provide this type of accommodation.
Platinum Portfolio Builder buys affordable housing in areas where the demand for affordable housing is
high. For example, in one of our investment towns - Barnsley in South Yorkshire - there is currently a six-
year waiting list for affordable housing through the local authority, with around 9,000 people on it.

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On the negative side:

The Government is selling off assets for short-term gain. This money is unlikely to be reinvested, rather
than being swallowed up by the huge national debts.

In the last round of Right To Buy, many people were offered their homes at discounts of up to 45%. This
cant be a good thing for the Government to be a motivated seller.

There are currently around 5 million people that need affordable housing in the UK. By selling off more of
its stock, the Government wont be able to provide this. As stated above, this is only a positive for the
professional landlord who can provide it.

The Media
The UK obsession with property ownership is driven on a daily basis by the media and their obsession with falling
and rising house prices. Steady 5% Growth in House Prices is not a headline that sells newspapers and catches
your attention on the news.

The media have to work increasingly hard for our attention and unfortunately that means more extreme
headlines. It is my belief that there is a whole section of property investors/gamblers that take their advice from
journalists about when is a good time to invest. Barring a few exceptions, the media is not a good source of
investment advice, and you should always invest with sound fundamentals in mind. You can find The Five
Fundamental Principles of Property Investing in Section Two of this guide.

The UK Obsession With Property Ownership
It is a fact that the UK is obsessed with property ownership. We are not like the Germans and other countries
that typically rent property, rather than buy it. Its engrained within us: An Englishmans home is his castle.

Almost everyone has their own examples of properties that they know have significantly grown in value over the
medium to long term. This is often their own home, their parents or some other relatives home. We all have a
subconscious seed that has been planted to make us know that, on some level, property is a safe and reliable
medium to long-term investment option. Add into the mix the constant media attention, TV programmes and
education on the subject and our property obsession is here to stay.

Greed and Fear
These are two of the most powerful reasons why people buy anything. Coupled with the media, many people
make their investment decisions based on the thought that they can either make a quick profit or that they may
lose a lot of money.

In any economy, and in all sectors, you will always have the pioneers and the followers. The pioneers are the
ones that enter a market when everyone is fearful and stick around until after the followers (or the masses) have
entered and driven prices upwards. The pioneers are the ones that many talk about after the event with phrases
like: I wish Id invested when he/she did.

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The followers push up the prices driven by their fear of missing out on what others have already gained. Whilst
the property market booms tend to last for 3-4 times longer than the busts, it is important to enter the market
when others are fearful and to leave when the masses have entered and before the inevitable bust comes again.

Boom and Bust is here to stay
I remember investing in 1993, and when I look back I sometimes wonder what would have happened if I had
known then what I know now. I would certainly have bought a lot more property and not sold any of it. Weve
now come full circle in the cycle and the same opportunities exist now as did back then.

Yes, of course prices are higher now than they were in the early 1990s, but prices in the early 1990s were higher
than they were in the previous cycle of the mid 1970s and we still went through another boom (and then bust).
And yes, of course this recession is different from the one in the early 1990s, but the recession of the early
1990s was different from the one of the mid 1970s and we still went through another boom (and then bust).

This stage of the cycle we are in now is very similar to that period and I've learned a lot more since then. We are
buying more aggressively now than we have ever done for ourselves and our Platinum Portfolio Builder clients.
With this strategy we never forget The Five Fundamental Principles of Property Investing (detailed in Section Two)
which bolster this strategy and provide safety nets to ensure that we maximise profits.

Previous Boom and Bust and the Itll Never Happen Again Brigade
After every bust there is a whole band of people that say things like, I told you it couldnt last, what goes up...
must come down and, I was right not to get involved. In my experience, these people thrive on negativity and
the fact that their own predictions were ultimately right.

Let me give you an example. There is one very well-known economist who, in almost every year of the boom
from 1993 to 2007, predicted that the property market would crash again and the ever-increasing property
prices couldnt possibly last. When the crash came, he wrote a highly self-promoting article with the theme of I
told you so. Now, of course he was right, eventually, but if he had simply stopped to look around during the 14
years of boom and invested, then he may have benefitted - as millions did - from the inevitability of the cycle.

The key to any prediction is, of course, timing, and it is my belief that we will go through a series of booms and
busts for decades to come.

At this point in time we are hearing the itll never happen again brigade chant louder than ever before.
It may help to compare the last two cycles, to see what happened in brief, and to remember that this brigade
were out in force in each of these cycles too, with their mantra of itll never happen again.

We define a cycle as a period when house prices go from the bottom of the market to the peak, and then
through a bust or correction period back to the bottom again before the next cycle starts.

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Cycle one ran from 1973 to 1992, as follows:

A boom period of 16 years of growth, from 1973 to 1989

Prices during this period went from 9,767 to 61,495 a total of a 530% gain

In simple maths this was a 33% per annum average gain

Then the bust/correction came, which ran from 1990 to 1992

Prices in this period went from 61,495 to 50,168 a total of an 18% fall

Then cycle two started and ran from 1993 to the present day, as follows:

A boom period of 14 years of growth, from 1993 to 2007

Prices in this period went from 50,168 to 183,959 a total of a 266% gain

In simple maths this was around a 19% per annum gain

Then the bust/correction came, which many believe that we are currently in

o Official figures show a price fall of around 15% - 20% in the year 2008

o Official figures also show slight gains in years 2009-2011

Its worth remembering that the itll never happen again brigade was out in force in the early 1990s, following
the crash of 1990-1992. Lets be realistic; when youve enjoyed 16 years of growth of over 500%, a correction for
3 years of around 18% is not a crash!

Whilst these people are out there chanting itll never happen again, many smart, sophisticated, well-informed
professionals are out there quietly buying at significant discounts and holding out for the medium to long term,
ready for the inevitable cycle of boom that is around the corner.

However, it is clear that at the moment there is still some uncertainty within the property market. The apparent
lack of finance and the lower number of willing buyers is stifling the market, although this is not having the
expected effect of reducing prices much further. This is because there are actually a lot fewer sellers out there at
present. One reason for this is that many are benefitting from extremely low interest rates that they have on
tracker mortgages. If they were to move, they would pay significantly higher interest rates. Also, the cost of
moving mortgages is high in terms of fees. Many people are simply resigned to the fact that they will not move
for a while. This creates opportunities for buyers to profit significantly from a major lack of competition!

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Section Two: Investment Strategies for 2012 and Beyond

Why Invest in Property?

There are various choices when it comes to making investments, such as shares/equities, commodities, bonds
and other financial products. For many, property is an easier way to invest money because you have a level of
understanding about how the process works. You can see what you are buying and, compared to other asset
classes, property is not as volatile over time. For example, although the press have reported property values
falling by up to 20% through the credit crunch, what they fail to report is that from 2000 to October 2009,
property prices rose by well over 100%. If you exclude new build properties, that figure is even higher.

So, even though prices appear to have bottomed out, if you invested in 2000 you would have effectively enjoyed
an 8-10% annualized return over the last 9 years. However, property investors who borrowed effectively would
have made even more due to the main reason that property is such a unique wealth creation vehicle leverage.

Leverage
When buying property as an investment, professionals aim to invest as little in deposit funds as possible. This is
because they understand and utilise the power of gearing, or leverage.

Since the credit crunch, a typical deposit on a buy-to-let property would equate to 25% of the purchase price.
The remaining 75% would be provided by a bank or building society by way of a mortgage. By borrowing the
remaining cash needed to purchase, you can dramatically increase the return on your initial investment
(primarily the deposit) in the long term, assuming, of course, the property grows in value.

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How Leverage Works
To illustrate the power of leverage we will assume that you have 50,000 cash.
We will use an annualized capital growth rate of just 5%:

Option 1:
Invest your 50,000 in a property without the power of leverage:

Property purchase price 50,000
After 10 years growth at 5% per annum:
Property value 81,445

Gain / profit 31,445
Amount invested 50,000
Return on investment 63% over 10 years
Return on investment 6.3% per annum

Option 2:
Invest your 50,000 and utilise the power of leverage to buy a property worth 200,000.
You would invest 50,000 of your cash, and borrow 150,000 from the bank:

Property purchase price 200,000
After 10 years growth at 5% per annum:
Property value 325,779

Gain / profit 125,779
Amount invested 50,000
Return on investment 252% over 10 years
Return on investment 25% per annum

Footnotes:
For simplicity we have excluded the costs of purchase, i.e. stamp duty, legal costs and so on.
We have shown return on investment as a simple linear calculation. To more accurately show return, an Internal
Rate of Return or IRR calculation can be adopted. We have also used a compound growth rate of 5% per annum.

In the above Option 2 example, the reason you have been able to make a significantly higher return than in
Option 1 by utilising the same amount of capital, is because you have been able to buy an asset worth four
times as much as the capital youve invested and therefore the benefit is four times greater.

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In no other investment will a bank lend you up to 75% of the capital that you need to invest. This is one of the
main reasons why its been said that 90% of the worlds wealth is made or held in property: no other asset class
allows you to borrow to invest in this way.

Whilst you have to consider the fact that you will have finance on the properties, if you remember the third
fundamental principle of property investing always ensure that the property is cashflow positive - then your
gains will be exponentially multiplied.

Leverage is one of the main reasons why property
has outperformed other asset classes over the years

Most financial investments generate some income from dividends or company profits. However, with property it
is possible to apply a specialised rental strategy that can generate a positive cashflow, far in excess of the cost of
servicing the mortgage and other expenses. In this situation, not only does the tenant pay for the costs of
running your investment, but they can help you generate great rental income profits that you benefit from every
month.

Capital Growth
As we have already discussed, property prices have grown in the past and they will continue to grow in the
future. We have already shown that capital growth, combined with leverage (or gearing) on a property, can
massively compound investment growth, but you must take a medium to long-term view five years or more.

As we stated before, everyone has their own examples of properties that they know have grown significantly in
value over the medium to long term. This is often their own home, their parents or some other relatives home.
This has planted a subconscious seed that makes us know, on some level, property is a safe and reliable medium
to long-term investment.

Forced Appreciation
In addition to reaping the benefit of leverage, it is also possible to force a propertys capital appreciation by
adding value. That might include buying a property and selling some of the land to build another, creating more
bedrooms as a loft conversion or extension or, more simply, undertaking cost-effective refurbishment.

Within Platinum Portfolio Builder we typically add
2 for every 1 spent on refurbishment

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This is how I got started back in 1993. I bought a very modest 3 bedroom terrace house for 27,500 and spent
about 4,000 refurbishing it. I then sold it for 35,000. Not a massive profit, but for someone on a wage of just
9,000 at the time, it was a good addition to my income. This also gave me more money to do the same again,
this time buying a house for 50,000, refurbishing it for around 6,000 and selling it for 65,000.

The process was repeated when we moved to another house on the street buying for 65,000, spending
around 7,000 on refurbishment and then selling for 90,000.

This process of buying cheaply, adding value and selling for a good profit is a timeless strategy that continues to
work in any market. Professional investors will always recover many times what they spend on a refurbishment
because they know how to identify properties with potential, what to do and how to do it on time and on
budget. Within Platinum Portfolio Builder we typically add 2 for every 1 spent on refurbishment.

Buying Property at a Discount
Unlike equities, where the price you buy a share for is fixed by the market at that time, properties do not have a
fixed value and can be bought below their real market value. The market value of a property is essentially
determined by what someone is willing and able to offer, and what a seller is willing and able to sell at. To
identify this value, you use an independent surveyor and find comparable evidence which shows the price similar
properties have recently sold for.

Most people in the property investment industry use the term Below Market Value (BMV) when talking about
properties theyve acquired at a discount. Platinum Portfolio Builder has coined the term Below Surveyed Value
as this is a more robust metric to use. Whereas Market Value is a subjective concept, Surveyed Value is
something specific and tangible. One surveyors valuation can still differ from anothers, but this is often the
value on which a mortgage lender will base their loan to you. We use independent RICS (Royal Institution of
Chartered Surveyors) surveyors to confirm the value of a property. This way, our partners and clients have
confidence in the discounts they are achieving, and we are always open to clients obtaining their own valuations.

Professional investors are able to source and negotiate to purchase properties at 25%+ below their market and
surveyed value. These properties arent easy to find, but as long as someone is under time pressure to sell and
this is greater than their need to maximise the price of the property, then the strategy works. Whats important
is to ensure that this is done ethically, so its a win-win for both seller and investor.

We buy many deals which are off market because we focus on a specific area and a specific type of property.
Many agents, vendors, developers, and receivers pass deals to us because they know that we can complete the
deal very quickly and that we have clients who are ready to proceed with the purchase. Our proven track record
of buying property since 1993 is also invaluable.

Tax Benefits
Property tax can be complicated. You are not taxed based on the physical property investment, but more on your
investment intentions, such as being a property developer or trader. For example, the current tax for property
investors means that anyone who is a 40% tax payer can benefit from a flat rate tax of only 28% on any capital
growth received when a buy-to-let property is sold.

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This is provided the property is acquired and run as an investment rather than as a trade. Anyone buying and
selling property straight away will be classed as a trader and will therefore be subject to income tax, or, if done
through a company, corporation tax and then dividend or income tax to get the money out of the company. If
you buy property and hold it for rental, the rental income is taxed as income tax. When you sell the property you
will then pay Capital Gains Tax at a rate of 28%.

We often make the joke that we have two rules in property:

Rule number 1: Never sell property

Rule number 2: Dont forget rule number 1

Not the best joke in the world, I know, but there is a serious point to this, which I'll explain below. Before I do, let
me say that everyone has a different strategy and reason for investing in property. This reason is unique to you
and it is critical that you are clear what this is, to ensure that you invest in the most efficient manner. Its also
worth stating that you should never let the tax tail wag the dog i.e. the tax saving defining your entire strategy.

Anyway, back to the never sell idea. Lets assume that you have a property which was bought for a total cost,
including refurbishment, of 100,000 and is now worth 180,000. Dont worry how the 80,000 profit was
generated at this stage, lets just assume that it was a good deal and you have added value through clever
refurbishment. Lets examine the two options of selling to get your profit, and refinancing to release the equity:

As you can see from the comparison above, you can often produce more cash from refinance than you can from
selling the property. There will have to be the consideration of the increased mortgage in option 2 and the
impact that this will have on the cashflow of the property. However, option 2 is often the best choice as you will
still own the asset, which should appreciate in value over the medium to long term. You should also benefit from
the cashflow generated by the property over the long term.

a Value of property 180,000 a Value of property 180,000
b Total cost of property 100,000 b Total cost of property 100,000
c Sale costs for agent @ 2% 3,600 c Total equity in the property (a-b) 80,000
d Sale costs for lawyer 1,000 d Refinance to release equity 75%
e Total profit (a-b-c-d) 75,400 i Net cash in your pocket 60,000
f Less capital gains tax allowance 10,100
g Taxable profit (e-f) 65,300
h Tax payable @ 28% (g * 28%) 18,284
i Net cash in your pocket (e-h) 57,116
Option 1
Sell the property
Option 2
Refinance the property

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Many people will tell you that the cash released in option 2 is tax free. Its not tax free, but rather tax deferred,
with the tax being deferred until you sell the property. Just imagine what happens if you never sell the property
you never pay the tax.

Within Platinum Portfolio Builder we have used a number of different tax structures and strategies to legally
minimize a property investors tax bill. From a personal perspective, we find people invest in property because
they can:

Build a business that they can run with their partner and/or children

Operate from home without having to pay for premises or staff

Generate income all year round

Be successful during a recession

Create financial freedom from a desirable lifestyle business

Enjoy working in an exciting, challenging and rewarding industry

providing the right property is bought and the rent maximized.

Over the last two decades, we have been gaining experience of property investment (both good and bad) that
has enabled us to create, develop, test and refine robust property investment strategies. We believe that what
we have developed takes best advantage of the current climate, with an eye to the medium and long term.

Understanding and Defining Key Financial Indicators (KFIs)
One of the key aspects to creating successful property investment strategies is by understanding the often
complex Key Financial Indicators.

The two most quoted KFIs are capital growth and gross rental yields, but we think it is also vital that you
understand a further one: return on investment.

Capital growth is where you purchase an asset (property) at one price, for example 200,000, and sell it at higher
price, say 364,000. The capital growth is the difference between the sold and bought price = 164,000.

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Gross rental yields can be calculated in different ways, but we calculate them as follows:

Annual Gross Rental Income
Purchase price of the property

This measure is used by many investors to analyse buy-to-let property and provides a useful guide, but not one
that we rely on when comparing investments. The reason is that it doesnt take into account the impact of
leverage, nor does it allow you to compare your investment returns over time against other property
investments that may deliver better cash and profit return. The other key missing factor is the cost of
refurbishment and acquisition, which is not typically included in the purchase price of the property.

Return on Investment (ROI) is what we consider to be the main KFI that you should use to analyse property
investments. ROI measures what returns you get from the capital you have invested into a property. In simple
terms, imagine you invest 100,000 in a bank and receive 3% annual interest (before tax). We would calculate
this as a 3% ROI, by dividing the interest earned by the capital invested: 3,000/100,000 = 3%.

With buy-to-let property, if you invest the same 100,000 in property worth 200,000, which delivers a gross
profit from rental income (i.e. rental income minus costs) of 8,000; your ROI would be 8%: 8,000/100,000

The reason you can secure this increased ROI is because you have bought an asset worth double your initial
investment. The more you can safely borrow against your capital, the more you can benefit from the powerful
effect of leveraging. This increased annual return is another reason why the power of leverage is such an
important benefit in property investment; one which is rarely available with other forms of investment.

The Safer Alternative to a Traditional Pension in our opinion
It is my firm belief that property can provide the safest medium to long-term alternative to a traditional pension.
It is with this in mind that we are currently writing our next book, entitled, Your Property Pension, which will
explain this theory in detail. The book is based on two things in which I strongly believe, and for which significant
evidence is available:

1. That the traditional pension system is fundamentally broken:
The multi-billion pound public and private pensions deficit
The pitiful state pension
Unfair pension reforms
High fees which are not linked to performance
Mis-selling
Fraud
People simply taking out more than they pay in

these are all major issues which contribute to a broken system

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2. Property has outperformed other asset classes over the years. Just buying ONE more property in your
lifetime could dramatically change your retirement provisions.

To receive your FREE copy of the book, simply go to the website
www.yourpropertypension.co.uk or contact us on 01226 732606
and we will send the book to you as soon as it is available.

Now, its unfair to say that all pensions are bad and that you
shouldnt have a traditional pension, but the rules of the game
are changing massively against your favour and are set to get
worse. With the recent announcement by Shell that they were
scrapping their final salary pension scheme, this means that
there are now NO companies in the FTSE 100 offering this type of
scheme. Further changes and reforms are certainly on the way
and I believe that it is within everyones power and obligation to
plan for their own retirement. Property is a great way to do this.

The Five Fundamental Principles of Property Investing

What many people seem to forget is that the fundamental principles never change over time thats why they
are fundamental principles! Whenever I've lost money in property its when I've forgotten or ignored these
principles. Looking back and analysing what went wrong usually reveals that I was too quick to chase a deal at the
expense of careful analysis and ignored these fundamental principles.

By definition, these principles are timeless and apply to almost every type of property deal. In the current climate
they are even more important than before and if you follow them, you should be successful.

Of course, there are other aspects to successful property investing, but these are a good place to start. Whilst
they might seem simple, they are not necessarily easy to adopt.

1. Always buy at a discount

2. Always add value

3. Ensure that the property is cashflow positive

4. Always invest for the medium to long term

5. Stack the odds in your favour

These five fundamental principles are the backbone of what Platinum Portfolio Builder does on a day to day
basis. The specific strategy of Platinum Portfolio Builder is discussed in the next section and incorporates all five
of these fundamental principles to deliver exceptional returns for our clients.

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Professional Investment Strategy: The PPB Strategy

We firmly believe that 2012 and the immediate following years will present a great opportunity to secure
properties at significantly reduced prices. We still dont know what the full impact of the Government spending
cuts will be, but the immediate impact will be to stop people from buying and encourage them to rent. If there is
a double dip, then anyone new to property investment needs to make sure that they have the knowledge, skills,
professional advisors, systems, strategies and support network in place to maximize returns and mitigate risks.

In our view, due to the constantly changing economy and property market, the days of the amateur investor are
long gone. Consequently, whilst in this next section we will explain our investment strategies as clearly as
possible, we would discourage you from trying to carry them out alone. Although the concepts are fairly easy to
understand, implementing them successfully requires a sophisticated approach and all our investments are
subject to an enormous amount of detailed research, analysis and expertise, throughout the process.

The Platinum Portfolio Builder investment strategy combines The Five Fundamental Principles of Property
Investing to create a market-leading strategy that is the best way to capitalise on the opportunities that are
currently available in todays market.

1. Always Buy at a Discount
The property investment community has been buzzing with the mantra of buying properties below market
value (BMV) for a number of years now. As weve already mentioned, we personally talk about buying property
below surveyed value and define BSV as making a purchase that is at least 25% less than the value that a Royal
Institution of Chartered Surveyors (RICS) qualified surveyor has placed on the property. For example, if a
property is on the market for 110,000, is valued by a RICS surveyor at 100,000 and you then buy it at 75,000,
we would consider that a BSV purchase.

Right now, professional investors everywhere are talking about this strategy and trying to secure properties with
these kinds of up-front discounts. Some will be successful, some wont, and we strongly suggest that you seek
professional help from those that have years of experience at buying below true market value.

The key thing to remember is that if you can buy with this level of discount, you are essentially securing equity on
a purchase, rather than the buy and hope strategy which relies solely on capital growth. If the property market
does decline further, buying with a 25% or greater discount means you are very well insulated against further
falls.

Bear in mind that buying below surveyed value is easier when the media is talking about the market falling, as
opposed to market recovery. It is also much easier to buy when others are fearful and not buying, as there is
much less competition.

The process of understanding a BSV strategy is simple enough, but it is the actual practicality of finding suitable
properties and sellers, doing accurate analysis, negotiating with the vendors and structuring appropriate
financing techniques that can be difficult to get right.

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Before you even begin to think about buying BSV, would you be happy to sell your property for 25% below its
surveyed value? Probably not! However, people sell BSV for many reasons. Many still have decent equity in the
property but cant release it due to the lack of buyers, the speed at which they want to sell and some other
factors. To give you an insight of where we secure deals from, here is a list of some recent purchases and the
reasons that we were able to secure these deals:

An inherited property where the vendors simply wanted to release their inheritance as quickly as
possible without having to deal with an estate agent.

A call from an agent who had visited a potential vendor, who had a personal reason for wanting to sell
quickly and was willing to accept a discounted price. The agent called us and a deal was done within 24
hours, prior to the property even being listed with the agent. This happens a lot because of the contacts
that we have and the proven track record within our chosen area.

A vendor wishing to step up in the market. We bought their property, which was worth 100,000, for
70,000. Although they had reduced the price of their property, they were then in a position of not
having a chain behind them and were able to negotiate hard on a property that was worth 230,000,
securing it for just 195,000. This meant that the discount they had given us was more than recovered in
their purchase. We even helped them with their purchase negotiation.

A vendor who had lost their job and couldnt afford to pay the mortgage was being chased by the lender
for missed payments. This was a win-win situation, as it stopped the vendor from being repossessed and
meant they maintained a good credit rating for the future.

A developer who had come to the end of his site and wanted to sell his units as soon as possible. We
bought 5 brand new units, which were valued at 125,000, for just 90,000 each.

A receiver that had taken possession of a complicated deal. It was complicated because the developer
had gone bust on the site prior to 3 houses being completed. The units were un-mortgageable because
they didnt have kitchens and some other work needed completing. The structural engineer was also
owed money by the developer and had not given the final structural warranty.

This meant that the units had to be bought for cash and, as a result, many other potential buyers had
been put off. We negotiated hard and secured all 3 units for a total of 112,000. With the completion
works the total cost came to 135,000 45,000 each.
With an end value of 85,000 each, the units represent one of our best deals at a superb 47% discount
well done to the Platinum Portfolio Builder team!

For people in these situations, selling to a property investor can be an ideal solution, allowing them to sell the
property and release spare equity and, in some cases, stay in their home by renting from the new landlord. This is
called sale and rent back, which is now regulated by the FSA and has specific conditions under which it can be
done.

To get BSV right, it is essential to create a win-win situation, and understand the vendors needs. Remember no
one should ever force a seller into accepting a low price. It must be their choice and when the time pressure is
greater than the money pressure, creating a win-win solution for both parties makes BSV a viable option.

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In many cases, we also offer alternative solutions to the vendors, which can include:

Selling the property with another agent. As we know the best agents in town, it is often the case that
the property could actually be sold if the agent was changed. As with every profession, not all agents are
equal and it can often be the fault of the agent that the property hasnt sold.

Debt counselling. For some vendors, the sale of their property is not the best solution and in many cases
we will refer them to our debt counsellors that we know can help. Whilst this doesnt directly benefit our
business, it often pays us back ten-fold through referrals and the outstanding reputation that we have in
our sector.

Lease options. There has been much hype around lease options in the past few years and the truth is
that they only work for a handful of vendors. They can, however, work where a vendor simply wants to
move the cost of the mortgage or finance away from themselves, but is not prepared to accept a heavily
discounted price for the property. The best example of this type of deal was The Old Post Office, which
was a deal that I did for myself back in 2009.

The Old Post Office in Barnsley had been developed and
converted into 9 studios and 1 bed apartments by a
developer, who then struggled to sell the units for the asking
price of 90,000 each (810,000 in total).
The truth is that the price was slightly high and we obtained
a RICS valuation of 75,000 each (675,000 in total). The
main reason for the lack of buyers was that mortgage
lenders had completely lost their appetite for apartment
schemes. Even though this was a conversion and not a new
build, prospective buyers struggled to get finance. The
developer did not want to rent the units, and was not too
keen to sell the units at a full discount of 25%, which would
have been 56,250 each or 506,000 for all of them, when
taken against our independent survey. The solution was for
us to meet somewhere in the middle and we agreed a lease
option for the entire development on the following terms:

An option to purchase the units for a price of 600,000, payable within 5 years
We lease the properties from the developer for rental of 32,000 per annum. The rental income is
around 40,000 per annum, so will generate a reasonable margin

Note that this is an option to purchase, not an obligation, which means that we can buy if we want to,
but dont have to. This essentially gives us a hedge against what we believe the market will do within
those 5 years. Just 2% per annum growth will give a value of 745,000 at the end of 5 years.

This is a true win-win deal because:
The vendor gets 600,000 for his property instead of our BSV offer of 506,000, albeit in 5 years
Above: The Old Post Office in Barnsley

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The vendor is released from the property and doesnt have to worry about renting it out, as this is
not his area of expertise
We make a gain on the property from rentals for a period of 5 years
We have the option to buy the property in 5 years, should we wish to, and the numbers stack up

A BSV Case Study:

John Wass wanted to invest passively in below market value properties that would supplement his existing
income and provide further pension provision. The four properties that Platinum Portfolio Builder sourced for
John were successfully renovated and let to tenants without him having to deal with the process himself. John
has already benefited from excellent equity, has now recycled almost all of his capital originally invested and the
properties are delivering positive cashflow. He is currently having his next portfolio built.

Johns first four properties are shown above.
They have a combined value of 414,000 with equity of over 111,000

2. Always Add Value
Always add value stretches further than just the practicalities of adding value to the property. It includes adding
value when you meet vendors, agents and anyone else involved in the process. The reason many clients choose
to work with Platinum Portfolio Builder is that we add value to their investments through our experience,
contacts, knowledge, buying power and wide expertise.
Value after refurbishment 95,000
Purchase price 68,000
Purchase costs 1,605
Refurbishment 810
Total cost 70,415
Instant equity 24,585
Discount 25.88%
Peartree Orchard - 2 bed mid-terraced
insert photo here
Refurbishment 347
Total cost 82,146
Discount 30.97%
Higham Common Lane - 3 bed bungalow
insert photo here
Purchase costs 700
Refurbishment 8,400
Total cost 86,100
Discount 25.13%
Wharncliffe - 2 bed semi detached
insert photo here
Refurbishment 12,178
Total cost 63,678
Discount 25.08%
Oak Street - 3 bed semi detached
insert photo here

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To look at the obvious area of adding value to a property, Platinum Portfolio Builder carries out refurbishments in
an extremely cost-effective manner. We buy materials in bulk and drive a hard bargain with material suppliers
that want our business. This does not always mean that we are driving the price down; in fact, in some instances
we add value to the refurb in other ways. An example of this would be that in recent months we have secured a
five-year parts and labour warranty on all new boilers that are installed, instead of the usual 1-2 years.

We always use a similar specification, which means we can carry out the refurbishments in record time and for
the minimum cost. A typical refurbishment for us would include the following items, costing between 8,000 and
12,000:

Rewiring
New heating system
Replastering
New joinery works
New kitchen
New bathroom
Full decoration
New floor coverings

Most people would spend almost double what we do and take twice as long. By getting the balance right
between spending just enough to get top market rent and lower voids, and not overspending, we add the most
value to any property. Every 1 that we spend typically adds between 1.50 and 2 to the value of the property.

35


Below are some examples of the before and after refurbishments we have done:

36


37


3. Ensure That the Property is Cashflow Positive
This is critical to ensure that you dont become one of the buy and hope investors. Whilst our main strategy is to
buy discounted properties to ensure that you have instant equity and a safer alternative to traditional pensions,
we also ensure that the properties which we do buy are cashflow positive.

It is also critical that you dont kid yourself when you do the numbers and that you take into account all of the
costs that are known. You should then make an allowance for voids and maintenance, which will inevitably
happen at some point.

Below is an example of a property that we purchased recently, showing the cashflow after all costs and a healthy
allowance of 10% for voids and maintenance. Remember also that this property was purchased at a discount of
26%, which secured instant equity of over 23,000 for our client.

There are some points to note about the above figures:

The rental income is a conservative figure. We will often offer our properties for slightly lower rent (maybe
3-5% less) than our competition to ensure that they are filled quickly. Coupled with the fact that our
properties are refurbished to an extremely high standard, this is almost always achievable. We can then
tease up the rent once we find a good tenant that we want to stay. Remember this: if you spend one
month finding a tenant; that equates to 8% of your rental income gone for that year, plus you will have the
costs of council tax, gas, water and electricity bills and the risk of an empty property.

The mortgage is based on a fixed-rate mortgage for a 5-year period

Lettings and management is based on an all-inclusive rate and looks like 12%. Its actually 10% plus VAT.

Insurance provides a great saving for our clients, as we insure all our properties under a single policy. The
policy is robust and is underwritten by a leading UK insurance provider.

Gas testing is an essential legal requirement and we arrange this for our clients

38


Voids allowance of 5% is a robust average across our portfolio. The quality of the properties that we buy,
the refurbishment standard, plus a waiting list of 9,000 people in the area who are waiting for affordable
housing make our overall voids figure around 3%.

Maintenance will always occur but, because we refurbish to a high standard and we secure a 5-year parts
and labour warranty on all new boilers, this is reduced. We also work with a number of builders who carry
out lots of refurbishment work and will carry out small repairs on properties without charge. Our Contracts
Manager who looks after the refurbishment and maintenance is also handy with a screwdriver!

4. Always Invest For the Medium to Long Term
This is essential, as we discussed in the section about the inevitable boom and bust. If you have observed the first
three fundamental principles, then you are in great shape to do this. The truth is that no one can predict what
will happen to the UK market in the short term.

In the event that you find yourself in need of selling quickly, then the fundamental principles of always buying at
a discount and adding value will give you some scope in your asking price to offer a discount to any incoming
buyer and allow you to sell quickly.

5. Stack the Odds in Your Favour
This is a really important point to consider at this stage what type of property will you invest into? We buy safe,
solid and reliable 2 and 3 bedroom houses, simply because they appeal to a wide choice of buyers. Whilst the list
below is a little simplistic (most of the best ideas are) and doesnt apply to every area of the UK, it has some
timeless values that you should consider.

Just compare a 3 bedroom house with a garden and dining room to a 2 bedroom apartment:

Both properties would probably appeal to First Time Buyers in equal measure

The 3 bed house would appeal to more young couples considering starting a family

The 3 bed house would appeal to more family buyers with children

The apartment would appeal to more young professional buyers who work hard and play hard

The 3 bed house would appeal to more growing families

The 3 bed house would appeal to more retiring people and those that are downsizing

As stated before, the list above is a little simplistic but the point is that you stack the odds in your favour much
more with a 3 bed house than you do with a 2 bed apartment. Often, in many areas, 3 bed houses can be bought
for the same price as apartments, especially if you go a little way out of town and city centres and into the
suburbs. In most cases, the rental yield is much higher on a house and you wont have the added costs of ground
rent and the uncertainty of service charges.

39


Other ways to stack the odds in your favour include:

The first four fundamental principles of investing will give you safety and security in your investment

Areas of significant investment. The areas in which we invest have significant inward investment and are
sandwiched between two of the Governments Local Enterprise Partnerships. These are areas that have
been designated by the Government and are designed to drive sustainable local economic growth and
create the conditions for private sector job growth in their communities.

Affordable areas. Particularly with the current economic climate this is particularly important. We buy in
an area of the UK that is sandwiched between two large cities. To the South is Sheffield and, although its
only 30 minutes away, its an average of 31% more expensive. To the North is Leeds and, again, only 30
minutes away but an average of 40% more expensive.

High tenant demand means that the properties which you buy will generate profit on a monthly basis
and are less likely to become void and therefore cost you your hard-earned cash. We rent around half of
our properties to Local Housing Allowance tenants (the old housing benefit) and in one area there is a
waiting list of 9,000 people that are looking to rent affordable housing

40


Platinum Portfolio Builder
Platinum Portfolio Builder has developed an investment offering that allows clients to leverage not only their
money, but also our wealth of expertise in sourcing properties at between 25% and 40% below their current
market value (as verified by a RICS surveyor).

Platinum Portfolio Builder builds and manages property portfolios for people who want to invest in property but
who dont have the time, knowledge or skill to do it themselves. We only buy properties where we can achieve a
minimum discount of 25% below an independent RICS valuation. Last year, an average discount of 26% was
achieved for the benefit of clients. Our clients are those who have between 75,000 and 1,000,000 to invest.

We have in-house teams of expert buyers, project managers, builders and letting agents and we buy discounted
property using extensive knowledge and contacts that secure an instant profit for clients. The properties are then
let and managed for clients on an ongoing basis until they want to sell them and cash in their profits. We
recognise that many people are unhappy with the poor returns, high fees and uncertainty associated with
traditional investments and pensions. Our proven models of property investment achieve market-leading returns
and security through intelligent property investment.

Our portfolios are currently built in South Yorkshire, focusing primarily on the area halfway between Leeds and
Sheffield, where the Founder, Nick Carlile, worked for many years as a quantity surveyor and project manager.
He has also bought, sold and rented out properties in this area since 1993. It is a market that he knows
particularly well and one where he and his team have built solid relationships with estate agents, developers and
other experts who source properties for Platinum Portfolio Builder. Teams of tradesmen and property, legal and
financial professionals all enable Platinum Portfolio Builder to take advantage of the very best opportunities and
structure great deals.

Having invested in property as a side-line for more than a decade, I only realised how little I really knew
about the property business after meeting and learning from Nick and the Platinum Portfolio Builder team.
Platinum Portfolio Builder has a wonderful strategy to leverage the resources of time and money and enables
me to spend every valuable day with my 6-year-old son, while building for my familys future, Gerry Scannell,
Client of Platinum Portfolio Builder.

41


Section Three: What to Do Next

For many investors, 2012 will be a deciding year as to whether or not they are going to be successful over the
next ten years and beyond. For those of you who havent yet started to invest, now is the time that you should
make the decision about whether to take the plunge.

We spent a lot of time in 2011 making money from property and intend to do the same again in 2012 and
beyond. Hopefully this guide will have been helpful in showing you what can be achieved by working with a
network of professional investors, rather than investing on your own. Whoever you invest with, make sure you
follow our seven-step guide to ensure that your investments are safe and secure.

The Platinum Portfolio Builder Guide to Property Investment

When we work with individuals, we meet and discuss the following points on a one to one basis. It is important
to know where you are now, before you start planning the next stage of your journey. It is also a fact that greater
knowledge and understanding helps minimise your risk, so you should factor some form of personal and business
education and development into your plans.

Step One: Work Out Your Investment Objectives
How much money do you want to make and by when?
Why do you want to invest in property what will it give you?

Step Two: Invest Alone or With Experts?
Its a good idea to work out whether you want to go it alone and build and manage a portfolio yourself, or
whether you want to take professional, expert advice. You might have to pay for it, but as long as it delivers
better returns than you can secure on your own, its worth investigating. In this scenario you should look at the
value that you are getting as well as the cost.

Step Three: How Much Can You Invest?
Work out how much money you have to invest and review your finances. What cash do you have? What equity
do you have in your home? What are your other investments delivering to you, and could you get a better return
with property investments?

Step Four: What Level of Risk Are You Comfortable With?
Some people are happy to invest everything that they have into one project, whereas others prefer to balance
the risk by having a spread of different investments. It is important to understand what level of risk you are
willing to take, so that you can determine what property investments are best suited to you. It is critical,
however, not to be put off by the apparent riskiness of property investment that many advisors will talk to you
about.

42


To my mind, the two main risks in property are:

1. A property market crash or correction. This is only an issue if you are forced to sell at the wrong time. If
you remember The Five Fundamental Principles of Property Investing and ensure that the property is
cashflow positive, you can ride out any correction until the inevitable boom comes round again.

2. Interest rate rises. One thing that is absolutely certain is that interest rates will rise again. What we dont
know is when or by how much. What we are clear about, though, is that the margin the banks are making
is probably as high as its ever been. The difference between the base rate and the cost of borrowing is
excessive. This should mean that as the base rate rises, the banks maintain the cost of borrowing at
current levels for some time. In simple terms, the best way to mitigate this risk is to look into taking a
fixed-rate mortgage. Yes, you will pay a higher rate in the initial stages than with a variable rate, but the
risk is eliminated for the period of the fixed rate.

There are other risks to consider, such as lettings and management and tenant issues, refurbishment overspends,
legal issues, property maintenance, legislation, rent arrears and so on. We simply dont consider these as risks
because they are all within our control in the main, and we have expertise and experience in dealing with them.
Risks can be mitigated greatly by following in the footsteps of other professional investors and using tried, tested
and proven investment strategies.

Step Five: How Long Do You Want to Invest For?
Property investment shouldnt be seen as a get rich quick scheme. Any money and time that you invest should
be for a minimum of five years and ideally ten or more, depending on market conditions. Its the properties that
you buy now and in the next 3-5 years that could be the source of great wealth for you in years to come.

Step Six: How Much Should You Invest?
Many people are keen to invest in property but nervous about whether it will deliver or not. When deciding on
how much to invest, it is important to understand how much risk you are prepared to take and this will depend
on two things:

How safe are the investments that you are considering?

The level of experience and knowledge that you or in your investment partners have, in relation to the
investment strategies you will be working with

Typically, clients who work with Platinum Portfolio Builder secure their investment monies from:

Inheritance they have received that they want to grow

Sale of, or profits from a successful business

Savings or other investments

Equity from their own home or other investment property

43


Many people have been brought up with the philosophy of work hard at school/college/university to get good
qualifications, so that you can get a high paying job and pay off your mortgage as soon as possible. Whilst there
is nothing inherently wrong with this approach, it flies in the face of how professional investors and successful
entrepreneurs operate.

If you have paid off your mortgage(s) or you have substantial equity in your own home, you are presented with
an unbelievable opportunity. You should be able to set up a drawdown facility, which allows you to withdraw
equity on an as needed basis. As long as you are making a better return than the cost of borrowing which, as
has been illustrated in this guide, is very achievable then it makes complete sense to consider this option.

For example, if you could borrow money at 5% interest per annum and make 25%, why wouldnt you do it?
Remember that, while it may feel risky, if you do it right you are simply dividing the equity from one house
between many others and making a higher return. Once you have the understanding and confidence that this
can really work, it is a logical step to take. Its just that for some people, it can take a little while to become
emotionally accustomed to the concept.

Step Seven: Visit the People and/or Investment Location
This is so simple that it needs no further explanation, other than to say its astounding how many people dont!
Just ask yourself, would you buy a car or even a new suit or dress without seeing it? Yet many people buy
property without taking the time to visit the people and the locations involved.

44


Want to Know More about Platinum Portfolio Builder?

We hope that this property investment guide has been interesting and useful to you, and that it has inspired you
to consider wisely investing in property. You can find out more about us by:

Visiting our website: www.platinumportfoliobuilder.co.uk

Calling our office on: 01226 732606

Emailing us on: info@platinumportfoliobuilder.co.uk

You should never invest in property unless you have visited the area/property itself and we believe that you
should never invest in a property company unless you have spoken to and met the owners! We have a varied
programme of events across the UK throughout 2012 and we would be delighted to spend time helping you with
your property investment plans and goals.

If you have at least 75,000 in equity and/or liquid funds
and you want to fast-track your success in property
investing, then you may qualify as a Platinum Portfolio
Builder client. If youre serious about property
investment as a route to financial freedom, call us on
01226 732606 and speak to one of the team.

Platinum Portfolio Builder is a passive investment
opportunity. The team specialises in building buy-to-let
property portfolios for clients using a tried and tested
model that produces extremely reliable results. For an
initial investment, the Portfolio Builder team sources,
refurbishes, lets and manages buy-to-let property
portfolios on behalf of clients who are looking for a
secure alternative to more traditional pension provision.

If you would like to discuss your property investment, call us on 01226 732606, to discuss with one of our team
or to arrange a visit to see for yourself what we do and how we do it.

Platinum Portfolio Bulder has won a number of Awards including:
Compare the Financial Markets Most Innovative UK Property Investment 2012
OPP Award for Excellence 2011

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