While researching and considering this blog I’ve been travelling to Poland with my family for Xmas. My family consists of my fiancé Magdalena (and bump), my mum Heather, mum’s partner Bruce and myself. We’ve just flown into a snow covered Poznan for our first Xmas in Poland with Magda’s family and my mind has naturally drifted towards Christmassy thoughts.
- Santa dropping by
Like so many families around the world we’ve had a very tough year. With such hard times so fresh in our memories and with such uncertainty ahead important questions are begging for answers. Will the families get on well and have a great Xmas? Will we have a better year next year? And does Santa Claus really exist?
Clearly these are big questions and the answers will depend on your own beliefs and circumstances. I’ll let you know how we get on in future blogs. For now I’ll share a few of my beliefs and relate them to my specialist subject of investment and specifically investment in London Residential Property.
1. Fog is inevitable
I’ve had the good fortune to spend valuable time with some extraordinary leaders in both finance and property. One great snippet I heard from a hedge fund manager once was ‘the world is full of fog; I’ve developed the vision to see beyond the fog’.
In reality even his vision couldn’t prepare him for the events of the last 2 years. Despite this I do believe it’s important to come to terms with the fog and uncertainty we are suddenly so acutely aware of – and carry on with our lives. Psychologically it’s probably the most important step we can all take on the road to recovery.
An uncertain environment offers great opportunities particularly when broadly recovering. In this environment Inspired Asset Management (an investment business I advise) is fortunate to be fresh, new and without the legacy issues that will continue to hamper many of its competitors for years to come. The first fund Inspired is advising on will be buying throughout 2010 and deals are likely to be considerably better than if future price rises were “assured”.
2. Fundamentals matter
Now more than ever when investing it helps to:
- deliver products and services people need or want
- target undersupplied markets
- focus on very specific known locations
- buy very selectively – ‘Alpha’ is a word used in financial circles to describe this approach to cherry picking assets
- generate plenty of surplus cash flow
We received confirmation just yesterday that the first fund we’ve helped to raise with Inspired has achieved its first close and will be able to make the first purchases – a great way to start Christmas !
3. Think long term
Short-term sentiment matters (perception is often reality) however good assets and businesses if they are well funded and in demand will generally normalise over time. If they can be “farmed” effectively to generate plenty of cash flow they should do well without suffering from the risks inherent in short-term speculation.
Property in particular is an illiquid asset class and should generally be approached accordingly. Five years should really be the minimum period to plan to hold an investment – of course if someone offers to buy at a huge premium then early sales should be considered.
Instead of always trying to second guess short-term movements in markets and assets I believe it’s sensible to look at where supply and demand forecasts are likely to leave gaps in the medium term and seek to fill one of those gaps.
Inspired’s partner Urban Share for example achieves 95%+ occupancy rates and generates 9%+ rental yields on residential properties in Central London and with population growth forecast to continue apace while construction supply is likely to take five years or more to recover we see a gap.
4. Luck favours the bold
Putting time in to research and test your market thoroughly is generally time very well spent and I’m a firm believer in planning to succeed. It’s important to also bear in mind that you also have to be in it to win it. Many procrastinate from the sidelines while most others choose to follow the herd (too late).
Those with the guts to drive forward into the fog with their headlights on will often attract others to their cause as they prove their concept. At Inspired we hope a real passion for Social Media/Networking, collaborating and engaging with our clients & peers along with establishing a successful investment track record will help us to achieve this.
5. Network and make yourself available
In the finance & property sectors leaders like Philip Calvert (IFA Life), Robert Gardner (Mallow Street & Redington), JC Goldstein (CREOpoint), Nick Tadd & Vanessa Warwick (Property Tribes and 4 Walls & a Ceiling) and Jaime Steele (North Financial) are true visionaries and if you don’t follow them or participate in their networks yet (10,000+ contacts) I highly recommend you do.
Doors have already begun to open for us and we’ve met some extremely innovative and passionate individuals and groups. If you would like to know more about us or can add value to our network perhaps come along to one of our networking events. Our next one is on the 11th February in Mayfair and tickets are just £49.95 each. Drinks sponsors are also welcomed.
- Doors Opening
And finally please have a very Merry Xmas and a Happy New Year
I suspect I’m not the only one pondering these subjects and while I have initially shared my thoughts with you I would be extremely keen to hear what you think too – please feel free to comment or indeed describe your own Xmas [belief/wish] list.
Now back to the festivities and the family.
- Merry Xmas from Martin, Magda, Inspired & Stepnowski – !
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