I only recommend properties that I think will go up in capital value by 50% or more. So how do I estimate this? Well its all to do with AFFORDABILITY.

The properties I buy are first time buyer’s (FTB) type of properties. The non-luxury end of the market, starter homes, studios, flats basically the cheaper end of the market. Now I have to make a prediction of the value of the property. I do NOT look at past historical growth. This is what amateurs do!

I look at:

1. FTB’s average salary today
2. What lenders income multiples are

Since FTBs have to borrow you have to look what the lenders are willing to offer the FTBs. So currently the income multiples are averaging around 4 so a crude calculation to evaluate what a property is worth would be:

4 x FTB Salary + FTB deposit (5%) = True Market Value.

So in an example, where I buy in a certain town in Scotland the average salary is £17,583 so the true market vlaue is:

4 x £17,583 + £3,701 = £74,033

I buy these properties at anywhere between £25,000 to £50,000. So you can see my capital growth is locked in. The growth could happen in 5 years, 3 years or even 6 months! I have had 200% growth in 1 year before.

Now I know what the average salaries are for every town in the UK and what the income multiples of every lender in the UK so it is very easy for me to see what the true price of a FTB property is anywhere in the UK. More importantly I know when a property is CHEAP!!!!!

To view my findings visit http://www.propertyhotspots.net/ and look at the Affordability Index, Yield Index, Capital Growth Index and Rental Value Index. If you want us to find a property in your area then click here.

Ajay.

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