A very good question if you don’t know…and you’re unlikely to as this is not a well known sector. However, as we like to do at Discover and Invest, we can prove to investors that this route offers a high level of secured income backed by some surprising macro-economic fundamentals. It is also a sector we know well and can fully manage for you. Allow me to explain….

The investment concept exists because of the need of many farmers for short-term funds. This is down to either expanding or restructuring their businesses, particularly in light of many new EU directives which require new and costly upgrades. Farmers, as is widely known, are cashflow poor but are extremely asset rich, an asset which can be used to generate an income. This asset is of course their farmland.

What many investors are unaware of is how robust farmland prices actually are. Documented evidence shows that since records began in 1945, UK farmland prices have remained steady in each of the recorded recessions and in many places have barely dropped at all in the last 2 years. Therefore it is important for investors to understand that UK farmland is not affected by economic cycles in the same way as residential or commercial property does. Evidence from a number of independent sources is available in our packs.

So why are farmland values so robust? It is a question of supply and demand. In the UK , farmland for sale is a rare occasion and an exceptional opportunity for a neighbouring farmer to expand his business. In 1945, 1m acres per year were recorded as transacted. The numbers since then have steadily decreased to only 100,00 acres, a huge 90% drop in supply. This has been in the main because farmers have moved from tenants to actually owning their own land. Farms are passed down the generations and in order to succeed, the farmer needs to expand not contract. Therefore a chronic lack of available-for-sale supply coupled with a farmer’s ongoing expansion requirements ensure that values remain robust, regardless of lifestyle buyers. What this means to investors is that farmland, as part of a farm, is a robust product when protecting capital that also produces an ongoing income.

With the lack of funding available from banks, farmers are prepared to enter into leaseback style agreements for their farmland with private investors for an agreed timeframe of typically 2,5 or 10 years. The investor buys a portion of the farmland (usually not the property) at between 50-70% of today’s market value and rents it back to the farmer at around 8% per annum; a very competitive rate in today’s marketplace. Typically the farmer will also pay for the buying costs. The farmer pays his “rent” and then buys the farmland back from investor at the end of the agreed period for the same % discount based on the then market value. Therefore this offers the investor a superb capital gain opportunity and allows the farmer to improve his business profitability in the short-term.

Strong leaseback deals will utilise an agricultural project management team, (as we do), to ensure that a new business plan is in place and so that the farmer is monitored on a quarterly basis for the investor. This ensures a smooth, hands-off and full managed product that so many investors fear they will not otherwise receive. The product is also SIPP/SAAS compliant.

With regards risks, with such a strong initial equity position, you would need UK farmland to fall by more than 30% in order for your capital to be at risk; something which has not happened since records began, nor is it likely when taking into account global demand for food and the fact that we still have not found ways of making food without the use of farmland!

So in difficult economic times, it is possible to find deliverable, high income, secured products. If you wish to find out more, please register or email enquires@discoverandinvest.com

2010; a new year, a new start. But in some ways, we have been here before.

This is not the first time we have experienced a recession, and as tends to happen, governments spend their way out of them. New infrastructure projects, more public sector jobs, and that now oh so familiar phrase, Quantitative Easing, or QE. In other words, the government is flooding the markets with money to stimulate action.

Although deflation has been an equally used buzzword in 2009, as the lack of demand has in some instances had a downward effect on pricing, the smart discussions revolve around inflation, the natural consequence of “too much money chasing too few goods”. Inflation, that by-gone concept of the 1970s! In fact inflation is all around us, with a particularly constant pressure on currency over the years. How many remember when a chocolate bar was 10p?

Although there is a split between forecasters, significant evidence points toward a higher inflationary period and an increasingly weak Sterling/Dollar fuelled by unprecedented government debt. Current house price rises, driven by a lack of available supply are likely to be short-lived rather than upward demand (as sellers wait for prices to go back to “break even” levels) , as the resultant supply increase will outpace demand does increase through higher interest rates. The stock market is having one of its roughest periods on record. Therefore, where can investors look for not only safety, but also results?

In volatile times coupled with vulnerable and weakening currency values, tradable hard assets become investments of choice. The likes of gold, silver, farmland, wine and stamps have proven to retain value in tough times as the measurement and value of cash becomes uncertain. Regardless of the measurement of exchange, or currency, these products show value and become excellent locations to park and secure wealth whilst the world begins anew.

Throughout January and indeed 2010, we will explore inflation hedges in more depth, with the next blog giving investors a comparison of the available options. There are some cracking opportunities even in these times, so I look forward to welcoming you back for another instalment in the next few days.

New statistics were published today by the Council of Mortgage Lenders on mortgage arrears and possessions. Unsurprisingly, full year figures for 2008 show a sharp rise on 2007, but many steps are being taken to help borrowers facing difficulty. Interestingly, there were 5,000 fewer repossessions than expected and were forecast in the previous year, with the measures that were introduced towards the end of year seemingly having some kind of effect.

A few stats and figures released by the CML today:

* 5,000 fewer repossessions than forecast in 2008
* 40,000 repossessions in the year - 1 in 290 mortgages
* 10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages
* 1 in 64 mortgages in arrears of 2.5% or more
* 1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates)
* 75,000 repossessions forecast for 2009 remains unchanged.

Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders. The total number of first-charge repossessions in the year was an estimated 40,000. This was 5,000 lower than the CML’s original forecast for the year.

The fact that there were 11% fewer repossessions than expected, despite a worsening economy and rising unemployment, demonstrates that mortgage lenders are making strenuous efforts to ensure that repossession really is a last resort. It is important to recognise that repossessions include a proportion of abandoned properties and property fraud. They also include buy-to-let repossessions, as well as home-owner repossessions. In the vast majority of cases where home-owners are committed to working with their lender to keep their home, this outcome is successfully achieved.

At the end of 2008, around 182,600 mortgages - or 1.57% of the total - had accumulated arrears equivalent to 2.5% or more of the outstanding balance  - for example, £2,500 or more on a £100,000 balance (a £97,500 mortgage plus £2,500 arrears). This compares with 1.29% at the end of the third quarter of 2008, and 1.08% at the end of 2007.

On a “number of months” basis, 219,100 mortgages were in arrears of more than three months at the end of 2008, up from 166,600 at the end of the third quarter of the year, and up from 127,500 at the end of 2007. However, the big reduction in mortgage rates experienced in 2008 was a significant influence on the rise in the number of arrears cases measured on a “number of months” basis - as the same given sum of arrears represents a higher number of months payments as interest rates fall.

The vast majority of people who face temporary difficulties successfully work with their lender to stay in their homes, and get their mortgage back on track over time. Where borrowers contact their lender early, maintain good communication and are committed to paying what they can and resolving their arrears, lenders work hard to help wherever the household’s future prospects look feasible.

Source – CML Press Releases

The fifth of November 2008 is a day I will remember for some time. Now I know what you’re thinking, that’s the day a few centuries ago when a certain Mr Fawkes decided to try & blow up the powers that be, right? Or maybe that I went to a rather spectacular fireworks display? Neither of these were the case in this instance. That morning at around 10am our Ambulance Trading investment opportunity was emailed to one of our partner’s databases. I can remember telling my colleagues that I will be happy if we can generate 15-20 enquiries – after all, enquiry levels must be down as we prepared to head into recession.

After the eightieth enquiry had landed in my inbox just after 6pm you could say I had encountered my busiest day yet at Discover And Invest! Over the course of the following few days more filtered through ensuring that yours truly was putting in some seriously long hours!

Amongst this number was a variance in terms of quality, from those who were too afraid to hold a conversation over the phone to those who invested. In between were all extremes; those whose level of liquidity fell below the entry level, those who had no real interest, those who absorbed the information never to be heard from again, agents sniffing around and those who I simply could not contact! As all the enquiries are submitted in the same format, it’s impossible to gauge the level of quality until contact is established.

Investing is very similar in this respect. There are still so many opportunities out there ranging from property to bonds to shares to alternatives etc. How does one accurately appraise each individual opportunity? Which ones are most likely to do what they say on the tin and provide the promised returns? Which ones are the scams? Which ones are the big gambles?

Whilst there are no blueprints for what’s good and what isn’t, it’s fair to say that the usual rules apply. Over the course of sifting through the enquiries I received, the level of questioning was considerably higher than I expected – good! This goes to show that investors are doing their research, it shows that they are familiarising themselves with the workings of the opportunity, and it shows that where applicable they are using their experiences –both good and bad – to base their decision as to whether or not to take it further. Whilst this continues to be the case, those marketing the decent secure opportunities are certain to prosper.

If you’re a global investor, there is one country in the world today that is screaming value for money… and it’s the UK.  Why so I hear you cry?  Well, there are two main reasons why, the same two reasons in my view that has made the USA a value for money buy over the last 2 years.

The first reason is a weakening currency; typical of an economy in a downturn, one that is importing more than it is exporting or of one that is printing vasts amounts of money, or  potentially all three.  The weakening of a currency, relative to your own means better value purchases.  Many Brits indeed found that to be the case when buying American over the last few years at as much as 2 Dollars to the Pound.  Times they have a-changed though!..Xe.com tells me that 1 British Pound Sterling buys me but 1.38 US Dollars, a fall in the last 9 months of around 60 cents, or in percentage terms,  approx. 31%!!!  So if you’re making an investment purchase in the UK, there is certainly inherent value compared to even the most recent past.

The second major reason is falling house prices, which begins to give this type of investment market inherent value too.  Property prices have fallen approx. 20% from their peak 18 months ago, and therefore considered better value.  Discounts are also being offered in the region of an extra 20% on distressed and new build sales, which provides further value.  Therefore investors are  taking the view that these discounts provide built-in equity in case we have another year of falls.

Finally, rental yields are now in the region of 8-9%, which means on the typical mortgage, cashflow positive deals of around the £100 ($138) per month mark are starting to appear.  With interesting new 12 month insurance policies available from major brands to protect rental income, these deals are incredibly attractive.  Some valuers will even pay for your valuation for you so no expenses are necessary until you know you can get a mortgage and the valuation is accurate.

So it’s easy to see why property investors are taking the view that the current UK deals are great value, income producing straight away and extremely secure.  On top of this, a long term view means the profits are much more substantial than in a boom.  We are all taught to buy low, sell high.  Well here is the chance to put the first part of that equation into practice…whether it is property, or an alternative investment, companies like Discover and Invest can help you to see why the UK is worthy of your attention.

My morning started with Take That on the radio telling me this could be the greatest day of our lives, and then a report from the British Bankers Association informing me that the mortgage lending rose in December, indicating the start of a possible recovery for our shattered economy. Coincidence?

With nine out of ten news stories indicating the end of the financial world, it is refreshing and relieving to finally hear some positive news on this cloudy Monday morning.

Figures indicated that approvals for house purchases in December were around 22,000, up from around 17,300 in November. This figure is still 46% down on this time last year, but to see an extra 5,000 mortgages approved in what is traditionally one of the weakest months for selling houses, is excellent news and a sure sign that investors and home buyers are now starting to understand it is a great time to buy, with some amazing bargains on the market.

2008 was undoubtedly a lot harder for mortgage lenders and estate agents than the previous few years, with borrowing at a much lower rate, and the BBA backed this up.

BBA statistics director, David Dooks, said of the latest data:

“This first opportunity to compare 2008 with 2007 shows that gross mortgage lending by the main high street banks totalled £170bn, some 23% below 2007’s total of £221bn. However, lending by the rest of the mortgage market was half the previous year’s total, showing how mortgage lending became much more concentrated during the year. The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year which led to a wait-and-see mentality.

“Consumer credit was very weak in December as people reined in their credit card spending, despite early Sales and heavy discounting by retailers. This consumer caution was also reflected in personal deposits, which rose strongly.”

There are obvious problems at the moment but we are starting to see a rise in house sales, more mortgage companies offering more products and a general raise in enquiries reported by many estate agents. The question that will be asked is will this continue for the next few months or even the year, or will this rise only last a couple of months before things take another turn for the worse.

We will not know until it happens and I am sure there are more ups and downs ahead, but we must take notice of the fact that more people are now buying homes than in November, which in turn will not only help the economy but also give some relief to the many companies related to property.

With Discover and Invest launching our first Property Investment deals next week, this news is more welcome than a cold beer on a summers evening.

Today I’m going to take a look at what type of property will be a good play in 2009, with 2 main contenders: existing,completed properties or the recent investor’s darling, the off-plan..

Firstly, as a pre-text, it does depend on strategy.  If you are looking for a holiday home to use in the next few months, you will probably not be considering off-plan…so for the purposes of this piece we will assume it is for investment in 2009.

A comparison – existing, income generating properties are in many ways a lower risk play than off-plan and generally perform better in a downturn.  What is important with existing properties is that you have real-time evidence to base your decisions on: current comparable property prices, rents levels, availability of tenants, mortgage rates and terms, currency (if buying abroad), political situation, etc.  As your property is active as of now, compared to off-plan which is active in the future, you have the benefit of what judging information on what is happening now to manage your risk more appropriately..

With off-plan, it is a more speculative, higher risk type of purchase.  Off-plan is a solid enough investment in a booming market, where increases in equity are sought over rental yield.  You are however taking a leap of faith with off-plan and need to ask that many more questions.  Depending on location, such as an emerging market, there may be nothing built with no idea of valuation other than the developer’s price as a guide.  In the time between “purchasing” and “completing”, a whole set of factors will change, either in your favour or against you.   These factors include, property values, rental yields, mortgage rates and terms, final construction quality, infrastructure changes and exchange rates.  So off-plan is a higher risk play; some projects will be of great success but many others won’t.

With regard to the off-plan boom in the current climate, there is a caveat, and this applies to off-plan units that are soon to complete, or have just completed.  A number of locations round the world have suffered from over-supply of units from developers.  In several countries I have been to, many developers are renting recently completed, previously unsold, off-plan units out to generate some income.  These units are available for a snip of the advertised price when they were off-plan so, depending on your strategy and where you would like to buy, there are no doubt some excellent recently completed, or soon to be completed, “off-plan” deals.

Therefore in today’s market, for investment it is generally a better bet to go for completed existing properties, or soon to complete, “previously off-plan” properties, where the evidence to make your investment decision is real-time rather than 2 years away.

So firstly Happy New Year to everyone!  I know many people will be pleased to see the back of 2008, but what lies ahead for us in 2009?  More of the same or some interesting opportunities?

To many it is likely to another year of pure survival, that’s for sure.  Projections for further retail closures, particularly in January (the favoured month for administrators with little stock left), are not looking good.  Property prices are predicted to continue falling, and in my opinion as much as 20% next year.  All sounds very doom and gloom I know…

…however, there are opportunities, and the types of opportunities that exist are for the very reasons most of us need them..quick income.  It would difficult to find someone this year who isn’t looking for quick and stable income generation from another source other than work, whether it be to cover mortgage costs, a certain standard of living, or merely to make ends meet.

There are a number of options we will be bringing to the table in 2009, continuing with our successful ambulance trading project, where the first investors have received their returns.  Any sector backed with government contracts is largely recession proof, and in the next week we will be providing evidence of how the deal has worked from a numbers point of view, with testimonials to boot.  Other sectors we will be active in are renewable energy , which will be discussed in the next month or two, and, strangely enough property, which we will discuss now.

It is many a savvy investor’s belief that property is starting to show value again.  With yields up around the 8-9% mark and interest rates at 6.75% approx. for mortgages, there is a positive cashflow to be had if the right deal can be found.  On top of this, large discounts can be secured to ensure you are covered should the market fall further.  As mentioned earlier I believe a further 20% could be eroded, which means you should look for a 25-30% discount on property valuations.  Add in some tenant insurance and you have a property investment protected against loss of income, loss of equity and generating income on a monthly basis straight away.  The only major downside is a much higher level of deposit, but it ultimately reflects a more secure payment against the purchase and a lower amount to pay back on mortgage.  Remember this is the very factor that has caught so many out on 100% mortgages..!

So discounted, income generating properties are a strong bet for 2009…stay tuned as over the next few weeks we will be bringing to market such deals that match the criteria set.

In the current marketplace, it is interesting to note that there is a high level of demand for varying pieces of land with planning permission in emerging markets. Why? Well, the demand is coming from two main types of buyers. Firstly, nationals who have emigrated who wish to buy ready to go land back home to build on or to invest in for strategic future purposes. Secondly, an increasing number of corporates are looking for market share in emerging markets and are seeking strategic sites where they can build commercial, alternative energy or logistics operations. Discover and Invest Ltd., the london based investment consultancy, has recently sourced and launched 3 stunning sites which fit this criteria.

The first site is a 40,000 m2 of strategic land in Plazovets, from a stunning, elevated position 600m above and overlooking the Black Sea coastline in Bulgaria. The company’s project team on the ground are currently one month away from achieving full planning permissions for a ready-to-go property development project. The site is also extremely suitable for Wind or Solar investment projects, with the change in planning for such a project taking in the region of 4-8 weeks. A 10% deposit required which will be held with 3rd party lawyers until planning is approved. It is also worth noting that VAT is not payable on any land purchases in Bulgaria.

The second site is situated around the Bulgarian capital city, Sofia. This is another elevated, well located site of 5600m2, which offers stunning views of Sofia from the desirable upmarket commuter area of Bistritza. The land is strategic due to the fact it is 10 minutes drive from the new Sofia Business Park, 20 minutess to downtown Sofia, 20 minutes from the airport and 30 minutes from Mount Vitosha for winter weekend skiing. The land is suitable for either commercial units, or a high end villa development aimed at the more wealthy city dwellers looking to live near, but not in, the city itself. All the usual amenities exist such as schools and supermarkets, as well as the infrastructure necessary.

Finally, on offer is a rare plot of 980m2 situated in a developed residential area in the commuter zone of Krustova Vada in Greater Sofia. The plot is situated on a built up residential street with all the usual infrastructure and amenities in place. This is a wonderful opportunity to build a large house or small group of townhouses, where the land will be regulated in 2 months with the project team available to complete this if needs be. Again a 10% deposit is required, to be held with lawyers.

So if you are a Bulgarian, or non-national looking for an interesting spot to build or invest in or are commercial firms looking for some options to start operations and gain market share, Discover and Invest Ltd have some unique options for you.

To enquire, please contact Chris Goodman on London 0207 060 4404 or email chris.goodman@discoverandinvest.com

When I first speak to people about investing in rare stamps I am more often than not met with a cynical smile or look of shock. Some even laugh! Although in all cases the body language tends to have “tell me more” written all over it. Whilst a full overview is available by simply by emailing me it is worth a few narratives to explain what first attracted me to the proposition.

The primary aspect was security. The ability to work with a long standing company having already celebrated its sesquicentennial and boasting an exorbitant level of liquidity is one that is too good to turn down, not to mention their market leading position. Security is such an important aspect of anything we bring to market at Discover And Invest and indeed has seen a few intriguing opportunities fall by the wayside as a result of failing to tick all the boxes.

The secondary factor was the potential returns the investment can generate. Whilst our provider is happy to guarantee a minimum return of 25% after 5 years, the uncapped ceiling can provide returns at a considerably higher level. In troubled times where many property investors are struggling to achieve 5% and having to settle for less, it feels good to be able to bring a product to market that offers this level as a worst case scenario!

Supply and demand characteristics apply also and were the tertiary reason for taking this forward. Certainly when the demand is there with property for example, then you simply build more. Yet you cannot simply make a new batch of old rare investment stamps! As more and more collectors enter the market it naturally pushes valuations higher. A quick growth comparison with markets such as UK Property, the FTSE100, and even gold will show you just how stamp values are continuing to out perform the traditional routes.

Lastly, with any mid-long term investment lays the small matter of an exit strategy, of which there are six different options relating to this investment. All things considered, for me this stacks up as one of the more if not most secure investment products I have ever had the privilege to be involved with. And in this day & age – I’ll take that.