Holiday/Retirement Homes Part 2

One of the things we have to look at when buying real estate is what is the best use of the money.

There are obvious equivalences. If I live at 1 Windsor Drive and you live at 3 Windsor Drive in an almost identical house, we should expect to be paying the same money for the pleasure of living in that area. If you rent your home and I pay an interest mortgage for mine then our monthly outgoings should be roughly the same. By that I mean, the cost of the rent and the cost of the mortgage money should be roughly the same, give or take 10%.

If you are paying £1,000 a month in rent, then I would expect to pay a similar amount for the money I’ve borrowed. If I had a repayment mortgage I would have a larger outgoing because I would be paying back the money I’d borrowed, which would be paying for the house itself so it eventually became mine. I dont count that amount, it is the cost of the money that should be the same as the cost of the rent. That means, if interest rates are at 5%, then £1,000 a month in outgoings on a notional 100% mortgage should be £12,000 a year. At 5% that would assume a purchase price for the house of £240,000.

It would be rare for the outgoings for both houses to be identical, but that is the equivalence. The further those figures get out of balance the more someone is paying over the odds for their home. Is it you?

Needing a Mortgage:

In terms of a holiday home, are your total costs realistic in terms of equivalences? If your mortgage costs are £1,000 a month, what are your repairs and maintenance costs? What are the taxes? Add up your total annual figure. Now ask yourself how many weeks of the year you intend using your holiday home. Now check the rental figures in the local newspapers (not the online rental sites). If your total annual costs for the bought house come out at, say, £15,000, and you use the place on average two months a year, ask yourself whether holiday rentals are going to cost you more than £7,500 a month. The answer is that they are more likely to cost you £1,000 a month or less. Renting beats owning hands down. If you are retiring you will probably use the place effectively for the whole twelve months, so your cost is likely to be £12,000. Not that much difference, but rental is still a better deal.

There is an unfortunate unknown in the calculations. Will that 5% interest rate change over time, and by how much, and in which direction? If interest rates go up, the person with the mortgage is going to have to face a sudden increase in costs whereas the renter is less likely to be affected. The renter can take action to alleviate higher rents by moving somewhere else. If interest rates go up, the buyer cant do that because rising interest rates will cause house prices to fall.

One tends to buy real estate for the long term. Interest rate variations are short term movements. We now have the lowest rates in recorded history. Those rates may well stay low for the next two or three years. They may even stay low for the next decade. They wont stay this low for ever. At some stage they will rise, and rise substantially. If you are buying for your retirement you will be on a fixed income. You wont want interest rates to rise.

Paying Cash:

If you are paying cash, you would need to work on a different equivalence. You need to check what returns you could get on your money. Here we would be looking at very safe investments. One I recently recommended to a friend was an investment into solar panels for social housing in the UK backed by the government and returning 14% a year for a set period. There are many similar investments. With a locked-up banking system, there are companies that take deposits, and then lend on to developers with the deposits fully secured on hard assets. In other words, other companies are filling the lending gap left by banks. You can get returns of anything from 10% to 30% a year without too much trouble. For the moment let’s stick with the fairly simple and safe government backed investment, and use 14% as a bench mark.

Let’s go back and look at what your £240,000 could buy. You could buy that holiday home and have somewhere nice to stay, or you could invest the £240,000 and collect that 14% return. That equals £33,600 a year. As you can rent a nice holiday home for £1,000 a month, you will have a place to live plus an extra income of £21,600 a year, and when you get fed up with your current holiday home you just move on. With the extra £21,600 a year there are no headaches, no repair bills, no maintenance, no taxes; you are free, and you have a lot more money to have a much better lifestyle. What the heck would you want to be lumbered with a house for?

If you change your mind, then you can always buy later; your capital is still intact, but I seriously wonder whether, once hooked in the hassle free rental situation, you’d want to go back to owning.

If the figures were closer together I would think my argument would be based around lifestyle choices, but the figures diverge so much that it seems to me to be a simple matter of mathematics. An extra £21,600 a year for selling the house? Think about it.

john clare

2012 Real Estate

I’ve been reading what other real estate writers have been saying about what will happen in the world of real estate for the next year. For once it is a sorry state of prediction. No-one is happy. No-one sees anything much happening either one way or the other. Prices wont fall much because there is so much demand. Prices cant rise much because people will be poorer and feel poorer.

It’s more a matter of what wont happen rather than what will. I think most people are phased by the situation with the euro, and dont know what to make of the current economic chaos.

As I usually say in these circumstances, if you are just looking to sell one place and buy another it doesn’t really make much difference what happens. You are just swapping counters. But if you are investing you have big problems. Interest rates are low, but will have to rise sometime, so you need to build in a safety zone for that eventuality. You need to cost your project on the basis of rental returns rather than assume any capital gain in the near future.

I am staying on the sidelines because I dont like risk, and the risk element is high. I do still have rental properties but they were bought so long ago that they are in for peanuts.

As I stated in my previous post I think the tourist ghettoes are in for a hard time. Now is certainly not the time for buying holiday homes. The prices are still coming down, and the whole operation of buying a second home abroad is simply not cost effective, certainly not in Europe.

There are always exceptions to the general rule. The objective for the next year or so is to find those exceptions. They are out there. I still think the southern areas of Andalucia away from the Costa del Sol are good value, and so is the deep south of Italy. The eastern Mediterranean area, and Eastern Europe are still no-go areas.

john

Buying a Holiday Home

Okay, let’s start the new year with a look at a situation which I think is unsustainable, and then I will make a suggestion. I’m talking about buying a holiday home, or buying a retirement home.

Have you been thinking about buying a holiday home in the warm south? Have you thought about buying a retirement home in southern Italy, or Spain, or the Algarve? Well, I’ve got a few things to say that I think you should take on board before you make that final decision.

Apartments in southern Spain are at last coming down to reasonable levels. You can now buy a two bed two bath apartment close to the sea, new build, for around €75,000. For a basic well built apartment in a pleasant area that is a reasonable current price. If you want to be on the coast itself, maybe a similar build will cost a bit more. If it’s a flashy joint then expect to pay more again, but for a basic well constructed all mod cons average holiday home that price is about right. Dont pay more.

If you cant find retirement homes or holiday homes at that price just drop me a line and I’ll point you in the right direction.

So, you have been looking at apartments costing €135,000 or even more. You think my prices are nuts, and that I’ve finally flipped. Well, look at it this way. First, those are the prices that are now available. If other prices are higher then you know what that means. It means those prices will have to fall, and they will. And I’m not guessing.

Second, how much would it cost to rent a similar apartment? You will find rentals available for anything from €400 a month upwards. If you haggle you can probably do a long term deal at €350 a month without too much trouble. Dont check out the rental sites, check out the local newspapers.

Now ask yourself what your apartment is costing you if you buy it. Say you buy your holiday home on a mortgage. What will the money cost? At current prices about 4%. If you buy something for, say, €100,000 the money will cost you €4,000 a year. If the mortgage is over 20 years that will be a total price to pay of €9,000 p.a. If, on the other hand, you have cash, that €100,000 can be invested to bring you in a darn site more than 10% p.a., but let’s say 10% at the moment. You could get 15% on managed US rentals, 12% on UK rentals, 14% on UK government backed solar panel investments, 15% on green oil investments, and so on. All solid investments, but we’ll stick with 10%. You’d earn €10,000 a year. Similar to the cost of the property so the price isn’t that far out of line. But…..

Let’s have a quick look at that caveat. How much for the maintenance, rates, repairs, gas and electric bills, and all the etc on that holiday home? That would lift the annual cost of your nice new apartment from €9,000 to at least €12,000, and maybe even more.

Now let’s have a look at another option. I spent Christmas in a four star hotel. I had a large room, with a large balcony overlooking a lagoon and the sea. I had half board, the use of a vast outdoor pool, and a heated indoor pool, a gym, and daily entertainment from table tennis, to shooting, to petanque on the beach, and golf, and so on. No electric bills, no maintenance, no cooking, no shopping or washing up, and someone even makes my bed. I reckon I save about €6,000 a year on food and service charges for one. Why not add that figure to the €12,000 from the previous paragraph. Now ask me what I paid for my room for two people.

It worked out at €55 a day. If I stayed for more than four weeks I would get a discount. 55 * 365 = 20,000. Assume a 10% discount for long term residency and that hotel with all its amenities, and worries removed from my day to day living, costs exactly the same as that €100.000 apartment. Quite frankly you can keep it.

I reckon we are going to see some changes in tourist land. And I think my investments will go up in value a darn site more than a holiday home will.

john

2012 – Part 4

Property Market in 2012

Scenario Three: The great euro crash finally comes.

Relief all round. Not a pretty sight, but at least the waiting will be over. There will probably be a couple of years of very messy readjustment. Bank lending will be down for at least a year afterwards, but will then gradually return to normal. Once again, things will be tough, but there will be light at the end of the tunnel. We will all be able to build on what is left after the crash. What that will be I dont know. I suspect things will normalise reasonably quickly. The main damage will be to those owning debt. That will ultimately work to the advantage of house owners. It will, however, not be the time to buy anew. Ideally, those wanting to buy should look to wait a couple of years after the broken glass.

The best picture of what happens after a default is to look at Iceland. Unfortunately, Iceland is a small country, with less than half a million people, and it is scarcely an international economic hub. The eurozone accounts for more than a quarter of all world trade. If the banking system of an economic hub of that size goes splat all hell is likely to break loose. I have no crystal ball. I dont think you will find anyone prepared to say what is likely under those circumstances.

Okay, so much for the home front. What about those other places where people have been investing in property recently?

Ireland: You may recall that a couple of years back I said house prices in Ireland have to drop by another 50%. Well, it’s slowly happening. House prices have fallen every year since I made that statement. However, they haven’t yet reached bottom. They have some way still to go. I note that the current auction scene in Ireland has properties selling at between 70-80% off peak prices. Bargains? Maybe, but dont expect prices to rise any time soon. Remember the golden rule. Property prices are a lagging indicator. Prices only start to rise about two years after any economic recovery. We dont even have any sign of recovery yet. There is plenty of time.

USA: The USA is still no place for a sensible person to buy a house. The whole country is in a terrible mess. It is a political and economic nightmare and it is verging on a police state. Have nothing to do with the place.

The Middle East: Turkey is still doing quite well. It is one of the few successes in Europe. If only all of Turkey were in Europe instead of a large chunk of it being in the Middle East, which is likely to catch fire and burn at any moment.

I have consistently warned against buying houses in this region. You will note from past newsletters that I made an exception of the city of Instanbul, and I’m pleased to note that tourist revenue there is up 30.1% this year. Not bad. But long term the land mass the other side of the Bosphorus is a terrible fire risk. The same is true of Egypt. In any conflagration in this region the Straits of Hormuz are likely to be the hottest spot. Too much oil for the world market flows through this choke point. Egypt is just too close for comfort.

Eastern Europe: Bulgaria and Romania are still in the grip of recession. In one sense they are moving forward, but this is not filtering down to the whole of the country. Until the rest of Europe climb out of the current mess Eastern Europe will suffer.

I think the general message is ‘batten down the hatches and take cover’.

john

2012- Part 3

Scenario Two: Central banks start printing money like there’s no tomorrow.

This money will be channelled to all the banking institutions that are broke so they can pretend not to be broke. The currency will be devalued. Inflation will get into gear, and we will all feel seriously poorer. Those with cash savings will get shafted completely. Those with property will do well to hang onto it, as eventually house prices will rise to compensate for inflation, but it will be a long ride back up, maybe ten years or more. And rises wont start until a couple of years after economies have returned to an upward path. Typically house prices are the last to rise in any economic recovery. People are too stunned and wounded to start hoping until they are sure the danger is past. Money will also be tight because banks will be reluctant to get in a mess so quickly after being bailed out.

Things will be tough, but at least we will be able to see our way out of the mess. Holiday property prices will be the last to recover. One other problem in this scenario: interest rates will probably rise.

One of the problems at the moment is that money is not being treated very well. If you can lend money at 5% and inflation is running at 5.5% then lenders are losing money. So why lend? The money goes somewhere else. Money starvation equals stagnant economies, stagnant house prices, and a slow drop in living standards. This is why we so often hear that the ideal situation is a 2% inflation rate.

Unfortunately, banks tend to borrow short term and lend long term. Short term borrowing costs are way ahead of long term lending rates. I’m paying 1.7% on a UK mortgage, and 3.8% on a euro mortgage. With UK inflation at 5.5%, my UK lender is effectively losing 3.8% p.a. That’s no sensible business arrangement. There is a similar math in Europe. That cant last if banks are to get back into the black, and stay there.

A general rule of thumb over the centuries has been for people to look at returns on cash invested of at least 3%, and over. If inflation is down at 2%, then money should cost about 5-6%. If inflation gets up to 7% then the cost of money should be around 10% to compensate. Interest rates up there soon put the real cost of buying a house through the roof. One does not want to get locked in to a loan with that likely scenario in place.

john

Property Prices in 2012 – Part 2

Property in 2012 – Part 2

It’s time I made my usual comments about where the housing markets are, and what I expect for the next twelve months. First, a massive caveat. I cant make any sensible comments on where things are going in the face of a possible seismic calamity on our doorstep. If there wasn’t a bankrupt European, American, and Japanese banking system in place then I could make some sensible comments about the year ahead. However, will it or wont it all crash?

Let’s try a few scenarios. Which one you choose is up to you. I cant advise which scenario is the most likely. Putting it bluntly I haven’t a clue.

Scenario One: things go on as they have with fudge following fudge. In this scenario bank lending clams right up. That means house prices go down and sales dry up totally. If that happens I lose lots of customers wanting to sell houses. What a bummer! If that happens, you guys simply wont sell your homes no matter what you or I try to do. Expect house prices in Northern Europe to drop by 10% or thereabouts. Expect house prices in Southern Europe to drop by anything from 20% to 60%, depending on the zone. 60% in Greece obviously.

If you have something you want to sell in Greece or Cyprus by all means talk to me. I’ll advertise it for nothing because I dont think you’ll get a sale.

We already have a Spanish bank claiming that new build property prices in Spain have to fall by 50% to have any hope of clearing the backlog of over a million new homes lying unsold. That does not account for those that would be up for sale if there was a market. If you own a holiday apartment in Spain and you want to sell, all I can say is, forget it. If you have a nice home in a proper Spanish community (most Unique customers do), then do yourself a favour and sit on it. Now is about the worst time to sell.

Once again, if anyone has a Spanish property they want to sell now, then do try and work out a way to keep it for at least another two or three years. More money down the drain for me, because any new customers wanting to sell in Spain I will advertise your place for free as well.

If you have a property in Southern Portugal or on the Silver Coast, then the same applies. You’re stuffed. Prices in all but Northern Portugal have to fall by another 20-50%. The backlog of empty new homes in Portugal is beyond belief. There is ten years’ supply. This problem is not going to go away soon.

One of the big problems with the Portuguese market is the dream world in which so many Portuguese live. They have not even recognised there is a problem. Until they do that, there will be no attempt to solve it. Heck, builders are still building here on the belief that next year or the year after there will be another boom. They have a serious reality problem. We even had an absurd report from some idiot think tank that Portugal’s property market hasn’t failed by as much as anywhere else in Europe because there was no bubble here in the first place.

For the record the Portuguese housing bubble was the worst in Europe, with properties selling at three times their intrinsic value at the height of the bubble.

By now I have probably depressed the hell out of you all. That is not my intention, and I would love to bring happy smiles to every face. On the other hand, most of you know me from old, and know I tell the truth. Of course I can give you a whole heap of upbeat rubbish. Do you really want that? You guys are Unique People with Unique Homes. You need to know things as they are. Forewarned is forearmed.

In the UK the market will continue to function, but at a lower level. Mortgages will get harder to obtain, and prices will fall. It’s not a good time to sell. Neither is it a good time to buy. This disaster zone has not reached its height yet. We have more muck to fly, and more pain coming.

If you are thinking of getting into buy-to-let, for pity’s sake dont. Leave well alone.

john

Property news for 2012

Property in 2012

It’s probably been a difficult year for most people, especially in the property markets. There has been a massive fallout from the banking chaos. Without a sound banking system capitalism cannot work. That means capitalism is on the rocks. It will remain on the rocks for some time to come because politicians are hell bent on politicising capitalism, and trying desperately to tame it into another form of socialism.

You cant socialise debt without upsetting honest hard working people. You cant socialise failure, which is what it amounts to. You cant get rid of debt by creating more debt. You cant run socialism on debt, but that is just what Europe and America have been doing for the past decade. There is a big crash coming; when, I dont know, but it is getting ominously close. I just wish the politicians would get out of the way and let it happen, so we can try and cope with it, and then get on with our lives. This tedious waiting for the inevitable is no way to live.

My scouts out there tell me there are plenty of people looking at houses, but in the eurozone they are not buying. They are waiting for the crash. No-one wants to commit to anything big until the inevitable has happened. We are all in limbo, slowly moving towards the big splat.

The Greek government is now being run by one of the crooks who fiddled the books ten years ago to get Greece into the eurozone. He’s a banking man. He will be there to see the banks have time to get as clear as possible from the falling debris. There’s an election in February, so he doesn’t have much time. After that election it is probable that all hell will break lose.

No, what am I saying? The politicians and bankers will rally round and do something incredibly stupid to try once again to prop things up, and in the process make everything much worse. Wouldn’t it be nice if it all fell down in February? So, let’s all make a wish, that the European banking system will totter into total chaos early next year so we can get on with a proper clear-up.

So, here’s my choice for a new year’s resolution: Wish for a crash!

The housing market will not unlock until enough banks have crashed to clear the system. That way ruin lies for those who have invested unwisely. The other way lies ruin for the rest of us. I know which I’d prefer.

During the week I will add more blogs showing what I think we are in for next year. Dont read it if you dont want to be depressed, but anyone who has good news for next year isn’t thinking straight.

john

House Price Bubble

Dave Humphrey kindly made a comment (several points actually) on my blog about the house price bubble in Portugal. I’d like to answer his points in another article because they are interesting and raise all sorts of questions which really do need addressing. For ease, here is his reply to my blog about Portuguese house prices:

“Oh dear, gloom and doom! You are likely to be correct (I wish you were not!). However there is a small point you may be missing. Villas are expensive to run with higher property taxes, heating (yes it does get wet and cold here) and maintenance. If on the other hand you own a simple, easy care, low maintenance apartment, on ground level (ideal for retired clients), complete and ready to move in, you may be better off in percentage terms as you probably paid a lot less initially those many years ago. So perhaps you should hang on to an expensive property and ride out the financial storm. Yes it will be a long time, maybe 4 to 5 years but it will be resolved. History is a great teacher and if you can afford to be patient, no bricks and mortar investment ever goes below a ten year previous price level. But we do have to analyse what we need against what we want. It is a cruel culture shock, but you will win in the end.”

First: I wish I had a happy story to tell. I dont like doom and gloom either, but Portugal is a funny place. Everything here is upside-down. If the tourist figures are down we get told they are the best ever. If the housing bubble was the biggest in Europe we get told it was the smallest, and so on.

People who bought many years ago may well be better off because they bought before the bubble. That doesn’t alter the fact that there was a bubble and people were paying insane house prices, between two and three times what the places were worth.

In tourist areas you get a two-tier housing market; the local market and the foreign market. Foreigners generally are not terribly savvy and pay way over the odds. They dont realise that when they come to sell they are in the second hand market where there is no hype, no fancy brochures or slick salesmen, and they have to sell to normal people.

If anyone thinks a wait for better times of four to five years is on the cards then all I can say is that you are one heck of an optimist. We are in the midst of a total banking catastrophe the like of which has not happened in the history of the world. These sort of things have happened many times in single countries but not across three quarters of the globe. The entire European American and Japanese banking systems are bankrupt. That takes care of two thirds of the banks on the planet. With China in a banking crisis as well, that doesn’t leave much of the planet left with any sound money. On those terms a turn-round in house prices is way in the distance.

I dont know where Dave gets his facts from but to say “no bricks and mortar investment ever goes below a ten year previous price level” is nonsense. My charts show house prices in the UK in 1945 were identical to those of 1760 adjusted for inflation. Heck that’s nearly 200 years to show a 0% increase.

Not only that but the Great Depression that ran for nearly 30 years at the end of the nineteenth century had house and land prices falling almost every year. It was so depressing that old families just shut up their homes and went abroad, leaving the places to fall into decay. The novels of the time make a big issue of the rural decay. You get poignant vignettes of the situation even in the Sherlock Holmes stories. The mantra in the 1880s and nineties was “Never go into property, it’ll bring you nothing but ruin”.

I dont think house prices in Europe will ever get to such a high as they did five years back. The reasons are very simple. People will only pay so much for a home. They can only pay more if someone else gives them the money. Banks in Portugal were lending at 125% of valuation, and valuation was often twice the real value.

The main reason house prices were so high was simply because of those bank valuations. If the bank values a house at 25% more than the market price, then that new value soon becomes the new market price. Carry that farce along for three or four years and you have house prices that are off the chart. I cant see that happening again even if I live to be 120. Prices have to be affordable, that means wages have to rise, and if wages rise too far too fast then interest rates go up, and you get a situation where house prices cant rise more without inflation eating up the difference.

Putting this another way, we have come as far as we can in our current economic model. Maybe a new model is just around the corner, but I see no sign of it at the moment. Maybe if we colonise the Moon and Mars and harness free energy things will be different, but that has to be some way in the future.

If you look at house prices in the UK from, say, 1960 to 2000 you will see that they go up and down, but every time they go too high they have to fall, and they end up roughly keeping track with inflation. I show all of this in my book on the subject, complete with charts. The book is available from my website, http://www.property.org.uk/unique/book/index2.html

I dont think what has happened is a cruel culture shock. People were living far beyond their means. You can do that for a few years but not forever. Now it’s pay-back time. It’s the normal way of things.

What is making everything so much worse is the political inference with the markets. Governments are trying to apply socialist measures to a capitalist system. It wont work. The only way you can do that is to print money. That way lies inflation, which eats up savings and destroys wealth. It also will mean much higher interest rates. That of course will destroy house prices.

One final point I’d like to make. Dave says history is a great teacher. I agree. When I first visited Portugal in the sixties there were about 65 escudos to the £. Forty years later there were 320. House prices in Portugal had to rise by 500% over that period just to keep up with the falling value of the currency. Holding property for the long term in Portugal has been a disaster. I dont see any changes coming any time soon.

The upside is, if you enjoy living here, then why worry? As Bob Beckman used to say, “Your home is your nest, not your nest egg”. I think if we stick with that we’ll be alright.

As ever, comments are welcome. Disagree with anything I say. I am always happy to enter into discussion.

john

Eco Homes

There is an article in one of the magazines I subscribe to about a chap, Simon Dale, who has built his own sustainable home for £3,000 mostly out of found objects, and using only a chain saw and a hammer.

He had this dream, the dream so many of you have, to live in woodland, close to nature, growing his own food, and generally living a low-impact life. Here are a few key points about his eco home:

Timber from thinnings from the surrounding woodland
Straw bales in floor, walls and roof for insulation
Plastic sheet, mud and turf for low impact roof
Heating from a wood burner
Flue goes through stone/plaster lump to retain and slow release heat
Skylights for natural light
Solar panels for electricity
……….and so on.

While we are on the subject, if an eco home interests you, have a look at the Lammas Project. This is a voluntary organisation that has been working to promote low impact development for the last three years. It was involved in the development of a Low Impact planning policy in Pembrokeshire, the first county in the UK to introduce one. This policy allows low impact building and living where it is tied to working the land for a simple livelihood. Lammas has since, with others, been lobbying for similar national policies. A Wales-wide policy is now in public consultation, and English agricultural planning guidance is going in the same direction.

Meanwhile Lammas has managed to get permission for a settlement of nine 5 acre low-impact smallholdings under Pembrokeshire’s policy.

The Tir-y-Gafel settlement is well underway. Much of the infrastructure is now in place and the buildings are starting to go up. Thousands of trees have been planted, and gardens have been started, and homes are being built. To find out more about the settlement check out the Lammas website: www.lammas.org.uk

Lammas also provides advice and solidarity to those pursuing low impact living elsewhere.
Simon’s website is at: http://www.simondale.net

And, of course, dont forget to check out the Unique Property website.

Best wishes
john

Lose Money in Brazil

This is issued in the public interest. We have information on more sharks in the water, ready to bite off your wallet.

I have for some time been saying that Brazil is the place to buy property. I am invested there, and my investments are doing well. It would be difficult to go wrong in this country. It is coming along by leaps and bounds. It’s economy has come from nowhere just a decade ago to being just outside the top five biggest economies in the world.

Land prices in good locations in Brazil are cheap. They can only get more expensive. If you own some Brazilian land and sit on it for a while you will ultimately be able to sell for a nice fat profit.

Where there’s a profit there are thieves.

Your problem in investing in Brazil is not necessarily the investment but the sharks who sell it to you, or maybe even pretend to sell it.

There is a golden rule with all these investments. Get off your arse and go and look. If you dont you are likely to get stuffed.

I recently did a deal with a company called Cavendish Land & Property Investments (CLP). They purport to be selling land for development in Sunset Beach, Natal Province. I was initially not interested in the deal because I could not verify the company selling it was on the level, but I have a letter in my possession telling me they will buy back the property for a 10% uplift in price on 30 days notice.

Well, I sent in my request for them to do just that, and I have received no response and no sale-back. I sued them in the County Court. I now have a judgment against them.

So, here we go again. Dont have anything to do with a company selling plots of land at Sunset Beach.

CLP also run a nice line in ad-speak, telling customers that deals have been struck with Petrobras and the like. That is all codswallop. Steer well clear of this company.

john