ASK549: Can I buy somewhere I've never been? PLUS: Is it time to give up on flats?

(upbeat music) - Hey everyone, this is Ask Robin Robwood. We answer your questions. We answer them in the Sunday times. We answer them for the hundreds, if not thousands of investors that we work with, with Property Hub. But today, our questions come from you. So our first question is in from Robin. - Hi, Robin Robb. I love the podcast and I have a question. I currently live in London and I'd like to invest, but it's not affordable here. So I think my only option is to invest somewhere else. I've heard you mentioned places like commentary, notting in, as good places to invest that are coming. But it does scare me a little bit, investing in places that I don't know. Do you have any advice on that? - So Robin wants to know how to get comfortable investing in an area you don't know. And my quick answer to this Robb would be, turn it into an area that you do know. So you're always gonna know your local area better than anywhere if you've been living there for a long time. But I think you'd be surprised at how quickly you can get your knowledge up on a particular area. So if you identify an investment area that you believe in, you basically just need to give yourself a crash course in that area. Get yourself as close to becoming a local expert as you can. And I think people could be surprised at how quickly and easily you can do that and do a lot of it without even visiting. - Oh, absolutely. By using YouTube searching videos about that particular city, if it's a city, this is a lot easier, right, in and around a city. You can do it with big towns as well. But YouTube, speaking to localletting agents, getting their advice, reading every article that you can on that area in terms of the investment, what it's like to live there. Then there's popular places to live. The desktop research that you can do is incredible. You do not need to leave that comfy sofa or your desk chair to get that amount of information done. You can then rob, take it a step further. And maybe if you're a first-time investor, possibly should take it a step further and go and visit that place if you're a bit nervous. But the amount that you can do at home is quite impressive. - Yeah, we have clients who bought in different parts of the country without ever having visited. And we've done it. We both own properties in places that we've never been. No, I've got a place I've been within 100 miles off. But most people, I'd say that's going to see something that's going to sound scary to them. So if you're not ready to go all the way with that, then do that desktop research first, pick your area of interest, build up some familiarity, then make the visit, go do a trip, do some viewing, speak to a letting agent, get to understand the area. And that's where you start to build up that knowledge of beyond the stats, like where is the area where you've got the big long road and at some point the nice end of the street turns into the not so nice end of the street. That's something that you can't really see in the stats, but you can see it when you visit. And I think you'll be surprised how quickly you can pick that up. My secret weapon for this, by the way, without even going there is Google Street View. Google Street View is amazing. - You're going to say that. - Yeah, it's incredible though, because I've done this before, where I've checked out an area on Street View, got a feel for it. Then I visited and got, well, I'm kind of happy that I validated it, but I've also completely wasted my time by visiting, because I've not learned anything new. - Yeah, Street View and speaking to those local agents as well, like say what do you think of this road in this area? They'll tell you, like they'll tell you, if they think you are going to be someone that they can work with in the future and you build that relationship, like get them to give you the honest view, like they don't need to say everything's great and say that to them, like stay up front and want me to tell me if this is not a good area because I'm going to make up an investment, it might not be this area, but I'll keep looking, you tell me where I should be looking and where I should avoid. And if you find a good agent, they absolutely will do that, they really will. - Okay, our next question is from Aleem who's written into our Sunday Times column and he wants to know, should he be selling his flats to buy more houses instead? - Well, you know what, he's right, because flats have had a tough time recently. In the press as well, but also in the data, you know they've had a bit of a bad run, the price of flats in the UK is down 2.5% in the last year, according to the land registry. And Zouplafam at the price of flats has been falling for 15 straight months. So the recent data isn't great, Rob. And then when you go over 10 years, Zouplaf reports that the price of flats have gone up by 10% versus houses at 43%. So is he onto something? - I think he's absolutely right, that he's not unusual, like flats have underperformed. So the question is, are flats going to continue to underperform, or are they going to start to grow at the same pace as houses again, or even catch up? And so you need to know, are these factors temporary or permanent? And this is where I think people get it wrong when it comes to flats, because everyone goes, oh, yeah, the thing that everyone's saying these days is that they're flat to terrible because, like, lease hold, greedy freehold of service charges. But nothing's changed there. Nothing's changed over the last five, 10 years. In fact, the lease hold system has got a bit better. Yes, service charges have gone up, but everything's gone up. And so I think people have latched onto that as being the reason, but that's more sentiment. I think when you go, what are the real reasons for underperformance? I think there's a few of them. I think a big one is Grenfell, and all the safety concerns around that, which has made Lenders nervous, and there's been a lot, it's been hard work getting a mortgage on some flats, even if they're completely unaffected, just because of everything going on there. And it's made buyers nervous as well. At the same time, you're natural buyers of flats who are investors, well, not so many investors around, and first time buyers. First time buyers have had a hard time of things because of mortgage rates. So I think all of these factors play into it, but you have to figure out, well, how many of these factors are permanent, so flats are going to keep on doing worse, and how many are just temporary and when they clear, then off they go. - I think you're absolutely right, Rob. Sentiments is absolutely impact the performance of flats apartments. What it does mean, though, and I think this is kind of not seen as much and certainly not discussed, is because of that, the yields, when I look at it, seem to be a little bit stronger on apartments of flats versus houses. So you get a better return because of that negative sentiment. And there's a reason why we own both, like I own flats and houses, and you own flats and houses. We don't exclusively have one. And the reason for all that is good to divert your portfolio because if we jump back in our time machines and we look at the early 2000s, flats massively outperformed houses, they were invoked. That was what everybody wanted to live in and buy. And then that flats back then really outperformed houses. So you have cycles. At the moment, flats aren't in a great cycle, but when you see an asset at a suppressed price, that's when I see at least an opportunity because you're getting an asset that performs the same duty. You know, it provides you capital growth over the long term and remember, it cycles. So it will do well again in the future. But it also gives you a superior yield right now and less buying competition. So you're more likely to get yourself a stronger deal on a flat or apartment as well at the moment. So for all those reasons, that's why we invest in both. Because if I can get a really strong deal on a flat and apartment in a really good area with a really good yield, why wouldn't I invest? Yeah. But that's if you're starting from today, like from a leans point of view, I think it's even more stark because you have to write off past performance. That's already happened. You'd love to go back in a time machine and they've bought something different, but you are where you are. So then if you're going to make the switch, then not only do flats have to continue doing much worse, but you've got all the costs associated of selling and rebying with the stamp duty of your purchase. And so then you'd need to go where actually, flats are going to really lag to such an extent that it's going to more than make up for my purchase costs. And maybe if you look at that and you go, well, I've looked at the factism, that's my judgment. It's not a judgment that I would make. I'm feeling no temptation to sell any of my flats and buy houses instead. But at least if you understand the different factors, then you can come to your own view. That's what's done for another week. If you want to get your question in on the show, go to propertyhub.net/ask. It's in the show notes, nice and easy. And we'll be back on Thursday with the main podcast. So make sure you are subscribed if you haven't done so already. So you do not miss that. We'll see you then.