Don’t turn the lights out on the UK Property sector just yet’! – says entrepreneur and leading property investor Jim Moore

If you’re a property investor in the UK right now, I wouldn’t be surprised if you are little scared – even terrified by what you are reading in the papers – no one seems immune to the effects of the credit crunch. What about Lehman Brothers, Goldman Sachs, Washington Mutual and American Insurance Group - I don’t know another time in history when things have been this bad. These are terrifying times, unless you really understand what is going on.

You could do worse than looking at a quote from the ‘richest man in the World’, Warren Buffet’s it goes like this, “be fearful when everyone else is greedy, and be greedy when everyone else is fearful”.

Warren Buffet, you understand, has probably bought shares when prices are higher than now. Is that any different to us and our investments in property? We have all bought property at higher prices than right now. We are all in the same club! I take heed in the fact that once I bought a property for £325,000 – I sold it for £245,000 three years later at a time reminiscent of where we are now with falling house prices. I thought the bottom had fallen out the market and I was just going to lose a lot of money - so I got rid of it. It goes without saying I made a mistake for last year, it sold for a whisker over two million pounds.

Likewise, if you’re trying to sell right now, you’re going to have a problem. It’s going to be hard and you are going to have to accept you will take an all-time low price. So, who sells right now? Number one - desperate people! Number two - people who are scared! I am sure it would break your heart to sell something at half price, but think about it - if you could sell something at half price and use that cash to buy something that you could move on more quickly, or you knew you were making profit on, or buying less expensively, is it fair to say it’s possible? You might find a way to make more money in the market.

Over the last 50 years property has generally gone up - on average it has gone up 11.3% per year. So if you fast forward now - five or ten years - and imagine that we’re doing the averages all over again - property will have gone up and you will have made a profit.

This is coupled with the fact that we have got a deficit in the number of properties being built. In this country we have an immigration figure standing at around a 1/4m people a year- but on average, we have been building 170,000 a year or thereabouts. Hello, what’s wrong with this figure? Haven’t we already got a growing deficit here of 80,000 a year?

The situation, however, is worse than this! If you look to the figures this week that have been released from the National House Builder’s Federation, what they’re talking about is the construction industry has been decimated because of this credit crisis. We are building this year less than half the homes we built last year. They’re talking about building less than 90,000? So in my view there is only one way for house prices to go – and that is up. Surely this is the simple truth of supply and demand.

Yet some still say that they would be better off investing in shares or pensions! When was the last crisis, five, ten years ago? What was the crisis that precipitated people’s interest in investing in property in the first place, as individuals? It was a massive crash in pension values, and so actually I think we can all pinch ourselves. When we’re getting scared and we panic, and we go, oh my God, what have we done. You know, what we’ve got to do is really, really grab ourselves and give ourselves a bit of a shake, and say, you know what? Property is a good investment, don’t give up on the UK property market, not just yet.

The government understands that they have got to somehow guarantee or underwrite inter-bank lending. What they are doing right now is almost quasi-nationalisation and is making it so that the banks will start lending to each other again. When the banks start lending to each other that ups the wholesale market. When the wholesale markets are in luck, then they will start offering mortgages again.

Why do you absolutely know the banks will start offering loans again, as soon as they possibly dare? – and believe me they are desperate to start lending again – because that’s what they do!

When we go borrowing, they borrow it off somebody else, and make a wholesale rate of interest, and so that’s what’s gone wrong with the market. The minute that happens, the whole thing starts to move again. Today we are already beginning to see a glimmer of hope.

When I invest, I don’t get it right every time! I make mistakes too, but more often than not, I get it right. What we’ve got right now is what I call a Black Swan Event. How often do you see a black swan? 9-11 was a black swan event. I’d defy anybody to plan for somebody flying some jet liners into a whole bunch of buildings. They can plan for it now they’ve seen it, but they couldn’t before? I’d defy anybody to plan what’s happened here in the last twelve months – but we can plan for the future.

There are some fantastic deals out there if you’ve got cash, if you’ve got an ability to do a deal with a pension, if you’ve got liquidity there are some really great deals. . Do you honestly think developers have been doing deals with £1,000 in if they didn’t need the business? Of course they wouldn’t. They’d be saying, I want 40%, I want this and that, and so there are deals out there, even in broad areas that you can get now, that you couldn’t get in other times.

Now, what does that mean? It means if you want to succeed, you’ve probably got to swim against your own emotion. Does that feel difficult and uncomfortable? You bet it does. It means you might dispose of something under value. It means you might buy something when everything emotionally says to you; I ought to be running like crazy. But, actually you think about it and rationally, there’s only two ways to make money at a time like this. Number one is to buy something at rock bottom, knock down, depressed, bankrupt, in trouble price, does that make sense? And, that’s the best price you’ll ever buy anywhere. Number two is if you can’t do that and take advantage of it, then get yourself into somewhere or something where there’s growth, does that make sense? Because what that can do is balance out the fact that your investments in other areas haven’t got growth.

One of my clients said to me recently that this recession is giving me a headache, it’s such a worry. I said, you know what I have found, the best thing for a recession headache is a profit.

People say, if only we could control it. If only there was something we could change. Well you can. You don’t have to do it, but you can. There is no sign of the credit crunch in Brazil - one of the fastest growing economies in the world. You would do worse than looking at emerging markets where there are great profits to be made.

With IAP Global, I have set out to democratise and commoditise property investment for individuals, and I still believe that that’s the way forward. I will tell you something, however you do it, in ten year’s time if you stick with these philosophies. You absolutely will be thanking yourself that you did. The point is you’ll thank yourself, because you ask yourself, what are the alternatives? Shares?

Would they have made you any money? No, they wouldn’t. Most of us are not skilled enough to trade shares, to get into currency trading and all these arcane type things, where everyone talks about how much money they make. Have you ever met anyone who has done it really? They’ve all got this mythological name that nobody ever meets. So my advice is stick with property.

If nothing else don’t turn the lights out on UK property just yet! Sit tight and be more creative with your investments. Look to property fund, developer deals and emerging markets and you will ride this wave and provide a bed rock for growth.