What Returns Can I Receive?
The financial return achievable will depend on many factors, starting with yields of around 5%+. Return On Investment (ROI) can be significantly increased through smarter investment choices. For example, using leverage appropriately can see your ROI reach 15%+.
Why Is Property Investment So Popular?
Property is a secure investment as it is backed by an asset which does not see extreme volatility. For example, when Covid-19 reached the UK, the stock market crashed around 20% in one weekend. Fortunately, the property market is a slow moving beast, giving you time to sell your asset and retrieve your investment back. As we reside on an island with limited space, the demand for property will only continue to rise giving you an exit if (and when) you wish.
Property can offer a great return on your money. With the right property investment, you can get paid twice through rent and capital growth.
Another benefit of investing in property is the ability to leverage. An example of this is buying a property with a mortgage (often for an investment this includes a 25% Deposit). In this case, you could benefit from and receive the rental income of a £100,000 property, after only paying £25,000 towards it. In addition, when the property goes up in value, the debt (mortgage) will never be more than the original £75,000, meaning that you reap the benefit of the full asset (property) growth!
Is There a Minimum Amount of Investment You Work With?
For those not looking to directly invest in property and instead work with us on a project or two, then they may look to invest in our projects. In the past, the minimum amount an investor would invest with us was £10k. Essentially, we look at each individual and our long-term relationship prospects when evaluating a new investment agreement.
What are the Risks Involved with Investing in Property?
Short-term fluctuations in the property market
Hold your investment for a longer term. Also invest in areas with a high demand for housing which will naturally appreciate the property value.
Maintenance issues becoming costly
Ensure that the property is well refurbished prior to letting. Save money on the rent each month to cover unexpected costs, as well as accounting for upcoming jobs e.g. annual gas safety certificate.
Void periods or tenant not paying
Buying a property in an area of strong rental demand can help mitigate voids. With more demand, you will have a greater selection of tenants to choose from. Complete due diligence such as referencing checks and credit checks.
Requiring the money from your investment quickly
Do not over-invest and keep a rainy day fund topped up. Look to invest smaller portions of money in a few different projects with different exit strategies. You may think about some fixed return investments, some properties to keep, some to sell, all planned out for different times to help manage your cash flow should you require those funds.
How Much Hassle is Property Investing?
This one is a bit like a piece of string - it depends. However, there are many ways to minimise the hassle of your property investment. Buying in an area of high rental demand will often mean that you won’t have lengthy void periods. You will also increase your chances of having plenty of potential tenants to let your property to. We personally advise seeking professional advice from your local lettings agency in terms of screening potential tenants, saving you time and ensuring your tenancy is compliant with the up-to-date lettings legislation.
If you have completed a thorough modernisation of your property, spent full due diligence on tenant selection and found a good lettings agent, then you’re on the way to reducing all potential property ‘hassle’ - that being said, property is difficult to make fully passive so do expect the occasional phone call!
What Areas Do You Cover?
We make investments local to us covering Doncaster, Wakefield, Pontefract, Barnsley and the villages in between. As a family, we have been investing here for the last 20+ years, as well as having our estate / lettings agency based centrally. Our extensive local knowledge gives us great confidence in knowing the best areas to invest (and more importantly the areas to avoid!).
What Is a Legal Charge Over a Property?
A legal charge over a property is the legal right that the organisation / person that lends money has to take back property if a person does not return the money that they borrowed as per the terms of the loan. The easiest way to think of it is with a traditional mortgage. The bank are willing to loan money to you as an individual to purchase a property. Repayment terms are outlined and security for the bank is the first charge over your property. If you fail to meet the repayments, then the bank will serve court orders to gain possession of the property, normally they will sell the house quickly to re-coup their investment. When you make the repayments and only when the loan amount is fully settled, then the charge is removed from the property. You are unable to sell / re-finance a property with an outstanding legal charge, which ensures that the debt attached to the property is cleared first.
How Does Property Investment Work?
Property investment can work in many ways. The traditional way is to buy a property, then manage and rent said property out. A good investment should cashflow positively each month, and overtime the property value should increase providing a healthy slice of equity within the property. There are other ways to invest in property, for example, you may look to partner up with someone (joint venture) and invest together. A joint venture works when two people bring a different skillset to the table, sharing responsibility and splitting the profits afterwards. Other more passive ways could be investing with someone who can complete the full end to end package and may offer a fixed return on the money invested with them. This is something we at My Property Solutions regularly do. It works for us as we get to complete more projects and it’s great for investors who wish to have a great passive return on their investment, creating a WIN WIN situation for both parties. As with all Peer-to-Peer Lending, this is not FCA Regulated and thorough due diligence should be undertaken.
Is It Worth Having an Investment Property?
Property is a great way to build long-term wealth, whether that is having one or two investment properties, or a larger portfolio to help bring down the retirement age through another stream of income. Property is often considered one of the safest investment assets there is, hence the saying ‘as safe as houses’.
If I were to Invest with You, What Is the Process?
If you are interested in working with us, then it all starts with a conversation to help outline what you are hoping to achieve. We will only work with people if we believe we can be a good fit for what they are looking for. Given the fact that we are a family business, if we begin to work with an individual who is not a good fit, then this may be disruptive to each of our family’s respective services. Note: We have never not had a good relationship with those who we have been lucky enough to work with. However, we do highly value the process of getting to know you as an individual and your goals also.
As mentioned, there are a wide variety of ways in which we help people. We have set pathways to implement within each individual circumstance, helping our investors to benefit from the arrangement.
What Happens to the Properties We Buy?
It depends on the investment deal. Most frequently we buy the property, add value, and then look to rent and refinance the property. This releases the equity due to the force appreciation. This is when we can pay back (+ interest) the investor who has funded the purchase. We will then manage the property through our Lettings Agency.
What Type of Property Is the Best to Buy?
Typical Buy to Let stock is terraced or semi-detached properties. These properties can help achieve a consistent positive cash flow as they are often in demand by first time buyers and young families. We always look for good employment opportunities locally, with good transport links for commuters as well as close to schools rated ‘Good’ and above by Ofsted. Having an appreciation for areas which are receiving investment is also a good way to predict the up-and-coming areas of the future.