The UK Market has a substantial shortage of properties, according to the Government estimation; we need to build 250000 homes per annum to meet the growing requirements. The UK population are living much longer than have done previously and the Government continues to struggle to support us into our retirement. Pension schemes are no longer sufficient and the return on savings in the bank is at an all-time since the banking crises in 2008. Unless we do something now to look after ourselves in the future, it’s likely that working past the normal retirement age will swiftly become the norm and as a result, the standard of living throughout the later years of our life will become much more challenging.
According to the Times Rich list, 40% created their wealth through property. The other 60% invested in property as a means of growing and protecting the wealth that they created in other industries. In fact, more millionaires attain their wealth through property than any other type of investment.
Generally, there are 3 main options to choose from if you investment funds available:
From our investors experience they have found that investing in properties is by far the most risk free, hands off and financially rewarding option. The main reason to invest in the properties in Luton is that we are within 25 minutes commute to London. Properties and Land is limited, therefore prices are growing and will continue to grow.
In April 2015, buy to let property was highlighted as the best performing asset class when researchers compared its returns to other investment types such as UK shares, cash ISAs, government bonds and commercial property. Since 1996, buy to let investors have achieved returns of almost 1,400% - highlighting that every £1,000 invested into buy to let property would be equivalent to £14,897 today.
For Example, if you invested £35,000 into the property then we could purchase a property that was worth approximately £135,000. This is achieved through using a mortgage or other lending facility. Given the current market conditions let’s assume that the property market in Luton also increases in value by 6% per annum (even though it increases at a higher rate in normal market conditions). After 10 years the property has increased in value from £135,000 to £216,000. Our original investment of £35,000 is now worth more than £81000.
We must consider that we will have interest to pay for borrowing this money. But this cost will be covered by tenants who will rent the property from us and there will almost certainly be a surplus income which we can spend whenever we want. Therefore our investment has significantly increased in value over time and it has given us additional income to help improve our lifestyle. The most important thing is that the property will be tenanted for as much of the time as possible. Therefore, it should be in an area of high rental demand, close to good transport links, nearby bars, shops and restaurants or close to universities and business districts.
In Luton a typical yield we should look for is 8% at least, this equates to an annual rental income of £8,000 or £667 per month. The typical deposit needed to buy this property would be 25% which equates to £25,000. This means that we would need to borrow £75,000. The interest payment on this would typically be around 4% per annum. This equates to £3,000 per annum or £250 per month. Monthly rental income (£667), minus monthly mortgage payment (£250), equals £417.
Let’s assume monthly management cost of £75 per month. This equates to a net income of £342 per month which we can use how we like. Once we build up a portfolio of let’s say five properties, we have an extra monthly income of £1,710. This doesn’t even take into consideration the capital growth in Luton discussed earlier. Investing in property is both useful and flexible for many reasons. Aside from the obvious financial gains, it can be used to help you achieve specific goals. For example, if you want:
It is important that you know what you are trying to achieve from investing in property. Realising this will help you plan an investment strategy and work towards achieving those financial goals.
Buying a property which does not yet exist is not an easy decision to make; however, our investors have the rewards for their bravery once property is completed.
The concept is to buy a property off plan at a discounted price based on our bulk purchasing strategy, either sell before completion or when the development is completed in 12-18 months later then we can rent & manage your property to than cover the mortgage and the out goings and the capital growth. A lot of our investors are using property as their pension plan and creating wealth for retirement, for their families future or for simply adding properties to your portfolio. Property in the United Kingdom has doubled every 7 years for the last 50 years and in some areas we have seen accelerated growth. Buying from the right developer in the right area at the right time and at the right price takes full time research a great track record and careful negotiation. Our developments can take up to 2 years to build and deliver and have sometimes taken many years working through the planning process. We offer our investors an end to end solution providing pre sales consultancy, a financial, legal and efficient tax platform as well as an interior design and a block rental management service when the property completes. We don’t just stop there we can manage the sale of the property when our investors are looking to reinvest or reap the benefit of their decision.