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  • FIRST POST
    • lukepa96
    • By lukepa96 26th Nov 17, 8:04 PM
    • 20Posts
    • 1Thanks
    lukepa96
    New Builds with ‘assured’ or ‘guaranteed’ rental income.
    • #1
    • 26th Nov 17, 8:04 PM
    New Builds with ‘assured’ or ‘guaranteed’ rental income. 26th Nov 17 at 8:04 PM
    This should probably be in the property part of the forum but thought it was more suiting for here?

    Hi guys,

    I’ve been looking into buying my first investment property for the past few months and have spoken to a fair few companies offering various ways of investing in property. From sourcing agents offering vanilla BTLs or HMOs etc to developers offering assured rental income for a set amount of years plus buyback options.

    I am very cautious of making a move into property investment. Certainly on my own due to the risks involving voids (with mortgage/costs to pay) and maintenance of property etc.

    So the idea of having ‘assured’ or ‘guaranteed’ net income for 2 or more years, would allow me to hopefully have the property paid off within that time period.

    One company was offering 8% ‘guaranteed’ net income and 125% buy back option after 5 years.

    The other which is the one I have spoken to most recently is called Signature Capital (parent company is Signature Living) and offering 7.5% net ‘assured’ income for 2 years on a development in Liverpool (which won an award from some property magazine)

    Have any of you guys had any dealings with Signature Capital? Or purchased a new build property through a set-up like this before?

    I’m very wary as to why these developers are offering these properties as guaranteed income investments and not just selling on the open market?

    Any advice is much appreciated,

    Luke.
Page 1
    • jimjames
    • By jimjames 26th Nov 17, 8:28 PM
    • 12,244 Posts
    • 10,779 Thanks
    jimjames
    • #2
    • 26th Nov 17, 8:28 PM
    • #2
    • 26th Nov 17, 8:28 PM
    I think you're absolutely right to be wary. Unregulated companies can make any guarantee but it's effectively worthless as it depends on them being able to support it or even still in business. Effectively they can't guarantee it unless they are using other money to pay you back so either their own money or what you paid them or what others have paid them. Check exactly what you own, it may be that you have a worthless asset that you can't sell on and have no income either as many have found to their cost with similar schemes
    Remember the saying: if it looks too good to be true it almost certainly is.
    • firestone
    • By firestone 26th Nov 17, 8:30 PM
    • 39 Posts
    • 9 Thanks
    firestone
    • #3
    • 26th Nov 17, 8:30 PM
    • #3
    • 26th Nov 17, 8:30 PM
    Could be legit but if they can guarantee income & buy back why offer to others? Also is there any protection if it goes bust?Just as risky are BTL P2P companies such as Property Partner,Brickowner and Housecrowd etc but even they make no guarantees due to void periods and the housing market
    • dunstonh
    • By dunstonh 26th Nov 17, 8:38 PM
    • 89,956 Posts
    • 56,660 Thanks
    dunstonh
    • #4
    • 26th Nov 17, 8:38 PM
    • #4
    • 26th Nov 17, 8:38 PM
    Do not mistake the use of the word guaranteed to mean guaranteed in the same sense it is with financial services.

    With commercial arrangements, it is only guaranteed as long as the company exists and is able to afford it. Lots of schemes have had so called guarantees and gone on to fail.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Jeems
    • By Jeems 27th Nov 17, 11:17 AM
    • 182 Posts
    • 110 Thanks
    Jeems
    • #5
    • 27th Nov 17, 11:17 AM
    • #5
    • 27th Nov 17, 11:17 AM
    They've over inflated the property cost and will pay you back your own money as part of the "guarantee".

    Do your due diligence. What is the market rate for rental properties in that area? (speak to local estate agents). Invariably, the local rents will be lower than the guarantee, and then ground rent and service charge will likely shoot up after the guarantee period too.

    I was in the same boat as you in 2015. Decided against any company offering these sorts of returns.
    • Malthusian
    • By Malthusian 27th Nov 17, 11:22 AM
    • 3,466 Posts
    • 5,307 Thanks
    Malthusian
    • #6
    • 27th Nov 17, 11:22 AM
    • #6
    • 27th Nov 17, 11:22 AM
    So the idea of having ‘assured’ or ‘guaranteed’ net income for 2 or more years, would allow me to hopefully have the property paid off within that time period.
    Originally posted by lukepa96
    If words like "assured" or "guaranteed" are attractive to you then you should be going absolutely nowhere near these schemes.
    • jamei305
    • By jamei305 27th Nov 17, 11:50 AM
    • 239 Posts
    • 284 Thanks
    jamei305
    • #7
    • 27th Nov 17, 11:50 AM
    • #7
    • 27th Nov 17, 11:50 AM
    There are plenty of rent guarantee and rent insurance products you can avail yourself of after purchasing a property the usual way e.g. via an estate agent. There's no need to deal directly with developers.
    • lukepa96
    • By lukepa96 27th Nov 17, 11:58 AM
    • 20 Posts
    • 1 Thanks
    lukepa96
    • #8
    • 27th Nov 17, 11:58 AM
    • #8
    • 27th Nov 17, 11:58 AM
    Thanks Jeems,

    This is exactly what I had assumed..

    Does anyone on here know of any decent companies that run or facilitate fully managed property investments?

    Best,

    Luke.
    • planteria
    • By planteria 27th Nov 17, 12:00 PM
    • 4,880 Posts
    • 1,071 Thanks
    planteria
    • #9
    • 27th Nov 17, 12:00 PM
    • #9
    • 27th Nov 17, 12:00 PM
    agree with Malth and Jeems..

    i would say that if you want to buy a property to rent out then just do it yourself. an area you know well, that you understand thoroughly: lots of research with estate agents, letting agents, checking out the street carefully etc.

    also, i would set up a company to buy the property rather than buy it personally. speak to your accountant before proceeding either way.
    • Fatbritabroad
    • By Fatbritabroad 27th Nov 17, 2:17 PM
    • 196 Posts
    • 95 Thanks
    Fatbritabroad
    Do not mistake the use of the word guaranteed to mean guaranteed in the same sense it is with financial services.

    With commercial arrangements, it is only guaranteed as long as the company exists and is able to afford it. Lots of schemes have had so called guarantees and gone on to fail.
    Originally posted by dunstonh
    Dunston! You're back!
    • badger09
    • By badger09 27th Nov 17, 3:13 PM
    • 5,596 Posts
    • 4,908 Thanks
    badger09
    Dunston! You're back!
    Originally posted by Fatbritabroad
    He's been back nearly 3 weeks. Keep awake at the back
    I'm a supporter of dunstonh
    • Malthusian
    • By Malthusian 27th Nov 17, 4:06 PM
    • 3,466 Posts
    • 5,307 Thanks
    Malthusian
    Does anyone on here know of any decent companies that run or facilitate fully managed property investments?
    Originally posted by lukepa96
    Look under the Property category of the Investment Management Association (for open-ended property funds) or the Direct Property category of the Association of Investment Companies (for closed-ended funds, aka REITs).
    • fiisch
    • By fiisch 27th Nov 17, 10:42 PM
    • 208 Posts
    • 90 Thanks
    fiisch
    No. Avoid.

    These properties are typically above market value, whereas if you're looking to get started in buy to let you ideally want a below market value (BMV) property.

    Property Geek (and his associated books if you enjoy his free blog) is a good place to start if you haven't read this already...
    • lukepa96
    • By lukepa96 28th Nov 17, 11:11 PM
    • 20 Posts
    • 1 Thanks
    lukepa96
    Thanks Fiisch.

    That was my exact assumption.

    Cheers,

    Luke.
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