New flats, guaranteed returns, no running costs: too good to be true?

Frog_Prince

I received the e-mail below from a property investment company. They attract good reviews.

What should I be asking them about this scheme?

"Good morning,

 3 completed apartments have come back to the market offering an 8.5% NET return per annum guaranteed for 25-years, increasing by inflation each year. The rents are paid directly by the DWP (UK government sector).

 Each apartment is priced at £152,941 and gives you an immediate guaranteed income of £1,084 NET per month for 25 years. This income will increase every year with inflation, expected returns below:

• Year 1 - £1,058 NET per month / £13,000 per annum – 8.5% NET.
• Year 5 - £1,267 NET per month / £15,208 per annum – 9.9% NET.
• Year 15 - £1,875 NET per month / £22,500 per annum – 14.7% NET.
• Year 20 - £2,881 NET per month / £27,374 per annum – 17.8% NET.

 You have zero running costs, all service charge, maintenance, repairs, damages, management, council tax and utility bills etc are covered for 25-years.

 You are free to sell whenever you like. Capital growth will also be high, expected between 30 – 40%. The exit strategy is very quick and easy.

 The apartments are completed and your income starts immediately..."

TadleyBaggie

Smells fishier than barrel of herrings. 

Billxx

If it's too good to be true, then it probably is.

TiVo_Lad

How about who guarantees the income?

subjecttocontract

* Why have they come back on the market ?
* £1058 pcm sound a lot for a flat.....are they located inside the M25 ?
* Are they mortgagable ?
* Is the asking price competitive ?

dunstonh

If those terms are that attractive, why are they not using them themselves?

What happens when the limited company that offers the guarantee closes?  (as they inevitably do once they have no more left to sell)

Bravepants

Why isn't the property investment company buying them?

jimjames

People buying mini bonds were offered "guaranteed income". That didn't work out well either.

As above, a guarantee is only worth as much as the counterparty. If the apartment is unrentable then you'll struggle to sell and you presumably won't want to live in it. They probably won't have you actually buying the place but some scheme where you own a portion of it. Look up Storage Pod scams to find out the problems with that.

Millyonare

Sounds legit.

eskbanker

Frog_Prince said:
What should I be asking them about this scheme?

"If I kiss this frog, will it turn into a prince?"

Brie

TadleyBaggie said:

Smells fishier than barrel of herrings. 

That's unfair.  Herrings are a thing of delight!!  

As for rent of over £1k having to be within the M25, well not necessarily.

But yes.  This is a scam.  There's no guarantee as that's as if to say "we will ensure that someone ALWAYS lives there, that there is no fire, no natural disaster, no covid part 2, no mass move to the north of Scotland, whatever."