Frequently Asked Questions (FAQ)
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Why invest in property?
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Where should I invest?
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What about the longer term prospects?
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What type of property will I be offered?
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How do I know the property will rent?
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What about the day-to-day management of the property in the future?
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How do I receive the monthly rent?
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Can I view the property prior to purchase?
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Are there any other costs to consider?
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What's next?
1. Why invest in property?
Investing in property is renowned for being one of the most financially
rewarding businesses around. Property can provide you with both a steady income
and capital growth, which will continue for as long as you want, even after you
have stopped working.
With the poor return from many pension schemes it is no wonder people are
seeking to secure their future by investing in property.
2. Where should I invest?
The answer to this question is quite simply anywhere where properties
are of a relatively low value, where there is excellent potential for
capital growth and where there is a strong demand from tenants paying
realistic market rents.
At the present time, in the UK we believe that the North East of England
is one of the last few places which is ticking all the right boxes.
The following is an example of what we have seen in recent years:
| Property value 2005 |
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£50,000 |
| 15% deposit |
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|
£7,500 |
| Mortgage |
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|
£42,500 |
| Mortgage payments |
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£173.54 (assumes a rate of 4.9% interest only) |
| Legal costs |
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£650.00 |
| Property Insurance |
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£180.00 |
| Property Investments 4 U Fee |
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£1600.00 |
| Rent |
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£350.00 |
| Monthly profit |
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£161.46 (excludes management fee) |
| Total investment required |
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£9,425.00 |
| Return on investment
|
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Yield of £4,200 per annum (8.4%) |
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Net of Mortgage £2117.52 |
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23% return on initial investment |
| Estimate of capital growth at 15% |
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£7,500 |
| Estimate of total return for year 1 |
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£9617.52 (96% return on investment) |
3. What about the longer term prospects?
As can be seen in the example above property can be an excellent way of
generating additional monthly income. However we would always recommend that
our clients view property as a long-term strategy for accumulating wealth.
The table below shows what could happen to the value of a £50,000 property over
a 10-year period assuming a very conservative increase of 5% per annum.
| Point |
|
Value |
| Purchase |
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£ 50,000 |
| End of Yr 1 |
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£52,500 |
| End of Yr 2 |
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£55,125 |
| End of Yr 3 |
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£57,881 |
| End of Yr 4 |
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£60,775 |
| End of Yr 5 |
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£63,813 |
| End of Yr 6 |
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£67,003 |
| End of Yr 7 |
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£70,353 |
| End of Yr 8 |
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£73,870 |
| End of Yr 9 |
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£77,563 |
| End of Yr 10 |
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£81,441 |
By the end of year 10 we can see that the property value has increased by
£31,441. Now clearly property values will not increase by 5% every year, there
may even be times where the market falls or likewise times where increases of
10% or above occur. However the capital increase is not the only story,
remember the investor is also making an additional £161.46 in additional
monthly income (excludes management fee - free for the first six months).
Remember this is all from an additional investment of £9425.00.
Note: in many cases the properties, which you will be offered, have been
obtained at a price which is well below market value, and which we feel will
see capital growth well in excess of 5%.
4. What type of property will I be offered?
The types of property that we offer do vary. However typically this will be 2 or
3 bed-terraced properties in areas that we have thoroughly researched and
typically in areas where we own properties ourselves.
5. What about the renting of
the property?
Property Investments 4 U Ltd work in partnership with a range of professional
Letting Agents who are highly experienced in the letting of the types
of property which we offer.
6. What about the day-to-day management
of the property?
The letting agents that we work with provide a comprehensive service,
which includes, rental collection, dealing with any repairs, which may
occur, and regular property inspections. This is a truly “hands
free” service for yourselves. Our letting agents typically charge
around 10% of the gross monthly rent.
7. How do I receive the monthly rent?
Your rent will be collected on a monthly basis and forwarded to yourself
by electronic transfer direct into your bank account. You will also
be sent a written statement detailing all transactions, which have taken
place.
8. Can I view the property prior to purchase?
Of course you can. We would welcome the opportunity to show you around the
property and the areas in which we invest. Simply give us a call on 0845
3456559.
9. Are there any other costs to consider?
It is important to remember that all properties deteriorate over time and hence
a certain amount of your monthly profit should be allocated for maintenance
purposes.
10. What's next?
If you have any further questions then contact us -
we are always happy to help at Property Investments 4 U Ltd.
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