Fresh Invest Logo

Fresh Invests property investment blog

Latest

UK Student Property Investment

UK Student Property Investment

Liverpool student investment

 

Why purchasing high yielding student investments through Fresh Invest is the educated choice to make.

 

We have been operating in the UK student property investment market for a number of years now with projects nationwide. In the time we have been in this market, we have seen student investments of all shapes and sizes, offering yields from 8% up to 12% NET and guaranteed for anywhere up to 10 years! The investments are normally sold as either student pods, studios or HMO houses, new build or refurbishment. Here are some potential pitfalls to look out for:

 

  • Over-valued property
  • Unachievable rental prices
  • Large deposits through build schedule with little security
  • Pigeon holed property (only ever usable as student property)
  • Incomplete information (are rents inclusive of bills?)
  • Is the area popular with students?

 

Since the inception of the student pod, the market has been filled by a lot of developers looking to make a quick buck here and there. Offering products which, when investigated properly, do not stack up from a yield or a price perspective. The biggest thing to look out for is to see if the price has been “loaded” in order to pay back a guaranteed return. The easiest way to check this is to use comparables to compare the quoted rental prices, you may well notice that the prices quoted in sales literature are not going to be achievable, those prices are used to get you to pay more for the property up front, they can then be fed back in a guaranteed rental period. Once the guarantee period finishes, you are likely to be left with an over-valued, underperforming asset.

 

We don’t think student pods should be completely negated. We believe that there will always be a large number of students that like to live in this type of accommodation. It is social and gives students their own space, which is important. However, student pods are not our preferred method of investment in this market and the largest reason for this comes down to resaleability. Although resales are possible, the market is restricted purely to investors and the price will always be subject to the rental potential of the unit.

 

Our preferred method of student investment is with HMO’s, student cluster flats or studio apartments. These 3 types of investment give the increased flexibility of a property that can be sold to the owner-occupier market, if for any reason you ever struggled to attract student rentals. Another advantage of this type of investment is that the properties are all a mortgageable product, meaning you can leverage your funds to achieve returns in excess of 20%

 

Our last student project was a fantastic success with 9 x 6 bed HMO’s in Liverpool, all sold off-plan within 2 months of marketing. All of the properties were rented for completion with 100% occupancy at the quoted rental prices, giving NET yields of around 10%. All of the properties on this development are 100% occupied for the 2014/15 academic year too!

 

Our Next Investment

 

For our next student investment, we are partnered with the same developer as the last, who has a good track record in delivering projects on time and to a great specification. We will be building 27 x HMO properties in Liverpool, with deposits of 35% put down through the build schedule and only released upon particular stages of construction, signed off by an independent architect. Yields will be 10% NET after all costs and because this will again be a mortgageable property, we expect cash on cash returns around 20%

 

For more details of this and future property investments, register here http://www.freshinvest.co.uk/investors_registration/

Barbados Property, Weston Resort – promised vs delivered

Barbados Property Weston Resort CGI pool area

 

Barbados Property Weston Resort

As our property investment in Barbados, Weston Resort approaches completion, we thought we would show our valued clients some details of another success story for investors on a Fresh Invest Overseas Property Investment.

We started selling the Weston Resort development back in 2010, after a long period of due diligence where we looked at every development up and down the coastline of Barbados we settled with Weston Resort for a number of reasons:

  • Weston Resort comfortably out priced any similar development in the locality,
  • The developer for Weston Resort is a well established company in the UK with long term plans in Barbados,
  • Through a good presale phase and innovative payment plans we knew the developer had the funds to build,
  • All funds from buyers were ring-fenced and only used to build on this development,
  • The apartments were all sold as freehold condominiums, giving the purchaser maximum control post completion,
  • Common areas are owned by the owners’ co-operative meaning maintenance fees are kept low… In some cases, 90% lower than surrounding developments!
  • There were a number of offers from professional rental operators, who on completion were happy to take on the rental management of the apartments.
  • Through our due diligence we found that the apartments should yield in excess of 10% AFTER management costs.

As soon as we launched Weston Resort it got a great response and many units were sold at very early stages to savvy investors who could see the value on offer. Investors took advantage of flexible payment plans and were thrilled to see such security throughout the build program, with individual stages being signed off prior to funds being released from their solicitor to the developer.

One thing which we came to notice very quickly was the professionalism of the developer we were partnered with. All purchasers on the development were given updates through the build schedule of the progress along with anything else which was having an effect on the progress.

All purchasers were also given access to their own online secure area where construction pictures were posted regularly and owners were also given the chance to design the interior of their apartment using a clever program put together by the developer, where it would simulate the choices made for the purchaser online.

Now the development is in its completion phase, we do have a number of units for resale from purchasers whose situation have changed since their investment. The resales are all priced very well. With prices from $248,950 these are still far better value than the local competition.

Contact us today to discuss any of the resale apartments we currently have available and we will be happy to talk you through the development and arrange any viewings or purchases you may like to make.

Email – info@freshinvest.co.uk

Telephone – +44 (0) 1243 527 327

Freephone – 0800 043 6956

Barbados property – promised vs delivered

As construction continues at an admirable rate on our Barbados Property Investments, we believed now would be a good time to update investors with exactly how the developer did, with a picture of what was promised on one of our investments and what is being delivered as we near completion.

Ixora Resort is a development of ten one bed apartments and one, duplex two bed apartment. The development was priced very well by the developer and therefore sold out long before completion.

One of the real benefits for investors in Ixora Resort was the fact that, due to the low initial purchasing prices they make fantastic investments as well as an ideal holiday home. The rental rates on the west coast of Barbados are typically very high, so it does not take many weeks occupancy to make these apartments a very high returning investment. All of the apartments were sold as freehold condominiums with no usage restrictions, which is a rarity in Barbados, where many developments will limit personal usage to 5 weeks per year.

The developer of our resorts in Barbados does not just offer great prices, but they offer security when investing in their off-plan developments. They also offer an online area to each purchaser with details of any correspondence had with the developer, a running construction progress page and the ability to change the internal specifications of apartments from colour choices down to the relocation of non load bearing walls.

We have always felt that it is important, when investing off-plan, to invest with a developer that has long term plans for the area you are investing in. The developer of our Barbados investments has another 3 sites in Barbados, you can be sure they will try to satisfy every client’s best interest so that they are able to continue selling out developments going forward.

With this, we thought we would exclusively tell our clients that they have purchased another site and we will soon begin the marketing process on another great Barbados investment. The site is a beautiful south coast hotel which will be refurbished and turned into self-contained apartments, from studios to 2 beds. Prices will be kept low like their previous two developments in Barbados and the fact that this development is beachfront will only help it achieve sold out status even quicker than the last developments.

Below is an example CGI for Ixora Resort and then a picture just prior to completion.

CGI

Holetown apartments

Delivered

Holetown apartments
For details of future developments or questions on current developments, please contact us.

Property Developer Case Study

property investment case study, developer example

The Problem:

We were contacted by a Liverpool based property developer who owned various sites across the city but because of the lack of bank funding available was unable to build these sites out.

This situation is rampant with small to medium size developers who have historically had good relationships with their banks but because of the severe financial restrictions imposed to many main stream lenders has become untenable.

This particular developer had a 10 year track record in providing top class residential accommodation and had successfully built over 100 apartments and houses in that time.

It was important for him to trade through this downturn.

As bank funding was not available, we needed to achieve healthy deposits from the investor, whilst making sure we do not expose them to unnecessary risk.

We also needed to come up with a property investment that was strong enough to attract off plan sales in a market that had predominantly moved away from it.

The Solution:

After reviewing a number of his sites, we came across one in Wavertree, this site had great connections to both Liverpool Universities and major transport routes. Wavertree also has a nice mix of residential and student accommodation.

Student Property Investment has become a “buzz word” in the investment industry. With the Government slashing funding for Universities, many have had to rely on third party builders to keep up with student demand.

We are big fans of student houses, we believe they offer a very important option over student pods in that houses can be sold and valued as residential property, with pods your exit strategy is severely reduced.

The development is on a road called Ashfield, this is predominantly terraced houses so building more terraced houses to fit with the area seemed the logical choice.

Our next step was to put together an investment package and do due diligence on occupancy and room rates. Our due diligence was concluded in 2 weeks after numerous conversations with letting and management agents. We decided on Downings for our management and letting agency, Downings have a long standing relationship with the developer and are one of the largest student landlords, developers and management companies in Liverpool.

We wanted to structure this student property investment in a way where the developer could be happy that the deposit money he will use to build is secure; and the investors risk in minimised by only releasing a % of the deposit at specific build stages.

We achieved this by asking for a 30% deposit in 2 stages, 15% at exchange and 15% when building is wind and watertight. The 15% is released in 3 stages and only after an architect has signed the previous stage off. This only exposes the investor to 5% of his funds at any one time but the 15% held by the developers solicitor means the developer can rest assured the money is there when needed.

We asked for a reservation fee of £2,000 which is fully refundable should planning not be achieved.

Results:

We launched the Ashfield Student Property Investment to our clients in the form of a 4 part email, 3 parts detailing different points of the investment process and the last concluding all information.

We sold out the entire scheme in 7 weeks, investors bought because of the stability of the off plan purchase process and the achievable returns available.

The developer can now move forward with his planning application safe in the knowledge the entire site is pre sold off plan.

Student Property Investment – The Facts

Student Pod investment has most definitely been the “buzz word” in property investment over the last year.

It seems new pod developments are being marketed on a daily basis but are they really all they are cut out to be?

Let’s look at the facts:

History of student property investment

Let’s start with the reason all of these private student halls are being built?

The 2010-2011 academic year saw grants for capital projects, such as new buildings, cut by 58% in cash terms to £223m. In the 2009-2010 academic year, universities received £532m for building works.

Because of this universities were not able to respond to the increased demand from students and had to start to rely on 3rd party builders to satisfy that demand.

Student Pod developers can be easily classed into 2 different categories.

1. Large developers that are cash rich and can build out with their own funds:

This type of developer can afford to purchase a site, gain planning then forward sell to a fund at between 5-8% yields. Generally the developer will secure a FRI lease from the University for 25 years or so. The fund will then agree to purchase on completion.

2. Smaller developers or land owners that want to maximise their profit from land owned:

This type of developer/land owner generally either has an option on or owns the prospective land but does not have the funds to build out. They need to find 3rd party funding outside of the mainstream. These are generally the types of development that are offered to the individual investors.

3rd Party funding is provided by the investors who put down a percentage of the purchase price on exchange which is used by the developer in the construction process.

The absolute key to this type of proposal is to protect the investors deposit, this can be done by staging the tranches in which it is paid to the developer and making sure that a solicitor holds all deposits in a client account. For the developer to receive funds an independent architect would need to sign off each build stage.

How are they priced?

Good question, I will show you how they should be priced first of all.

  1. You decide what you want to build, so self contained pods, houses or flats.
  2. You work out what rental each room should achieve and the number of weeks they will be rented at
  3. You then work out the monthly, then yearly income that can be derived from the site, taking away the maintenance and management fee to give a net figure, divide this by the yield you want to offer and this gives you a sale price.
  4. Take away the agents fee and the site cost and you have net profit to the developer.

If the developer is happy with the level of profit then the investment goes to market, if not, it should be canned.

The Problem:

I won’t beat around the bush, its greedy developers or agents.

Normally when you get to point 4 above and it doesn’t work then it’s the end of the line, unless the developer wants to take less profit or the agent wants to take less commission.

What seems to be happening now is that investment companies use astronomical weekly rentals along with a high number of rental weeks to achieve higher rental returns, and in turn higher sales figures. Sometimes they guarantee this for a year or two but this is just worked into their profit.

I’m seeing a lot of opportunities that are advertised with a guaranteed return for 2 years but with absolutely no comparables to show what these pods will rent for after those 2 years.

An example, if we work to £100pw over 50 weeks -20% for management and maintenance = £4,000 (£40,000) on a 10% yield.

If this doesn’t work, increase the figure to £125pw over 52 weeks – 20% for management and maintenance = £5,200 (£52,000) on a 10% yield.

So you’ve paid £12,000 more for a property already, the developer can afford to guarantee this for 2 years because it will only cost him £3,000 if he rents at the figures of £100pw over 50 weeks.

The downside for the investor is that not only have they paid £12,000 more for the property, but their property will only be achieving a 7.6% yield after the first 2 years!

How would I know if the rentals are realistic?

A good investment company should provide you with full due diligence on the investment opportunity offered. It isn’t enough to offer a guarantee, you should be provided with comparables that show the rental being guaranteed is correct.

All investment companies should have conducted this due diligence as its service to you, if it’s not been done; you need to ask yourself why.

Don’t bury your head in the sand….You need to conduct your own due diligence as well, you can do this by phoning the university accommodation office and ask them about the area you are looking to buy the pod in, also speak to letting agents, its sometimes best to pose as an existing landlord, say you are looking to let your property and ask what you may get for it.

Is Student Accommodation sustainable and what happens if the market declines?

Whilst student numbers remain strong, yes it is. Liverpool universities showed an increase in student numbers last year and good quality student accommodation in favourable areas will always be in demand. What we will start to see is the death of the single landlord that owns a badly furnished house in an average area. I know when I was a student this was our only choice outside of halls. We will see good quality student houses and apartments that are regularly refurbished and well managed flourish but ones that are not will decline.

The management of student accommodation has moved forward massively over the last 10 years, gone are the days that a large percentage of landlords shied away from the student market; with a strong professional management company there should be no more hassle renting to students than there is to professional tenants.

Barbados property investment – now and our future plans

As many of our clients know, we are working with an excellent developer in Barbados, offering some very strong Barbados Property Investments, as their primary agent in the UK we are always first to release their newest offerings.

The developer we are working with is currently in the process of completing two stunning developments on the West Coast of Barbados in St James. One development, Ixora Resort, is a small block of just 11 apartments in total, in the town of Holetown, offering a prime position just 150 metres from the new Limegrove centre and less than 500 metres from the beautiful west coast beaches. This development is sold out and due for completion in June 2012.

The other development is Weston Resort which is currently under construction, a development of 45 apartments, also on the west coast, but just 150 metres from the beach. Many of the apartments on this development have beautiful sea views; we have a couple of apartments available priced from just US$299,000 making a very good investment as well as a very good purchase from a lifestyle point of view. One of the standout features on this development, apart from the excellent prices, is the fact that all apartments are sold as freehold condominiums so there are no usage restrictions, owners can also benefit from the management of a professional rental operator if required. If you would like some further details of any of our available apartments please contact us here.

Both of our Barbados developments have remained some of the most popular investments we have ever presented to our clients for a variety of reasons, one of which is down to Barbados’ long-standing popularity with holidaymakers. Many of our purchasers on both Weston and Ixora Resort have purchased due to the unlimited usage and the prospect of some very good rental returns upon completion, this gives them the opportunity of securing a price in a traditionally strengthening market, whilst benefiting from a good rental revenue and the opportunity to retire in the apartment in the future or sell the apartment on for a significant profit.

The developer we have been working with has just agreed terms on the purchase of a new development site in Barbados which will offer another fantastic opportunity for both investment and lifestyle purchasers. The site is a prominent, beachfront, existing hotel on the south coast of Barbados, which will offer a great purchase opportunity for those clients that unfortunately missed out on either of the previous two developments. We will be releasing details shortly, so if you are interested and would like to hear more on this fantastic opportunity, please register here.

A breath of fresh air in the student property market

Liverpool Student Property Investment

Most people reading this will know that we are an advocate of the student property market here at Fresh Invest. With good management and an attractive property you can benefit from very high and secure rental yields.

With student demand increasing year upon year and a massive shortage in student accommodation currently available in the UK, it seems like Student Property is a great area for investment and many of our investors have been taking advantage of that fact and profiting

There are many different facets of student property available for investment and we feel that our Student HMO’s are the best opportunity out there right now.

Our latest Student Investment in Liverpool is ideal for those investors looking for large returns but still looking to maintain an easy exit strategy from the investment, with high capital growth.

We now have just 4 houses remaining from 9 in total on this development site and we expect them to sell quickly. The development was only released around 2 weeks ago and since then we have had significant interest in the properties.

Our Liverpool Student Investment was completely designed by us. The developer came to us at the end of last year looking for an idea of how best to develop out a piece of land he currently owned, taking advantage of its location. With our knowledge of the student market up there and previous experience of selling student property in Liverpool and the demand for that type of property from both investors and students, we designed a scheme with the investor in mind, minimising their exposure to risk, whilst maximising returns in capital and rental income.

The site lies within 2 miles of 3 major university campuses and just 2.9 miles from a fourth. With a bus stop just 100 metres from the development, communications with the university are great and students will have no problem getting to the various campuses

The investment provides the investor with the opportunity to invest just £57,000 and generate a net income of £15,310 per year, after mortgage costs, maintenance and management fees!

INVESTMENT BREAKDOWN:
6 Bedroom Student Town house.

  • Price: £190,000
  • Deposit @ 30%: £57,000
  • Mortgage Amount @70%: £133,000
  • Yearly Rental Income: £25,500
  • Gross Yield: 13.42%
  • Mortgage Cost @5%: £6,650
  • Maintenance: £1,500
  • Management: £2,040
  • Net Return Per Month: £1,276 (£15,310 per annum)

If you would like some further information on any of our student property investments, please either use the appropriate contact form on the website, or send us an email at info@freshinvest.co.uk

Please follow the link for our latest UK INVESTMENT OPPORTUNITIES

Completion draws nearer in Barbados!

Weston Resort from Sea

As completion of our beautiful apartment in Barbados gets closer and closer, I thought I would share some of the latest news on this fantastic Barbados Property Investment with any prospective purchasers.

As you know, if you are reading this, we are a property investment company based in the UK and from our many years in the industry we have seen all kinds of investments cross our desks… I can safely say that this is one of the best, one of the reasons we purchased a 2 bed apartment for ourselves.

We purchased our apartment on Weston Resort back in 2010 and ever since, we have been very happy with the service and the progress of the build by the developers. The transparency has been second to none.

We have benefited from:

  • The opportunity to change the internal dimensions of our apartment by moving non structural walls,
  • The ability to fully customise the internal design of our apartment with a choice of finishes, paints, tile designs and bathroom suites
  • An online secure area to keep track of construction updates and all legal correspondence.
  • A great rental management proposal from a fantastic hotel operator. - Flexible payment plans through the construction process.
  • Stage payments relative to construction milestones, only requested upon confirmation by an independent Quantity Surveyor.

Along with all of the above points the price has to be mentioned. Weston Resort offers purchasers the chance to own on a luxury development just 150m from the beachfront at Alleynes Bay for a fraction of the cost of other nearby developments.

Not to forget the developer’s other resort, Ixora. Based right in the centre of Holetown, Ixora offers a great bolthole investment in a phenomenal location, also with the benefit of an offer from a professional management company to take care of rentals and very low prices.

Something that both Weston and Ixora Resort offer that is completely unique is an investment with a low ongoing cost on the West Coast of Barbados. Maintenance fees on some developments in St James on the West Coast can be as much as US$1,000 per month! On Weston and Ixora Resort costs will be between $140 and $180 per month!

If you would like further information on either Weston or Ixora Resort please contact us. Construction progress can be found on either opportunity’s page on our website.

Overseas Property, is it the little things that matter?

Weston Resort Kitchen

What really attracts people to purchase an overseas property, apart from location, price, and dimensional suitability? I would argue that it is normally the LOVE factor. Most people fall in love with the property they want to purchase and will normally go with the one that just feels right when they go to view it, sometimes even in spite of it not being “the best deal.”

The reason for the question is, believe it or not, to do with overseas properties and what developer’s currently use to entice buyers to part with their hard earned cash. We have just experienced something which we feel is a fantastic idea from the developer of our Barbados Property Investment.

As I said, I believe it’s the little things that matter when it comes to a purchase, so what if a developer gives you the chance to fully customise your apartment when you purchase it? On our apartment in Barbados, because we purchased early, we were given the option to change the layout of the apartment by moving non load bearing walls as well as specifying if we wanted air conditioning in extra rooms, fans in extra places, different styled lights, the list is endless!

The reason I write about all of this now is that all purchasers on Weston Resort and Ixora Resort are given their own personal secure area on the developer’s website, which details all correspondence, construction progress, legal documents and now… “Interior styling” the interior styling tab is a new feature and we think it’s just great! We are now given the chance to customise the whole colour scheme of our apartment as well as choose between different finishes in our kitchen from the worktops to the tiles even down to the washing machine.

We think it is vitally important for clients to feel happy right the way through their purchase of an overseas property, this is why we stay in contact with all of our clients, offering advice and updates right up to completion.

Please use the link for more details on our Barbados Property.

Barbados – Things are heating up!

Barbados sea view apartmentBarbados, probably one of the most revered holiday destinations in the UK and arguably the world. The traditional busy period in Barbados tends to last from around the end of November to the end of January and with this, British Airways are advertising their Barbados winter holiday packages in order to convince some of those tourists to fly with them.

British Airways announced earlier this year that they would be increasing their services between London Gatwick and Barbados as a result of the increased demand currently being shown for the Caribbean island this is great news for anyone that has a vested interest in property in Barbados.

Although Barbados has a strong economy away from tourism it also relies heavily on the industry and all of the money bought into the country and spent in the country by tourists from around the world. This money can be invested into the local economy to promote future growth, which is good for the country as a whole.

All this is good for those investors that have purchased in Barbados or are thinking of purchasing in Barbados in the near future.

We are working (and investing) with a pioneering developer in Barbados that is offering excellent investment opportunities as well as properties ideal for a lifestyle purchase. All of the properties are priced far below any other comparable properties in similar locations. There is a unique system in place to ensure that maintenance costs are kept affordable and the developer has multiple offers from top hotel operators to run the development on completion. This gives purchasers – a low purchasing cost, low ongoing costs and high rental returns! Win, win, win!

Please click the link for more details of our Barbados Property Investment.