Guaranteed rental investments – this is the deal you have been waiting for
In the last 3 years, we’ve seen an ever increasing number of guaranteed rental investments in the UK and abroad. Most of them have been geared towards the student market, hotel investments and to a lesser degree, on social investments. Indeed, Aston Eaves has been committed to asylum investments which come packaged with long term rental guarantees backed by the UK Government. We believe that a rental guarantee can only be a true guarantee if there is a genuine and legitimate guarantor behind the scheme. For example, in this case with our asylum seeker investments, it is the government which takes the responsibility for the rents coming in on a monthly basis. However, we have seen a multiple number of student developments for example that have been packaged as ‘guaranteed rental income’ or ‘guaranteed rental investments’ but have either fallen by the wayside or have never even taken off the ground once deposits or even full payments had been made. The major developments that are now infamous are the schemes in Manchester and Liverpool by two separate developers, both of whom offered spurious ‘guaranteed rental income’ for two or three years. It just hasn’t worked out for the client investor and we always say that the rental guarantee is not worth the paper it’s written on unless there is a genuine backer behind it with the full insurance requirements should the company fold or not deliver on it’s promise. It is now unsurprising that these companies that offered such rental guaranteed rents have done exactly that and disappeared or stopped responding to client enquiries. Obviously, we won’t be naming and shaming right here due to libel issues, but these facts are out there.
What are the basics of this guaranteed rental investment?
That was a long rant wasn’t it?!
Back to the issue to hand and as an update to clients that have registered their details with us in relation to our recent announcement on a guaranteed rental property investments, we’re now happy to further state that we should soon be offering these 15-20 year long guaranteed rental scheme properties at a minimum of 6.5% net. The properties will be priced in the region of £110,000 to £130,000 with high street bank finance available at 65% LTV. There will only be 16 units available, so it will be fist come, first served. It must be remembered that this is a unique product which will be done bespoke to the local council requirements and needs, so we ask that you register your details with us if you have not already done so. Where else are you going to get guaranteed rental properties offering such long term security?
What type of buyer will be interested in this guaranteed rental investment?
It must be said that this type of investment is suitable to clients that want a very secure, long term investment with reasonable rates of rental return. Admittedly, the 6.5% net isn’t going to be mind blowing, but the security of such an investment isn’t designed to appeal to the risky segment of the market. Despite saying this, it must be added that this figure is a true and absolute net figure. In essence, it equates to a gross figure of around 8%-9% gross on a similarly priced 2 bedroomed apartment or house. Once the client factors in voids, rental anomalies, maintenance and management, the net rental yield before tax figure will sit at around 6.5%.