Welcome to the latest news from FJP Investment. It is here that we post up to date news roundups for all of our property investments. We share with you our research and answer your questions in articles posted exclusively on our website.

We focus much of our news on the property investment industry along with providing investors regular updates related to their investments. FJP Investment aims to provide quality commentary which adds value to the portfolios of our clients. FJP Investment is a market leading provider of UK and Overseas property based investment opportunities.

Hotel Room Investment – Ultimate Guide

Our guide to everything you need to know about investing in hotels.

Continuing our guide into property investments, we now turn our attention to a particularly attractive market – hotel investments.

Investing in hotels has never been so appealing. We are seeing the highest growth in hotel room rates since 2011, travellers are at an all-time high, and we are seeing massive demand from all forms of investors in the hotel property market as a whole, according to Statista.

A hotel investment differs from a standard property investment. We have prepared a simplified explanation for how this form of investment usually operates.

Why invest

There are many benefits to investing in hotels, the first of which being the accessibility of the investment.

With the ability to easily invest in just a single room within a hotel, the accessibility of hotel investments is significant. When compared to investing in other HMOs (houses of multiple occupancy), the capital required to enter the investment, like student accommodation, is far more achievable for many investors.

Hotel investments are largely considered low risk, too. Some of the largest hotel providers are often seeking investment for further developments. With near-perfect track records, you are almost guaranteed a return.

Most hotel investments offer a return of 125-150% on the acquisition price. As an investor, the contract will often stipulate a buy-back option for the developer at around this percentage. As an investor, you will be looking for a contract that has an optional buy-back, meaning that if the investment is providing you with good returns, you can hold this for a long-term profitable yield.

The investment is also entirely hands-off. Your investment in a hotel room is as simple as making the investment, sitting back, and collecting the income. Although this sounds too good to be true, it often is this easy.

Your investment becomes part of the hotels stock, and this is managed on behalf of the hotel. Depending on the investment type, the hotel either takes a percentage of the income from your hotel room(s), or you take a percentage of the hotel’s overall income.

Given you have researched a safe hotel investment, and you have used a reputable investment broker, there is little reason you will not get a return on your investment. For investment opportunities, we recommend checking out some of our current investment opportunities.

What hotel type

In 2016, we highlighted that it was safer to invest in luxury hotels. Where this does continue to be the case, lifestyle & boutique hotels go a step further and look set to be the future.

You may be asking what a lifestyle hotel actually is, and this question is shared by many. James Sabatier, CEO of Two Roads Hospitality, says that “Lifestyle, to me, is about experiences. It ́s about feeling a sense of place. It ́s what travellers want more and more…”

Although the definition itself appears to be losing some meaning, with many new hotels claiming to be ́lifestyle ́, the concept is essentially offering beautiful, uniquely designed hotels that also provide an intimate and personal service.

What sets a lifestyle hotel apart from the conventional luxury hotel is the appeal these hotels have to the younger generation. According to STR, millennials spend marginally less annually than older travellers on hotel stays, but they are far more likely to spend money on a lifestyle hotel than a luxury hotel.

Internationally, STR also report the lifestyle sector has an average room rate of $229, with occupancy close to 76% across the board. This room rate is significantly higher than the average of $131 across the hotel sector, and also boasts a 10% greater occupancy rate. Clearly then, lifestyle hotels are where the market is currently at, and something you should target when making a hotel investment.

Demand

The demand for hotel rooms are on the rise. According to Statista, we are currently seeing a 3.7% growth on average hotel rates in 2018, this being due to a rise in the economy and increased demand by travellers.

International tourists in the UK are on the rise, up 7% from 2017, and this is set to continue according to UNWTO World Tourism Barometer. The reasons for this being the upsurge in the silver economy, the continued appeal of travel to younger people, and the rise in Chinese tourists as the country continues to grow in wealth. These trends look set to continue, with the reasons for this rise looking unlikely to be temporary factors.

PwC reinforces this high level of demand, with forecasts by the end of 2018 calculated as a 2.3% rise in RevPAR from 2017. With 2.4% supply growth predicted also, investors are aware of this continued demand for hotel stays.

The rise of Airbnb

Naturally, you may be cautious of hotel investments with the rise of Airbnb. A recent report by STR highlights that in areas where the average review scores on Airbnb were above average, hotels charged a marginally lower rate, presumably to supplement these reviews and attract more travellers. This was also applicable to Airbnb rentals that posted below average prices for the area.

The results did show that Airbnb has had almost no impact on RevPAR (revenue per available room) in the hotel market though, with Airbnb accounting for just over a 1% decrease in RevPAR. This supports the leading argument that Airbnb is offering more of a supplementary service to the hotel industry. Airbnb in itself is proven to be very unlikely to have a significantly negative impact on a hotel room investment.

Where to invest

Investors eyeing London

A recent study by Cushman & Wakefield reveals that London is now the top city for hotel property investment worldwide. This is thanks to several large deals, doubling the transaction volume from the previous year. This highlights London as a strong investment market, and also the fall in American cities receiving lower investment than the previous year.

Head of Investment Strategy at Cushman & Wakefield, David Hutchings, says that “London has battled through political headwinds to charm both hotel investors and consumers. Its rich culture, history and leisure scene, alongside its business operations, is proving to be a solid bedrock for its hospitality sector which continues to go from strength to strength.”

The result of this may come as a surprise to some. London made the leap from seventh the previous year, narrowly edging out New York to top spot.

Investment has fallen in the US by 21% when compared to the previous year. This is cited to be due to new legislation enforced in mainland China and Hong Kong, resulting in a cooling of capital flow. This comes after several years of high investment in the US.

Head of Hospitality at Cushman & Wakefield, Jon Hubbard, says that “We are seeing an increasing diversity amongst the type of investors coming to play, including institutional investors, whose presence in the market is reducing the risk profile and driving a surge in liquidity”.

The result of this means that we are seeing an uptake in major operators considering leases for strategic situations, and the rising interest of institutional buyers to invest with potential for high returns.

Broaden your search

From an investment perspective, it is clear that there is demand in London for hotel property, but there is already supply in place to match it. You could argue that identifying areas of high demand, but low supply could result in greater yields. In addition, an investment in a hotel in London is likely to be higher than it would be elsewhere, so the capital you are willing to invest is something to consider.

You have to think long-term when it comes to investing also, and although London is currently top for hotel property investment, PwC global anticipate that this growth in London will not be sustained.

The report shows that investors should be looking at Europe for hotel investment, with Portugal leading the way for anticipated growth. With a 10% increase in RevPAR set to be achieved in Porto in 2018, and 7% in Lisbon, Portugal is seeing major economic growth. When compared to the anticipated 1% in London, the benefits of looking elsewhere are apparent.

Source: PwC analysis

With the result of Brexit fast approaching, it appears unlikely that London will remain as the top city for international hotel investment. London is, however, tried and tested as a fantastic option for hotel property investment, regardless of the fall in growth.

Seasonality

Something that can be overlooked when making an investment in a hotel is the effects of seasonality. You may be investing in an area that sees high traffic in the summer, but low traffic in the winter, and therefore you need to anticipate this.

Findings by Statista have found that December is the most profitable month for hotels worldwide, consider this when making a hotel investment. Choosing an area that has high demand all year round, although difficult, is not impossible.

Seville is a good example. Lonely Planet rated Seville as the best city to visit in 2018, and sees visitors flocking to the city all year round. The city hits its peak between the beginning of June to the end of September, but also sees high footfall in the month of December. The city is not hit with the impact of the low season when compared to other areas of Spain and is therefore a good investment location.

Potential drawbacks

Something to consider is that it can go wrong. Although this is not a common occurrence, your profits as an investor directly correlate to the success of the hotel itself. The RevPAR of an investment can be affected in many ways, some examples include the economy, terrorism fears in the area and even natural disasters.

These factors can positively affect your investment however. If you are investing in an area that is unlikely to draw any of these inherent problems, you could benefit from more traffic to your hotel investment.

When investing in hotels, you are at the mercy of any change of direction the hotel may choose to go in, even if you are not in agreement. For instance, the hotel may see an opportunity to target the luxury market. If this fails, the failure is shared with you as an investor.

You also have to take into account any management costs that the hotel will deduct from your income, something that is not included with other property investments. Ensure that management costs are explained, and that the contract clearly defines what this includes to avoid paying out large sums from your profits.

You may be investing in a future build. In the event that a developer liquidates, there is a reasonable likelihood that another developer will take on the project, though this cannot be guaranteed. As with any investment, you have to be aware that there is always an element of risk involved, even if this is usually small.

Conclusion

Investing in hotel property is a relatively straightforward and safe investment, with returns often provided over long periods. As with any property investment, it is important that you do some research into the development.

Get a realistic estimate on what the RevPAR is likely to be for the investment, taking into account location and trends in the market. Make yourself aware of the potential pitfalls of investing in a hotel and compare the benefits to other property investments, such as student housing or a different HMO. Ensure the contract you are signing is to your benefit and seek out an optional buy-back.

As with all property investments, a hotel investment could well be the investment for you, just be sure to do your own research.

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Student Property Investment – Ultimate Guide

Our guide to everything you need to know about investing in student property.

Following on from our recent post about HMO Property Investments, we look at one of the most popular forms of HMO in student property.

Student Property has continued to see increased interest from international investors, and with good reason. Savills highlights that property prices in key areas for education in the UK are as high as 37% over the last three years. For perspective, investors that bought a house and then sold it during the three years from 2015 – 2018 could have effectively paid for a three-year university course with the profits alone.

How do you define a student property?

Student Property lets are a form of HMO, being purpose-built apartments consisting of studios or cluster flats. The properties are built with large communal areas, close to universities and have exclusive planning permission for student-use only.

You can either choose to invest and convert your own property into a HMO and target students, or you can invest in a developer’s large-scale student property. Either one of these options have their own benefits and drawbacks.

A HMO investment

There are many benefits to investing in your own HMO student property, many of these benefits were covered in our recent post here. To summarise, the yield when compared to standard buy-to-let (BTL) properties is a significant incentive.

With a HMO, you can obtain higher returns on your property as you have more tenants. You can charge more by letting out the rooms individually as opposed to the entire property. You also reduce personal risk through an increase of income streams, with more tenants paying the total rent.

Choosing to invest in your own HMO and targeting students means you also have an asset. You will have the benefit of owning the property that is likely to increase in value, given you have identified a high growth area.

As an investor, you also have the opportunity to receive profitable returns for many years going forward, this being for as for as long as you own the property, as opposed to a limited investment with returns over a pre-requisite period of time.

You are also in full control of your investment. There is no actual guarantee that you will get a return on a developer’s investment, and so by doing this yourself, you take full control and responsibility for your investment. Depending on your approach, this may be a safer option for you. Consider that an investment with a developer could be safer though, given the developer is specialising in the area.

To support this, guarantors come in the form of parents for most students. This generally makes rent receival far safer, and statistics show that students are some of the best tenants when It comes to paying rent. This research was carried out by Glide, a leading utilities and service provider, who also cite maintenance loans being used to fund the payment as being a major benefit.

A developer ́s project

Clearly then there are many benefits to investing in your own HMO property, but this may not be an option for many. The reason for this is the high level of capital required.

Purchasing a property outright is not an option for many. House prices in high growth areas, near reputable universities, are high. Of key areas such as Exeter, Birmingham

and Manchester, Zoopla report that for an average three-bedroom house you are looking at a purchase price of over £300,000.

When investing in student property through a developer, you can often invest as little as £25,000. Given you have researched the investment opportunity, and you have used a reputable investment broker, you should see a return on your investment.

FJP investments have provided returns on a range of property investments, including recent returns with the High Street Group.

Unlike regular HMOs, student property investments made through a developer are more hands off, allowing you to focus your efforts elsewhere.

You may benefit as an investor by making several investments through a developer or broker, this being an easier and more viable option for many investors. Consider the risk and rewards to this investment strategy though, be aware that higher returns on your investment generally means the risk is higher also.

The benefits are clear for a student property investment then, whether this is through your own HMO investment or a developer’s project. Something that hasn’t been covered, and is a major benefit shared by both investment strategies, is the high levels of demand.

Demand

Although there has been a steady demand for HMO ́s over the years, the demand for student property continues to soar. Universities cannot keep up with the demand to provide students with accommodation, and so often allow first year students only to stay in the halls of residence, with this making up roughly a third of total students.

Statistics published by UCAS also highlight that there is an increase in students attending university in 2018.

Although there has been a decline of 2% in UK applications to go to university, there is an explanation for this drop. There are 2.3% less 18-year olds in the UK now than there were in 2017, with 18-year olds making up the majority of university applicants. Proportionately then, the amount of applications is actually up by 0.3%.

In addition, there has been an increase in both EU and rest of the world applications for UK universities. EU applicants are up by 2% from the same time last year, and there is a substantial 8% rise in rest of the world applicants to a record high of 65,440, all of whom need accommodation.

In contrast to the housing market as a whole, the economy also has no bearing on the number of students applying to university. Surprisingly, findings by the CIPD show that as an economy falls, the number of university applicants actually rise. This is cited to be due to a lack of job prospects and tougher competition, both of these factors playing a part in individuals seeking further education.

Brexit itself appears to be playing very little part in the demand for student property, as highlighted by the UCAS figures.

A recent study by Savills further supports this high level of demand and the opportunities available in the student accommodation sector, with over £5.8bn being invested in the market in 2017, with this figure continually rising. This certainty of income is essential for investors.

Will my HMO appeal to students?

It is important that you do some research into how the property you are investing in is prepared and marketed, whether your own HMO or a developer ́s.

Findings by Unipol, a student housing charity, found that students favour properties that are more like homes. Of the most important things students wanted in accommodation, a fully furnished property, with high speed internet and comfortable rooms were most sought. Will the property you invest in provide this?

A recent post by bmmagazine highlights the increase in demand for luxury student accommodation. An ever-increasing number of students are turning their attention to premium offerings, with the demand for purpose-built luxury accommodation doubling over the last 10 years.

The main reasons for this being the accessibility of maintenance loans to supplement the costs, reliance on parents to pay the higher rent, and the value students are placing on a calm working environment. Many are seeing this as an academic advantage – It could be wise then to review investment opportunities that can appeal to this market.

If the property is of a high standard, your student tenant might end up staying long- term. Most university courses are three years, students may opt to do a masters for an additional year, and even then, may choose to stay in the city of study for work.

Keep an eye out for property that might be coming onto the market. There is plenty of competition, so the property you invest in has to be unique and appeal to the students that you will be targeting.

Where to invest?

As with any HMO, the location for your property investment is hugely important. It goes a step further when investing in student accommodation.

You have to identify an area with high demand for student property, but also a low level of supply for the area. A good example of this is in the North.

As covered briefly earlier, cities of high economic growth are important for your property investment. Due to the recent effects of `northshoring`, this being the influx of people moving to Northern cities such as Liverpool and Manchester, the economy in these areas is on a rapid rise.

Combined with an increase in applicants to both of these cities’ respective universities, this is one example of a good area to invest in student accommodation.

You also have to consider specific geographical location. Flats on the edge of town will of course be cheaper than in the centre of town, but you have to work out the potential return based on the rent you can charge.

Consider what students will desire from a property. By investing in a property with close links to public transport, or even walking distance to the university, will be a great selling point for the property. By also investing in central areas you can increase the rent charged.

Something to consider is that a property developer will have done this already. These properties will be custom built specifically for students, close to universities, and with marketing carried out to attract prospective tenants already. Again, this investment is far more hands-off.

Will you get a return?

As an investor, you will want to ensure that you are getting a return on your investment, and the statistics suggest you will.

DIGS, a real estate investment trust that owns ten halls of residence across London, report that the net asset value of student property is up by 7.2% for the first half of 2018. The reason for this high figure is apparently due to an ever-growing number of

applicants going to university, and an increase in rental price for student properties across the market.

However, an investment in a HMO still has the potential to fail.

When investing in student property through an developer’s project, you need to think critically about whether the firm will stand behind its ‘guaranteed’ returns. The success of the investment is essentially down to the rooms being occupied. If the company fails to market the property correctly, it may be unsuccessful, and you will not get a return on your investment.

Do the same research as you would if you were investing in your own HMO investment before committing to an investment of this kind.

If you are investing in your own HMO, the property has to abide by certain regulations. This is highlighted in our recent post about HMOs. To summarise, the rooms have to be of at least a certain size, and importantly, funding may be harder to acquire, with a phasing out of tax relief on mortgage interest.

It is important that you consider the additional cost implications to investing in your own HMO. You must calculate a realistic return on your investment to see if it is a viable investment.

Conclusion

With the total number of students on the rise, the market is flourishing. Demand has never been higher for student accommodation, and this is reflected in the high amount of investment into the market.

Assess whether you want to invest via a developer or go it alone, identify key areas for growth and high demand for student accommodation, and make sure the investment is appealing to the students you will be targeting.

Investing in student property is one of the smartest things you can do in 2018, just be sure to do your research beforehand.

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HMO Property Investment – Ultimate Guide

Our guide to everything you need to know about investing in HMOs.

As an investor, you have most probably heard of the term HMO, and are at least partly aware of the potential benefits. With the potential for high yields and an ever-increasing demand from prospective tenants, HMO property looks to be a sure-fire investment.

However, with stricter legislation coming into effect, and finance options becoming increasingly difficult to obtain for HMO investments, is this still a viable option?

What is a HMO?

A house of multiple occupation (HMO), also known as a multi-let, is exactly as you would guess, a single property in which there is more than one tenant.

More specifically though, the property will have at least three tenants inhabiting the property, with the toilet, kitchen and bathroom facilities being shared. The minimum of three persons living in the property must be from different households – those that are not married or otherwise related.

However, the specifics of what make up a HMO are not always so clear cut. From this graph, we can see that there are many factors that play a part in defining a HMO.

Why invest in HMO?

There are many benefits to investing in HMO property, with the obvious one being the increase in rental yields over single-let properties.

According to findings by GVA Redilco, HMO properties produced the highest yields in the first half of 2018 for the property investment sector at 7.1%. When comparing this against the average yield across all property types of 5.8%, the financial benefits are clear.

In addition to the increase in yield, a HMO reduces risk through a spread of income. When compared to a single let property with one source of income, the significance of this becomes clear. If your sole tenant doesn’t make a payment or simply moves out, the entirety of your income from the property is on hold.

With a HMO, there are more sources of income for the property, albeit these amounts being proportionately lower, but making up the same total. With this being a minimum of three separate sources of income, if a single tenant moves out or is not keeping up with payments, it only affects part of your income. This allows you a buffer to remedy the situation.

This is particularly advantageous if you are relying on the income of the property, so a HMO property could make for a great first investment opportunity.

Another advantage of investing in HMOs is the continual increase in demand by prospective tenants. Data from UCAS highlights that young students, those with the lowest average income, are applying to and finishing university at an all-time high in the UK.

When combining this with data from the Office of National Statistics, highlighting that disposable income has only been lower twice in the last twenty years than it is now, the financial benefits are felt mutually between tenants and landlords of HMOs.

Demand for HMOs rose by 100% in 2017, and 150% in 2016 according to Multi-Let UK. This rise in demand also looks set to continue in 2018 with tenants maintaining interest in the market.

Finally, there are some tax advantages to investing in HMO property. HMOs are treated like any other rental property, and this applies regardless of whether buy-to-let (BTL) or commercial financing has been used.

However, as opposed to conventional BTL properties, HMO property landlords can claim ´Plant & Machinery Capital Allowances´, a form of income tax relief. Yearly, a proportion of the capital outlay, these being the capital improvement and purchase costs, is treated as an expense for the rental business.

Importantly, Capital Allowances can be offset against non-property income, unlike normal rental losses that can only be offset against future rental profits. The result of this are tax rebates that can run for thousands of pounds.

What are the drawbacks to investing in HMO?

There are some obstacles you will encounter when investing in HMO that need to be acknowledged before considering an investment. The first being the increase in competition for HMO eligible houses.

With new legislation recently coming into place (covered in detail below), it is now harder than ever to identify a property that meets the requirements satisfied for a HMO property. The result of this means there is a disproportion of demand to supply, resulting in a scarcity of eligible property and a rise in prices.

Compounding this, the Bank of England shared concerns over HMO properties, stating that they posed a “systemic risk” to the UK economy, in which lenders are forced to impose stricter criteria on borrowing going forward.

Investors will therefore have more difficulty raising finance. Alternative financial solutions may need to be sought by landlords who currently own or wish to invest in such properties, with bigger deposits likely to be required for mortgages.

There are also far fewer letting agents that will manage your HMO investment when compared to standard BTL properties.

Many letting agents will be willing to assist with finding tenants, but very few are willing to fully manage the tenants for your property. If the agent is willing, the cost to you will be a far larger than a single let.

The likelihood is that you will be managing the property yourself in order to see the beneficial financial returns. Although the management of your property may seem achievable short-term, there is a lot of on-going work that is involved with this. A comprehensive list can be found here.

The legislation surrounding HMOs is also stricter when compared to single let properties. For example, under the Town and Country Planning Order 1995, an Article 4 direction may be in place for the area, whereby any property purchased must have planning permission sought to change the properties use from a single let to a HMO, unless the property being purchased is already operating as a HMO.

Not only can this be a lengthy process, but there is no guarantee permission will be approved. Given you have followed current regulations regarding requirements for HMOs, you should be approved, but new regulations recently introduced make this an even trickier task.

Recent legislation

New legislation has come into effect regarding HMOs, and if you are looking to invest, you will need to be aware of these changes.

This legislation came into effect on the 1st October 2018 and has influenced as many as 177,000 existing HMO properties, according to the Residential Landlords Association. This new legislation comes off the back of some challenges faced by the BTL market over the past few years.

One of these recent challenges includes the 3% stamp duty tax on all second homes and HMO properties in 2016. In addition, the phasing out of tax relief on mortgage interest over the four years to 2021 will affect many, and by 2021 this will be replaced with a flat 20% tax credit.

Before the new legislation, mandatory licensing was only enforced on large HMOs of at least three storeys and five occupants, comprising at least two-family units.

The new legislation encompasses smaller BTL properties within the scheme and extends to a wider range of properties previously unaffected by the mandatory licensing. This includes flats above shops, and small blocks of flats not connected to commercial premises.

In addition to extending the scope of the mandatory licensing, new regulations include the introduction of specific measurements regarding the minimum size of rooms, these being standardised across all councils. The minimum size of rooms is under constant monitoring and is something that landlords and investors need to be consistently aware of.

Now more than ever, if you are considering a HMO investment, you need to remain knowledgeable about the changes that are being implemented.

What makes a good HMO investment?

It is imperative then that the property you invest in meets the requirements for the extensive rules and regulations that are required of a HMO.

The rooms, as mentioned above, need to satisfy a minimum size. For those over the age of ten, single bedrooms sleeping one person need to be a minimum of 6.51 square metres in size, whilst a double bedroom sleeping two needs to be at least 10.22 metres in size.

Naturally, if you are looking to accommodate a minimum of three tenants, the property itself needs to have a good number of sizeable rooms, that ideally do not require extensive work or extensions built into them.

Small vs Large

When investing in a HMO, you must consider the size of the property and the potential for the number of occupants. There are advantages and disadvantages to investing in both small and large HMOs – you must identify what’s right for you.

Smaller HMOs are loosely defined as properties that house three or four separate household tenants. You could, in theory, purchase a three or four-bedroom house and rent these rooms separately. The planning permission for this will be easier, with only an article 4 direction to act upon if there is one in place for the area. This would mean that the property would get to the market faster.

The quality of living is likely to be better for the tenants also. With the rooms expected to be of a greater size, and a lower likelihood of tenants falling out with fewer people in the property, in theory, you will have happier tenants. Less tenants also means fewer potential problems and maintenance issues, so a small HMO is easier to manage and maintain.

The obvious advantage of a larger HMO is that your rental income will increase. This is achieved by either purchasing a larger property at a premium or by introducing refurbishments to increase the number of rooms in a property.

There could be as many as twelve tenants living within your large HMO. Whilst operating costs will grow to facilitate this increase in tenants, the financial benefits of the increase in rent will very likely outweigh this.

With less competition for larger properties, you may also find that you could get a better deal. Examples include small care homes and B&B´s.

You will of course need a higher initial start-up for a large HMO. The property itself will cost more. If you are investing in a property with the hopes of converting the rooms to facilitate more tenants, the costs for refurbishment will stack up, and will need to be done from the offset.

More facilities such as bathrooms and kitchens will need to be built to satisfy the needs of the tenants, as well as the rules and regulations in place for HMOs. This could take months. The property is unlikely to go to market as quickly as a small HMO, and you may be waiting longer for tenants too.

Naturally, the property will also be harder to manage. With more potential problems and a higher turnaround of tenants, the property management will be amplified as you increase your number of tenants.

You therefore have to weigh up how invested you will be in the property management side of the investment, and how much time and money you can realistically invest in your HMO property. If you are looking to build a portfolio of HMO properties, you will have to consider the income potential and cost of the individual rooms as opposed to the properties themselves.

It may be more cost effective, certainly long-term, to hold four five-bedroom HMOs than two ten-bedroom HMOs. Although initial investment may be higher for the four properties, the cost to convert these four properties, and then potentially revert them back again, will be lower. Increased man-management and time to get to market, combined with an increase in the spread of your held assets, may make it worth investing in small HMOs.

However, you may find your choice is made for you, as you have to consider what is available in your investment location.

Location is key

The location of your property investment is vital. A recent report by IBM highlights that areas in the North of the UK are excelling in terms of economic growth.

This is due to a rise in inward migration and available employment opportunities, with work recently being created for more than 7,000 people in Manchester and Liverpool alone. Cities in the North are seeing a huge rise in demand for affordable property.

This is supported by a recent study carried out by BDRC Continental, that highlighted the North West as having the highest rental yields for HMOs at 6.7%, with the lowest being Central London at 4.8%.

Investors have caught on, with Manchester now overtaking London as the number one city for international investment.

When considering an investment in a HMO, you also have to look at the demographic of people you are appealing to. Most of the demand for HMOs is from students and younger people with less disposable income. Naturally then, the location of your HMO investment should be in an area near universities, and with high-demand for lower cost living.

It is essential that the demand for HMO´s in your area of investment is sought before making your investment, and that you choose an area of high economic growth.

Know the market

Wherever you choose to invest, it is important that you also do research into other HMOs in the area. This will provide you with many benefits, the main one being that you can gauge what the average rental price is.

Once you have collected this data, you can identify a price you can realistically charge your tenants, giving you a better idea of potential yields. Doing this also allows you to assess the quality of the HMOs in the area.

Consider HMOs in the market as competition. You can assess what they are doing in order to succeed and look to build upon this. You may choose to operate as a premium HMO, furnish the property to a higher standard than the competition and charge a premium for this, but still price yourself under a standard BTL property.

The approach you take will be based on your research into the market and will give you a better idea of what is required to run a successful HMO.

To conclude

Clearly then there is a lot to consider when investing in a HMO, emphasising how essential it is that you have a plan in place before purchasing any investment property.

The benefits of investing in HMO property are potentially huge. Just be aware there are many hurdles you will have to overcome, and the management of HMO properties should play a large part in whether you choose to invest.

With a massive increase in yields for HMO properties when compared to single-let properties, and the continued rise in demand from prospective tenants, now really is the perfect time to invest in HMO property.

Download: HMO Property Investment Ultimate Guide

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Outstanding Returns Achieved by Investors of High Street Group

Our investors are pleased again! Investors have been paid from the High Street Group their investment capital plus an 18% return in just 11 months.

This is the seventh successful loan note, all of which have been paid back to investors in full. The High Street Group have raised over £50 million and paid it all back plus the investors return of 15 to 20% depending on the project.

With the continued updates and level of security that the High Street Group offers, we are delighted to work with the High Street Group to provide you with fantastic investment opportunities.

Investors take comfort from a regulated trustee being in place to represent the investors interests. The debenture over The High Street Group’s assets is valued at £68 million. This is used as collateral should a default occur. The High Street Group’s business model has never defaulted and our investors are keen to learn more about the next opportunity.

The High Street Group have also benefitted with the latest certified assets and liabilities sheet doubling from £34 million to £68 million in the previous 12 months.

Grainger PLC and APG acquired the High Street Group’s site in Milton Keynes for £30.5 million, buying all loan note investors our last Spring.

The High Street Group recently broke ground and started construction on a project in Newcastle city centre; Hadrians Tower – the city’s tallest building providing 162 apartments across 26 floors.

Jamie Johnson of FJP Investment said “well done to our investors, we couldn’t be more delighted to pick up the phone and share with you the great news. The response from our investors has been truly amazing and we are so proud of the work we are doing together”.

The High Street Group have proven themselves to be a fantastic partner of FJP Investment. They are reliable and have delivered time and time again for our investors.

The High Street Group are working with some of the biggest blue chips having recently sold developments to the likes of Grainger PLC, Aberdeen Asset Management and Cording Real Estate Group.

Gary Forrest, Chairman of The High Street Group said “We would like to thank our valued loan note investors introduced to us by FJP Investment. We hope you are pleased with your returns and we very much look forward to working with you on future projects”.

With current projects in the region of £1 billion, the High Street Group is showing no signs of slowing down its rapid growth. The High Street Group utilises funds received from investors to purchase sites with full planning permission. The PRS scheme is the focus of their developments.

The company has over 3,000 properties in the pipeline and under construction, with many opportunities for investors to come in and invest with the High Street Group. The company is now in as better position as ever to capture significant loan note investments.

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Photo Update: FJP Investment Attends Property Exhibition Singapore

Having operated successfully for over five years, Singapore investors have increasingly taken to working with FJP Investment on numerous property deals over the years. Investors in Singapore have identified FJP Investment as a reputable partner to be working with when seeking investments in the UK Property Market. At the same time, we have identified Singapore as being one of our key growth markets where the calibre of investors is very high.

So much so, we took the show on the road and exhibited at the Smart Investment and Property Expo.

The exhibition was a two day event held on Saturday the 22nd and Sunday the 23rd of September 2018 at the Sands Expo & Convention Centre, Marina Bay Sands. The venue provided the perfect environment in which we were able to showcase our latest title deeded care home investment opportunities.

We found a lot of value in being able to meet with our existing clients whom reside in Singapore whilst also being able to meet with new investors. We feel meeting with investors is crucial in terms of furthering and cementing our investor partner relationship.

Property Exhibition Singapore

Singapore is an interesting market in the sense that property investors are turning their attention away from the local market due to the Singapore government taking measures to cool the property market. In July 2018, the government introduced new stamp duty measures at an eye watering rate of 20% for foreigners and 30% for developers.

The effect of this has meant that Singapore based property investors are seeking out opportunities on the global stage.

Naturally, Singapore investors are targeting the UK property market due to the attractiveness of many of the developing cities on offer, some particularly high growth cities include but are not limited to Manchester, Liverpool and Birmingham. in addition to this, the high standard of customer service, high quality of law and a general affinity between the UK and Singapore, making the UK highly attractive to Singapore based property investors.

All in all, we are very pleased with the outcome and we look forward to working with our new investors as we continue to grow our footprint in Singapore and beyond.

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New Corporate Video from the High Street Group

The High Street Group, a leading privately owned property developer based in Newcastle with developments throughout the United Kingdom, has just released its new corporate video. We consider the High Street Group to be one of our key partners and have found them to be an excellent partner in which we can comfortably introduce our investors to.

The High Street Group have successfully completed several funding cycles with its loan note investors and has a track record which speaks for itself.

Walled Gardens, Newcastle
Start date 21.10.16
Amount raised £740,000
Capital & Interest returned April 2017

Milton Keynes
Start date 26.09.16
Amount raised £2,607,500
Capital & Interest returned from May to July 2017 due to dates on contracts

Rutherford St, Newcastle
Start date February 2017
Amount raised £4,776,500
Capital & Interest returned July, August, October 2017 due to dates on contracts

John Street, Warrington
Start date April 2017
Amount raised £5,133,400
Due 21st Dec to 31st Jan 2018 due to dates on contracts

Liverpool St, Salford
Start date June 2017 Amount raised £1,988,000
Due April 2018

Westminster Works, Digbeth, Birmingham
Start date September 2017
Amount raised £6,200,000
Maturity date 40 weeks from date on agreement

The company made a profit of £26 million in 2016 and is currently working on projects worth close to £1 billion. Huge progress has been made by the High Street Group, they have more than 100 people employed and they have created a strong platform to create value for all involved.

The company has around 3,000 properties under construction or planned. There are so many opportunities for investors and with the High Street Group having delivered on a regular basis, they stand perfectly positioned to capture a significant amount of loan note investments.

High Street Group utilise investors funds in purchasing sites with full planning permission. They particularly focus on developments which are PRS Scheme approved.

The High Street Group Loan Note Investment Milton Keynes

What is a PRS Scheme?

The Private Rented Sector (PRS) is a classification of United Kingdom housing tenure as described by the Department for Communities and Local Government, a UK government department that has amongst its remit the monitoring of the UK housing stock.

Once a site has been purchased, the company will then utilise sales agents to sell the flats to homeowners and investors. The model is super simple and super efficient and this is why we love introducing our investors to this highly profitable investment opportunity.

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FJP Investment to appear at Smart Investment and Property Expo, Singapore

Smart Investment and Property Expo – one of the world’s largest and most prestigious real estate exhibitions – will be returning to Singapore this year, and FJP Investment will be there to showcase some exciting opportunities.

The event will take place at the Hall A, Sands Expo & Convention Centre, Marina Bay Sands, Singapore from September 22nd to 23rd 2018. Here are some of the highlights to look forward to:

Smart Investment and International Property Expo Singapore 2018

The FJP Investment exhibition at stand C8 will showcase some of our most exciting developments. These highly desired investment opportunities are expected to be very popular with investors from Singapore wanting to invest in the UK property market.

We will be on hand to provide updates and expert advice for both new and existing investors.

The exhibition will run from 11:00 to 19:00 daily.

Meet FJP Investment at Smart Investment and Property Expo, Singapore

Marina Bay Sands Singapore Property Exhibition

As well as being the perfect opportunity to showcase some of the most exciting opportunities currently available at FJP Investment, the exhibition will give investors the chance to meet with members of the team.

Singapore is an important market for FJP Investment and our commitment to the region is incredibly strong. We believe that quality developments at the right price point, are a perfect fit for property investors in Singapore.

We look forward to welcoming you at our stand and are keen to discuss your investment needs as we are confident that we can meet them.

The FJP Investment team will be on stand C8 throughout the duration of Smart Investment and Property Expo, Singapore 2018.

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Care Home Investment VS Hotel Room Investment – The Verdict

As one of the UK’s leading introducers of property-based investments with a solid 5 years in business, we certainly have what it takes to identify market leading investment opportunities.

We are going to share our views and thoughts on both the care home investment market, as well as the hotel room investment sector with you our clients and prospective clients.

Both care home investments and hotel room investments are attracting hundreds of millions of pounds each and every year from investors seeking above average yields. Both, as a vehicle for investment, are similar in the sense that an investor will invest in a room within a building and earn income, based on someone renting the space, both investments come with a title deed and are often of a similar rate of return.

Hotel Room Investment

The sector has done tremendously well in the last decade or so, since we have been in and around identifying investment opportunities, there have always been hotel room investments as an option for our investors.

Investors will purchase a room in a hotel and receive a title deed.

The investor will then earn a share of the revenue generated from people paying to stay in the room, the investor will be completely hands-off in the sense that there will be a management company in place to operate the hotel / advertise the room.

Hotel room investments have typically done well over the years, it is very much demand based and so long as the economy is doing well, there tends to be demand from people going away and needing somewhere to stay.

Hotel Room Investment

Hotel Room Investment

Care Home Investment

We have recently cast our eyes towards this hot area of the property market. Care homes have been around for as long as property has been sought after, there is a real high demand from property investors seeking stable and more longer-term property investments. We have looked at care home investments and have been pleasantly surprised by the quality of the underlying asset and the numbers really stack up for investment.

Investors are purchasing a care suite within a care home and they in turn are receiving a title deed. The investor will then earn a share of the income generated from someone renting the room, there will be no involvement whatsoever from the investor, as the care provider will come in and take control of every aspect of providing a very high standard of service in accordance with the Care Quality Commission (CQC).

We believe care home investments to be a solid option for an investor seeking a stable return over a longer period of time with excellent returns.

Care Home Investment

Care Home Investment

Care Home Investment VS Hotel Room Investment – The Verdict

Both are quality assets that investors should be considering as a suitable acquisition for an investment portfolio. Both will offer similar returns and are very much of a similar price, both also come with title deeds and are certainly very similar by nature of what they are and what they do.

There is one major difference in the sense that, a typical care home will be 20 to 30 rooms, where as a typical hotel might have say 100 rooms.

In addition, the occupancy of a hotel room might be on average 2 to 4 days, whereas the occupancy of a care home is typically 3 years.

Another factor with regards to the 3-year average occupancy for the care homes, the better the level of care, the better the level of care home, naturally helps one to live longer which possibly ensures an even higher occupancy level than the 3 year mark.

It is pretty easy therefore to draw conclusions, both are high yielding, and both offer a lucrative package for an investor, but, from an occupancy standpoint – the care home investment is the clear winner in our opinion.

FJP Investment is a leading provider of UK and Overseas property investments.

We have a solid track record of delivering high quality investments to our global audience of investors, to find out more about our care home investments, click here.


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Site Visit – Carlauren Group Care Home Investment

We love going on our site visits to meet with our partners and developers and most importantly, we love to tell the story to our investors. What ultimately makes FJP Investment successful and we get told this time and time again, is that we get up and out of the office and go to see our client’s investments and how they are progressing, we then come back to the office with a plethora of photos and videos and a story to tell.

With our investors investing in our Care Home investments from all over the world, it is not always possible to come and see for yourself and therefore rely on us making regular check-ins with the Carlauren Group and thus providing our investors with timely updates.

We get it. We understand what it means for an investor to receive photo updates and we will be sure to continue this and with every site visit, we become better at telling you the story.

June 4th, 2018, we went to Yeovil for a few days to meet with a client who had just arrived from Saudi Arabia. We were taking him on a site visit, the timing of the site visit was actually very good as we had 3 care homes within a good 20-minute drive to showcase:

Hurst Martock – 13 minute drive from Carlauren Group Head office.
Status: Construction well underway – a good 50 or so builders on site and several weeks away from completion.

Latimer Lodge – 7 minute drive from Carlauren Group Head office.
Status: Completed and fully occupied.

Tynedale House – 7 minute drive from Carlauren Group Head Office.
Status: Completed a few days before we arrived and guests arriving in the coming weeks.

On this particular site visit we were able to see a care home under construction, a completed construction and of course a care home fully occupied. This was really valuable for both us and our client, as we could see what a care home investment looks like at all stages.

State Funded Care Homes

Any one who thinks of a care home, or has visited a care home will have the vision of boring colours and lots of residents sitting on old chairs in one big room. Government funded care homes are in big trouble, with the UK Government funding care for those who need it, that is ultimately the reason why those in Government funded care homes, are getting a poor service.

If you have been assessed as needing a care home place and your capital is below £23,250, you should be entitled to financial support from your local authority. This typically works out as £450 a week being paid by the Government to the care home.

Carlauren Group Care Homes

Luxury en-suite care studios with professional care and support on hand 24 hours a day. Residents benefit from the finest furnishings, fabrics and fittings. I think, what makes Carlauren Group exceptional is that they hire the best of the best. For example, the chef at Latimer Lodge is an award winning chef. All of the biscuits are baked in-house, all of the meals are freshly prepared using the finest ingredients. Fine dining is on offer with companionship from all of the other residents, Latimer Lodge even has a hair and beauty salon on site and a Bentley for the residents to be chauffeured around town.

The key to understand what the Carlauren Group are doing – they are offering a 5-star level of care to those who want to pay for it.

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The Numbers – Care Home Investment

The average life expectancy of someone in a care home is typically 3 years.

More than 80% of citizens in the United Kingdom aged 75 and above own a property. The wealth amongst those aged 75 and above is significant with many owning second properties, stock and shares, bonds and saving accounts.

The price per week in Latimer Lodge is around £1,300.

3 years = 156 weeks

£1,300 x 156 = £202,000

If you can imagine the average cost being put at £202,000 from the estate, for a very high quality end of life service, it is easy to understand why this is an attractive proposition for those who demand the very best.

As far an investor is concerned, he/she will see how the yield is more than easily obtained. I think another interesting point that my colleague makes, when you go into a care home, you go in and you stay in. Which means the turnover of guest within your room is very low. Whereas if you as an investor was looking at a hotel room investment, not only does it pay the same rate of return as a care home – but it also has a high turnover of guests staying 1 night to 3 nights on average.

The overall feeling and thoughts from seeing the latest status of the developments from the Carlauren Group is that we feel proud and privileged to have identified a developer whom is delivering a quality product with sustainable yields and an excellent service to the residents.

The Carlauren Group have at the time of writing this article around 15 care homes. The jewel in the crown is Windlestone Hall in County Durham, we still have some availability and if you are wanting to see the details, we encourage you to make contact and register your interest today.

Windlestone Hall was built in 1830 and was the grandest stately home of its time, the birthplace of Sir Anthony Eden who was the UK prime minister in 1955. The Carlauren Group have a grand plan of renovating this property and breathing fresh life into a beautiful estate of apartments and cottages for the retirement community. Planning permission has been granted to build an underground health club and spa with a gym and swimming pool.

Windlestone Hall is a stunning building and it is very easy to understand why someone with class will yearn to live out their latter years in such an incredible environment.

The head chef at Latimer Lodge is Mathieu Eke, he worked for Antony Worrall Thompson at the famous 190 Queens Gate in London and then went on to work in the Michelin Starred restraint at Castle Hotel in Taunton.

The standard of nutrition is extremely high, and residents enjoy premium fine dining on a daily basis. The best news of all, is that family members are welcome to join their loved ones for meals.

As far as transforming a property, it has typically taken 4 to 6 weeks, though every property is unique, and some require more time than others. The Carlauren Group are operating an impressive number of properties across England. What impressed us most of all is that the Carlauren Group are bringing everything in-house and creating synergies between the various services that are on offer.

Technology is a big part of the strategy for the Carlauren Group. Family members are able to access an app and get a snap shot of what their family member is doing, what they are eating and also read reports written by staff. The application manages everything in one place, such as food allergies, dietary plans and offers real time reporting and feedback.

Going forward, there is a big opportunity that the Carlauren Group are about to take advantage of, they are creating an application which will be rolled out throughout the United Kingdom with a focus on centralising available rooms for those seeking respite care.

Respite care is planned or emergency temporary care provided to caregivers of an adult. The care provider for example, needs a break and is going on holiday but her / his father is unwell to go along, she or he will then ring round care homes looking for available beds. This application will be a bit like booking.com or Skyscanner in the sense that it will showcase all of the available beds, services, reviews, photos and carers will be able to check their loved ones in just like you would with a hotel. Revolutionary and forward thinking and very much pleasing to see!

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Care Home Investment Opportunity

The Carlauren Group is in the business of acquiring and renovating care accommodation in affluent locations on behalf of property investors.

The number of people reaching retirement age is growing and will continue to grow at unprecedented rates for a good while yet. New facilities are needed, and the quality of the product must improve throughout the United Kingdom because expectations are increasing.

Rob Fielder is the executive director care and support at the Carlauren Group. He was previously an inspector for the Care Quality Commission (CQC) and his job would be to go in and inspect care homes throughout the UK so very much qualified in his field.

Investing in a care home studio is a really good method to generate long term income. By taking option 2, (there are 3 options with this investment) you will receive a monthly income from your care studio equivalent to 10% per annum. The property comes with a title deed registered in your name at the land registry.

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Site Visit – Wyndham Halcyon Retreat Golf and Spa

Sunday 20th May to Wednesday 23rd May 2018.

Our Director, has recently returned from the Wyndham Halcyon Retreat Golf and Spa Resort and wishes to share the site visit report with you, along with up to date photographs and videos.

wyndham halcyon retreat golf and spa
“At FJP Investment, we conduct regular site visits to all of the projects we introduce to our investors as part of our Due Diligence, we see this to be fundamental in order for us to truly understand what we are introducing to our investors and to ensure investors are kept up to date with their investments.

Some site visits are nicer than others, 3 days at a French Chateau in the Lake District of France was not to be missed!

I arrived late Sunday afternoon to be greeted with a smile along with “Bonjour Monsieur” – I certainly had arrived; but my recollection of French studies as part of my schooling, only allowed me to simply say Bonjour!

None the less, it was straight to the room to freshen up and then down to the restaurant for dinner. With the Chateau very much into the wedding season, the restaurant of course was full of diners.

Halcyon – Drone Site Visit May 2018 from Halcyon Developments on Vimeo.

I decided on Duck for my main followed by freshly made Eclair with seasonal fruits.

After a superb dinner, I retired to my room in preparation for the next few days in which I fully intended in getting to know everything I could regarding this resort.

A little background to the Chateau itself; purchased some 7 years ago in a state of disrepair and a grand vision for what it has become today, the Chateau underwent 3 years of back and forth with the French planning department and full planning permission was given to build 220 units made up of apartments and cottages, an 18-hole professional golf course, kids play areas, indoor water park, World-class spa and an award winning fine dining restaurant.

As of today, the Chateau has been fully renovated and is operating as part of the world’s largest hotel company and is the first in France under the brand – Wyndham Hotels and Resorts.

wyndham halcyon retreat golf and spa
Wyndham Hotel Group operate a global portfolio of over 668,524 rooms across 71 countries. Wyndham are the world’s largest hotelier by number of beds and this certainly bodes well for what we are doing in terms of seeing the beds filled and with the hotel operating to the very high standards that Wyndham require.

Monday morning arrived, and I was greeted with sun glares through the French style windows. I sat for a moment gazing out to the first of the two fishing lakes, I could instantly see the reasons as to why this was the place to build this resort, the views are simply amazing, and everything is perfect for those wanting to holiday in pure tranquillity.

Halcyon Luxury Golf and Spa Resort from Halcyon Developments on Vimeo.

With breakfast and a nice cup of tea out of the way, it was hi-visibility vest / hard-hat on, and off for a 4 hour walk around the 220 acres of grounds. We visited the site of where the current construction activity is taking place, there are a good number of finished units and this was pleasing to see, we were able to see with our own eyes and ascertain the quality of the end finish which is second to none.

My opinion is that Halcyon are building this resort to a very high standard and are not in any way cutting costs on cheap materials. The standard of the finish is very high and the Resort will stand out as a truly luxury golf and spa retreat.

The Spa itself is situated within a beautiful 16th century turreted chateau close to glistening lakes, the spa is a completely unique facility, set to become one of Europe’s top spa destinations. You will see from the photos; the Spa is not too far off from nearing completion.

wyndham halcyon retreat golf and spa
The Golf Course was commencing construction, with mounds and bunkers being positioned according to the professional designs. This was really pleasing to see and I very much look forward to returning in a short while to see the further development and provide you all with a real time update on how the resort is progressing.

After a long walk through beautiful fields and seeing and meeting the construction workers, I was pleased with where we are at and convinced that all is heading in the right direction.

wyndham halcyon retreat golf and spa
The last couple of days were a mix of enjoying the Chateau, taking walks through to the fishing lakes and visiting the surrounding area.

I and FJP want to take a moment to say thank you to those who have backed this project and we very much look forward to taking you on the journey with us, by providing you with regular updates, photos and videos at key stages of the development.”

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