UK Property Investments

UK property investments have long been seen as the trophy asset amongst property investors the world over. It is for very good reason that property investors are attracted to the United Kingdom, as they seek to generate wealth from our solid property market which is built on providing quality for the long term.

The UK property sector is attractive to investors in the Middle East and Asia, especially so in the eyes of FJP Investment, we are finding more and more investors coming to purchase property in regional hotspots of the UK such as London, Manchester and Birmingham. Investors are afforded high level of security, in knowing that English and Welsh law is amongst the strongest on the planet in terms of standing up for the property owners rights. FJP Investment is a leading provider of UK and Overseas investments and we are on hand to help you secure your UK property investment.

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UK Property Investment in 2019 | Ultimate Guide

Our next property investment guide delves into the UK property market in 2019.

The UK property market was slow in 2018. With the effect of Brexit having a negative effect on the market, many will shy away from investing altogether in UK assets amid fear that investments will continue to fall in value.

Data from the Royal Institute of Charted Surveyors (RICS) draws attention to this, with less property for sale, deals taking a record amount of time to complete, and property staying on the market for substantially longer than in previous years.

Mixed growth across the UK

So, what is the outlook for 2019? Unfortunately, there looks to be a similar trend going forward, particularly in the first half of the year. The market will inevitably continue – unfortunate scenarios in debt and death results in property naturally entering the market. With a continued rise in students going to university and increasing numbers of people moving for employment, there will always be some demand for property. However, buyers will find they have less options in the market.

With tighter lending criteria on mortgages, the purchase of property continues to be an uphill struggle for most. More homeowners are now looking at renovating and extending their existing homes than looking elsewhere. For this reason, the property market is likely to continue ‘treading water’.

It wasn’t all bad news however. We saw economic growth in cities such as Manchester and Liverpool, with a general trend emerging of high growth in the North. London house prices however saw a fall in value.

Mr Burrell, of Capital Economics, says that “prices in London could drop by 5% next year, but rise elsewhere. At a hyper-local level, the performance of a school or the prevalence of crime can affect prices.”

Brexit is cited to be a major reason for this fall in value. RICS were unanimous in blaming Brexit and say that “uncertainty created by the Brexit process is causing buyers and sellers to sit tight in increasing numbers.”

House prices will fall by as much as 30% from a pre-Brexit level if we are to see a “disorderly Brexit”, and house prices could fall by as much as 14% this year alone, according to forecasts by the bank of England. The effects of the dreaded B-word are abundantly clear. It is highly unlikely that we will see a recovery post Brexit either, with those holding property assets abroad also facing uncertainty.

Who is buying property?

Young people that are aiming to get on the property ladder will also have a hard time of this. As mentioned previously, there are stricter lending criteria when it comes to taking out a mortgage, and when combined with higher turnover and a lack of security in employment, saving for a house is ultimately out of reach for most, especially those in big cities with higher property prices.

This speaks volumes when first time buyers were actually the most active on the market in 2018. 1 in 10 buyers received support from Governments help to buy schemes, increasing this demographics likelihood to buy. However, Property Reporter’s recent forecast found that over 50% of those between the ages of 18 – 40 are due to be renting privately owned property by 2025, with one third of those predicted to never buy a home. Could this be an opportunity for property buyers to target this increasing demographic?

The rise of rental income

It is predicted that capital growth will account for just 30% of total returns across UK property to 2023. This forecast is a whole 10% lower than at the start of 2018 and is also noticeably down on the average 55% share we have seen over the past 10 years. Income returns are also predicted to rise to 70% of total returns. This highlights the importance on rental returns over the appreciating value of a property.

You have to consider the unpredictability of the current political situation. The UK housing market is particularly difficult to anticipate, nobody is able to accurately predict how the coming year will unfold. Something is for certain though – Sterling has had an effect on property buying.

The effect of Sterling

At the start of 2018, Sterling was holding relatively strong against the US dollar. Although not at the same level we have seen over the past decade, a peak of £1=US$1.434 was enough to be favourable for those holding Sterling.

Unfortunately, this was effectively reversed from April 2018 to August 2018. The value of Sterling fell rapidly, with £1=US$1.27. Fast-forward to December 2018, following delays from the EU withdrawal from Europe, Sterling fell even further to a low of £1=US$1.252. As of today, the Sterling is seeing something of a mini-resurgence after the Brexit deal was recently voted down, standing at £1=US$1.32.

For those holding foreign currencies, such as euros or dollars, UK investments have naturally been more attractive. Many international buyers will have seen an opportunity to buy up property assets at a reduced price, in the hopes that these assets regain value once the dust has settled. Those holding US dollars will have seen the greatest benefit, particularly in dollar international investment trusts.

Should I invest?

Those that are holding Sterling will effectively have nothing to lose if they are investing in UK property. It is incredibly difficult to forecast the relative value of Sterling going forward.

We appreciate that the situation may become clear in a few months times, as the result of Brexit becomes apparent. But, there really is no guarantee the economy will be better off afterwards – in all likelihood it will probably be worse.

Attempting to time the market and the political situation is a major pitfall that many investors fall into. Even if you anticipate the result, the market often reacts differently. Stick with what you can control and monitor what you cannot. A long-term strategy for investing will likely see you make a return, even if this is passive.

Where should you invest?

As discussed, it is difficult to forecast how the coming year will be for the property market as a whole, but we can say with reasonable confidence that a number of areas in the UK will see economic growth.

When identifying where to invest in UK property, we use 2018 as a guideline. London is the area that was most hit by the uncertainty in the market – more specifically, those holding high value properties. With house prices in the capital being the highest in the country, these properties had the most to lose. You could argue that as the political situation settles, London could have the most to gain – something to consider.

When looking at the UK as a whole, particularly those areas in the north, average house prices actually rose. Overseas property buyers saw value in the fall of Sterling, and most targeted areas in the North due to the ongoing effects of what we call ‘Northshoring’.

Northshoring is the result of companies moving to the North to cut operational costs and improve business. The result of this is increased inward migration, and talent coming in from overseas as a result of increased job opportunities. With a lower cost of living than in the capital, the economy in cities such as Manchester are taking advantage of this increase in demand and are growing accordingly. With the aid of data collected by Savills, below are some of the areas that we forecast to receive high growth.

Northampton

Northampton is seeing one of the highest levels of growth across the UK. In 2018, we saw house prices increase by a figure of 5.3%, this being noticeably higher than the national average. Houses sold on average in 33 days, suggesting continued high demand to live in the area.

Leicester

Being just under an hour’s drive away from Northampton, Leicester has reported the best year-on-year growth of all the major UK cities, and is lauded as being the best city to invest in 2018 by Hometrack’s. Property prices have increased by over 250% since the turn of the century.

With a prime location, being just an hour away from both London and Birmingham, it has fantastic links to some major cities. With future investment of up to £3bn, Leicester really appeals as a fantastic investment location.

Colchester

The small Essex town of Colchester has been on the receiving end of some surprisingly high growth in recent times. The town has great transport links, schools and leisure facilities that is boosting the price of property in the area.

Findings by housesimple.com highlight that house prices over the last three years have grown on average £55,000. In terms of capital growth, rental yield and rental price increase, Colchester is one of the most attractive places to invest in 2019.

Leytonstone

Admittedly, we advised earlier against investing in London property. However, it is difficult to ignore the UK capital, and there are areas in London that can make you a return on your investment. The North-East is the place you should be looking at.

Leytonstone is seen as London’s latest up and coming area and is proclaimed by a third of estate agents based in the capital as the best area to invest in London. With access to the central line, and future regeneration due in the coming years, more buyers are eyeing up Leytonstone and the surrounding area.

With lower prices than in the capital, combined with a rise in average house prices of 83% over the past five years according to property experts Savills, there is hope for London property still.

What property type?

It is easy to get into the mindset that the only property investments available to you are residential. Thinking more broadly, there are many opportunities to turn a profit when focusing on alternative property assets. To do this, we need to focus on the importance of supply and demand in the current market.

Urban logistics has, for a second year running, had the highest forecast returns in the property sector. Annual returns are predicted to be as high as 10% until 2024. The sector has attracted significant investment off the back of major rental growth over the past few years, spiking growth in the sector.

With a forecasted undersupply of Grade-A office space in London in the near future, there is expected to be high growth in this sector. With a re-pricing emerging in the retail sector, opportunities are likely to surface over the next 12 months that are worth keeping an eye on.

Demand in the build-to-rent sector will continue to see increased growth over the coming year. Largely due to consistent returns and familiarity in the market, the sector is an attractive one. Delivering competitive returns by operating at a larger scale and with the overwhelming demand for private rentals, the sector is a great investment opportunity.

To summarise

On the face of it, the UK property market would appear to be best avoided, due to political and economic uncertainty surrounding the country. However, by delving deeper into the market, there are opportunities to be had.

Seek value in the market. Identify an investment that is receiving growth and is also in a high-demand area (think the North). Consider also diversifying your property investments, putting all of your metaphorical eggs into one basket is ill-advised. Consider investing in a variety of property types, if this is within your means to do so, as this will spread the risk of losing money on a single investment.

The property market, as stated, will be difficult to forecast for the coming year. Focus on your long-term strategy, and with the advice above, we are confident you will make a return.

Download: UK Property Investment in 2019 | Ultimate Guide

 

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Introducing Our New Cheshire Office

It is with great pleasure that we are able to announce the opening of our new office in Bollington, Cheshire.

2018 has been a phenomenal year in which we have grown our UK client book several fold, and this naturally means we need to be well positioned in order to meet with our investors throughout the UK. We have identified Cheshire as a great hub for our business.

Bollington, Cheshire

The new office is located at Adelphi Mill, Grimshaw Lane, Bollington, Cheshire, SK10 5JB.

You are welcome to pop in for a visit, simply get in touch to schedule a meeting. For our international investors, we are located 25 minutes from the busy Manchester Airport if you wish to visit. Where possible, we do aim to meet our overseas clients on one of our various international trips.

The office is located by the idyllic waterside setting of the Macclesfield canal that runs alongside the office.

The Adelphi Mill, originally built in 1856 by a local cotton spinner by the name of Martin Swindells, is a Grade II listed building. During the Second World War, the mill contributed to the war effort by contributing to the production of parachutes. No longer a cotton mill, the building recently underwent a multi-million pound refurbishment and now functions as bespoke, modern offices.

The building is spectacular, and serves as a fantastic environment for our business.

The canal running alongside the mill is one of the most well used and indeed picturesque canals in the United Kingdom. When coming to the office, we will be sure to take you for a short walk alongside the mill. The location also benefits in that it sits right on the very edge of the Peak District.

FJP Investment is delighted with the location and the space in which we are comfortably able to thrive and deliver presentations for our investors. The opening of the new office also facilitates growth of our product range, since the vast majority of interest amongst developers is currently in the North of the UK.

 

 

 

 

 

 

 

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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.

Download: Hotel Room Investment Ultimate Guide

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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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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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Retirement Home Investment Opportunity

The opportunity for investors to earn money are varied especially when you take a look at the retirement home investment opportunity sector of the property market. We are currently seeing a growing number of investors approach the sector with a view to generating medium to long term profit on investment. Knight Frank have said that if the current curve continues, the UK retirement home supply is expected to fall from 456,400 beds to 444,700, while the population over the age of 65 is due to rise by 1 million from 11.4 million, this is the recipe for creating an acute shortage of beds by the year 2020.

The lack of care home facilities has created a situation which ultimately will need to be addressed and this is why we are looking at retirement home investment opportunities with our investors. Knight Frank are suggesting that 6,000 new beds are needed per year, but unfortunately, we are going the other way with care homes closing due to lack of investment. Many care home providers are struggling to find reasons to invest and refurbish their existing rooms due to their less desirability as many of these homes are quite older buildings with less than adequate facilities for the number of occupants and this in turn results in occupancy levels falling as people seek more up to date and more modern care in their later years.

In recent times, the case for elderly care has effectively created what some would view as a two-tier system with a vast difference between the performance of retirement home providers who are providing for privately funded residents versus those who rely on local authority funding.

We regularly see media coverage which is predominantly focussed on the struggles of retirement home operators who are catering for their residents who receive funding from the local authorities, when we see the reduction in funding from the authorities it makes it very difficult for the care home owners to provide the level of expected service.

The privately funded care homes are doing very well, these are mainly in affluent areas of the United Kingdom, areas such as the South East and South West of England.

Retirement Home Investment Opportunity

It is said that 1/3 of property wealth in the United Kingdom is now under the control of households where at least 1 of the occupiers is aged 65 and above. Drilling into the numbers even further, nearly 1 in 10 of those aged 55 to 64 are living in a household with a net property wealth of +£500,000.

The “Grey Pound” now accounts for some 76% of financial wealth in the United Kingdom and it is said they have the willingness to spend. The life expectancy of this age group is increasing year on year at a startling rate. Those that are in retirement are said to have modest incomes along with relatively high assets which ultimately translates into higher feelings of prosperity.

When the moment comes for an individual or a couple to consider the need for a retirement home, it is very clear that they are shying away from the traditional and more institutional home that their parents may have previous occupied as it does not meet their requirements. instead they are turning to their assets to funder a higher quality of care rather than that which is offered by the state.

Investing in Residential Care Homes

We are typically looking at developments that are from Victorian period properties in which they have managed to keep their original features along with generous room sizes. Often they will have operated as care homes for many years and with that there is an amazing opportunity for private financing to come in and redevelop some of this dilapidated stock and help to bridge the gap between supply and demand.

An extensive survey is done on each property along with the production of a feasibility report. This will ensure that the property is in a good position as to whether or not it is the right property to generate an income from. The typical size of the retirement home is 15 to 30 rooms and they are in areas that have a high retired population within an affluent area.

The retirement home is then renovated to a very high standard over a period of 4 to 6 months. Following the redevelopment, the retirement home is then reopened offering a luxury home from home to fee paying residents. When buying up existing retirement homes, there is often very little needed in terms of planning applications as it is normally simply a case of the property having a full refit as opposed to actual construction work.

Investing in a retirement home is seen as a smart move because you are investing your capital in an area of the property sector which is considered to be in high demand with diminishing supply.

Nursing Home Investment

When a retirement home is identified as prime for investment, a marketing strategy is developed with a unique focus to said property in order to build awareness and interest from those in the local area. Making use of modern marketing techniques and all round good PR, it allows for the full potential of the property to be fulfilled by having the right target audience learn about the offering.

Investing in Nursing Homes

Step 1: Due Diligence

The company identifies suitable properties in affluent towns and regions. The company undertakes constant monitoring of the care market and the availability of suitable properties and ensures that full commercial, technical and financial due diligence takes place on all potential properties.

Step 2: Purchase

Following a satisfactory outcome of due diligence, and provided sufficient funds are available, investment monies are used to acquire the property.

Step 3: Development

The properties are renovated into 5-star luxury care accommodation using permitted development rights where possible or the equivalent full planning requirements. The potential for extension works to existing properties and/or the construction of new build facilities to increase the number of care studios is always explored.

Step 4: Operation, sales and lettings

Upon completion of works the property is registered (or re-registered, as appropriate) with the Care Quality Commission (CQC) for the provision of residential, nursing and domiciliary care services. Comprehensive regional marketing and sales campaigns are then launched to secure sales and lettings on individual care studios and achieve/maintain target occupancy levels.

You have the opportunity to purchase a care studio within a care home on an 125 year leasehold basis. The care studio will then be managed for you and in return you will receive a fixed income. More information about our retirement home investment opportunity is available upon request.

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Godwin Capital Investments Loan Note Review

Following the recent announcement of FJPs partnership with Godwin Developments, we thought it would be beneficial to introduce you all to Godwin Capital Investments.

This company is the funding arm of Godwin and was established with the purpose of raising capital from a range of avenues such as the loan note market, listed bonds along with ISA’s and public listings, therefore as long as a project passes the strict due diligence checks of Godwin Developments, the funding arm will then raise capital in order to see the project through.

There are a number of partners within the property industry in which Godwin Capital Investments work with such as other property developers, joint venture partners and of course family offices. Property funding is a complex business which requires a complex approach in order to secure the capital required to get developments built.

We’ve noticed from our time working with Godwin that they see their projects through, before they have even gone out to market and identified where the funds are coming from they will be thinking and sourcing the end buyer/user.

Godwin Developments

Godwin Capital Investment

Godwin Capital Investment is a subsidiary of Godwin Developments and was set up to raise capital for the developments. The company has been very successful in attracting investors and we believe they are an excellent partner for FJP Investment to be introducing our investors to.

  • Godwin Capital No 1 – a 3 year and 5 year loan note instrument approved by a number of pension platforms
  • Godwin Capital No 2 – a 2 year loan note instrument investment with either six monthly or deferred coupon payments for cash investors only

At the end of the raise, Godwin Capital would look to launch the next SPV, namely Godwin Capital No 3, 4, 5 and so on.

Godwin Capital Investments will always select sites that suggest there is an opportunity to earn at least a 30% return on project costings. The process of selecting the right projects is thorough and is a reflection of the stringent due diligence that is deployed on any project analysis therefore ensuring the best due diligence is undertaken before an investment is made it means any probabilities are eliminated beforehand.

Godwin Capital Loan Note

Why Use Loan Notes?

Godwin Capital Investment will use a range of funding sources and from time to time use bank financing. In reality, bank funding can take typically 3 months to arrange which is the reason the capital raise arm of Godwin Developments has set about making use of a multi sourcing strategy which encompasses both high net worth and sophisticated investors along with institutions and of course family offices.

The security trustee is in place and is a representative of the interests of those who hold the loan notes (the investor). The legal charge is then held by the security trustee against the property and this effectively means a mortgage debenture is held over the assets, providing the investor with security in the event that the company were to default on the repayments.

When will interest begin to accrue on my loan note?

As soon as investment funds have been cleared into the Godwin Capital Investments’ bank account, interest on the loan notes begin to accrue.

The Godwin management team is made up of a very high calibre team of professionals with Godwin starting in the business some 15 years ago. The property board has 2 members which both have +40 years experience in the construction sector. Since the company is well respected and has 15 years worth of history, there is a massive pipeline of developments that are in-place ready to act on as when capital is raised.

In terms of the relationship with Godwin Capital, we have always found Godwin Capital to be professional and work with the upmost integrity when dealing with investors of which we have introduced to their range of loan notes. FJP Investment is a leading introducer of loan note investments and we believe Godwin Capital to be an excellent choice for you and your investment portfolio.

  • Short term investment opportunity
  • Loan note terms of two years with income and deferred interest options
  • Minimum investment of £5,000
  • Interest earned will be 10% or 12% per annum gross dependent on type of loan note chosen
  • Secured with a first legal charge over properties purchased and a fixed and floating charge
  • Security Trustee appointed to represent the interests of the loan note holders

Godwin capital investments

The process for becoming an investor in Godwin Capital Investments loan note product is a simple and very straight forward. The first step is to register your interest for more details about Godwin Capital Investments.

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FJP Investment Partners With Godwin Developments

FJP have had an exceptionally busy start to 2018 and today we are delighted to announce the partnership we have entered into with Godwin Developments. We will be introducing high net worth and sophisticated investors to the 2 year loan note investment that is currently on offer from Godwin Developments.

Godwin Developments is active in regional property development and is focussed primarily towards building out and monetising its large and varied portfolio of both commercial and residential property, these assets are a mix of developments that are being developed with the option of either selling or holding for income.

The focus is on a mix of short, medium and longer term maturity in order to optimise the value and cash flow of the groups investment programme. This ultimately leads in to the balance between risk and reward while ensuring the portfolio is not weighted too heavily on any area in particular.

Godwin capital no 2

Within the property development circles which we frequent, Godwin Developments is a well-regarded entity and they have managed to build a great reputation for their work.

What makes Godwin Developments particularly attractive to FJP Investment is the very strong pipeline of development and investment opportunities they have in the pipeline throughout the United Kingdom.

Godwin Developments is operating from three locations at present; Birmingham, Nottingham and London, which is particularly useful considering our strong makeup of investors throughout the United Kingdom.

The developer is recognised as being one of the most professional developers in the UK. Godwin Developments take pride in the work they do and we find them to be a credible partner in which we can represent with our investors.

Godwin Developments

In terms of the areas in which Godwin Developments is active, they have a strong focus on an area made up between Leeds, Liverpool, Bristol and Cambridge – this pretty much takes in the main population centres of the Midlands. This segment of the UK property market is also in keeping with our own research- as all the indicators currently indicate the Midlands will be an area of strong regional growth over the coming years.

Due to a housing shortage coupled with higher rents, we have identified the Midlands and the North of England as key areas for investment in housing which is ultimately down to the consequences of an increasing population. It is very unlikely that we will see Godwin Developments going after development opportunities in London or the South East as the market is no longer the pick of the bunch, as other areas now provide higher returns and in far greater volume.

Godwin Capital

Sectors in which Godwin Developments operate

In the residential sector, Godwin Developments will have a particular focus on opportunities in:

  • Private Rental Sector (PRS)
  • Private Housing
  • Housing Associations
  • Local Council & Quasi-Governmental Bodies

In the commercial property sector, there will be a focus on opportunities in:

  • Retail
  • Fast Food
  • Discount Food Retail
  • Neighbourhood Centres

In the industrial and logistics sector, Godwin will have a focus on opportunities in:

  • Trade Centres
  • Distribution
  • Warehousing

About Godwin Developments

The existing portfolio is made up of residential and commercial properties in multiple regions of the United Kingdom. As far as diversifying risk goes, the Godwin Developments portfolio is as varied as any UK property portfolio gets.

Godwin Developments is particularly interested in identifying opportunities with develop out, planning gain, refurbishment or even strategic land purchases.

While each project has a methodical approach to be taken such as a target return, they are all assessed on a case by case basis which determines the amount of time and resources to be inputted.

All in all, we feel we have partnered with a fantastic developer and we believe the experience that Godwin Developments has will benefit our investors.

Godwin Developments Loan Note Investment

2018 is set to be a big year for property based loan notes following on from what was a record year in 2017.

FJP Investment is at the forefront of property loan notes / property bonds and we can see that among all the different structures we are able to offer our investors, the loan note model is particularly favoured.

Godwin Developments Ltd

We believe the reason for the unprecedented popularity of loan note investments is that they give flexibility and readily available capital to property developers and brilliant returns in a timely manner to the investor. The loan note model creates a win-win for both property developers and the investor.

It is important to note that all of the loan notes that FJP Introduce are only accessible by high net-worth or sophisticated investors.

Register your interest for our loan note investment in partnership with Godwin Developments.

REGISTER YOUR INTEREST