A lot of people seem to stay away from new builds, and as an experienced property consultant of 30 years, I would like to see what people think of this sort of proposal and detail why is does not represent a good investment?
The developer in question has a track record of 15 years. They have already completed thousands of new builds. They are given contracts to help regenerate urban areas in major cities, such is their reputation. They retain some of their properties for their own income and now run structured loan notes based on their own assets and income. The developer is thus very secure.
As an example of capital appreciation, on their last major Birmingham development, investors that bought off plan realised up to 59% capital growth on the value of the property they bought on completion of the project. So, capital appreciation is as good as it gets. The projected rental values increased by similar levels; hence the projected yield went from 5.3% to 8.7% on a 1 bed flat and 6.2% to 8.9% on the 2 bed flats.
They run their own rental programs, some with guaranteed income rates. They do monthly payment plans during the build term to help people pay deposits. Some developments allow you to pay up to 30% back to them via the rental income rather than mortgage.
They pick towns and cities where large corporations have head offices and such like, so they know the employment rates are high and rental properties in demand. They also try to pick locations close to essential transport links (HS2) or as close to a major shopping centre areas as they can.
They always price at around 10% below current market values for the post code they are building in, so that right away on launch you can be assured you have bought at a good price. The leaseholds are up to 250 years.
For buyers who pay at least 35% upfront deposit, they do free furniture packs, free legal costs and pay your stamp duty on some of their developments.
Special offer examples.
- Lump Sum Deposit Incentive ACTIVE FOR APRIL ONLY
- 2 year Rental Guarantee with 7% Net Yield, No Service Charge, No Ground Rent, No Management Fee’s* ACTIVE FOR APRIL ONLY
These can be turnkey investments where you can, as shown above, make very good capital growth between launch price and completion price and have a fully managed property delivering you a very good income yield.
Some interesting stats on Birmingham prices here:
Does this not sound like a good property investment to you?