New Property fund - need help with specifics

[Black Swan]

FYI I'm 25 years old and I've own seven properties, but thats besides the point. I made it clear from the start I am a beginner on the funds side and I asked for some help. Not exactly the crime of the century. The FACT is I do have something to offer and I'm trying to find out the best way to go about it. I thought one of the uses for forums is to ask for help and suggestions. Leave the name calling out of this.

If you don't have anything positive to say, then don't. Now be gone, please.

Sigh, another monopoly player, you guys are so 2006..

So, re-mortgage your houses, raise the deposit and buy the block...now let me guess, you can't as you've got no equity, other than 'denial' equity...

Mods, kill this thread please, wtf is it doing on here, this isn't general trading, singing pig is the destination for all this bmv nonsense..

 

[DJ85]

I'm not here to sell property to anyone, I'm saying theres options to invest £10k and make 10% return p/annum. There are 100's of threads in this forum, leave this one alone if its bothering you this much.

 

[Martinghoul]

Swan, you got a point, but come on, dude, give the guy a break. If he wants to do this as a business and he has some stock that people might be interested in, let him try. Maybe he has a different view on where the mkt is headed and he can convince investors. I, for one, don't think it's such a horrible idea and would be interested to put some money into smth like that, given my existing risk-averse stance. However, it's not ideal that it's residential, rather than commercial, and mucho due diligence is key.

The one thing that I don't like and that's a very big red flag for me is the whole "GUARANTEED" malarkey. It's obviously not guaranteed in any reasonable sense of this word, so to label it as such stinks to high heaven. Other than that, good luck to DJ, I say.

 

[Hoggums]

Can we see some figures DJ85. Ie if you had your million - where will it be spent, how much rent/ annual costs etc.... I'm interested to know how you will yield 10%.

 

[DJ85]

Martinghoul, thanks, I think people are forgetting in the the opening thread I did state that I am new to this. I would like to ask/remind people what their knowledge was like when they FIRST started, not where they are 1,5 or 10 years down the line.

Like I said, perhaps I should use a different word if guarantee is a word that doesn't bode well. With the residential properties, they're all on 6 and 12 month AST's. We've got access to plenty of commercial stock with tennants already leasing so that is an option to move forward to as well.

 

[Martinghoul]

Sure, makes sense... I know of a few people invested in these types of vehicles (mostly commercial). If it survived some interesting times in '08, when most of these broke covenants etc, it's worthwhile. I know a guy who invests in distressed property (esp up North) in his spare time, but he has a LOT of money and is a very old hand in this biz.

Generally, as I said, best of luck to you. Just make sure you label things correctly and, trust me, if you want real investors and are serious about this, it's ALWAYS best to err on the conservative side when pitching/describing the deal.

 

[the hare]

I'm not here to sell property to anyone, I'm saying theres options to invest £10k and make 10% return p/annum.

There's a few problems here. The return is far from guarenteed, 10% per annum isnt that great a return given the risks (its equivelent to the type of returns available from well established peer to peer banking oportunities, or even long term buy and hold returns in legitimate property funds who have the benefit of a publically audited track record)

You claim in own 7 properties, but are unable to raise the capital personally or through existing associates. Thats a massive red flag, and I strongly suggest you draw a discrete veil over the fact that you are not prepared to risk your own capital when pitching for finance.

I wouldnt dismiss the project out of hand. You wont attract smart money, but the average mug punter in the UK still believes property to be a sound long term investment, and thats all what matters.

 

[DJ85]

Can we see some figures DJ85. Ie if you had your million - where will it be spent, how much rent/ annual costs etc.... I'm interested to know how you will yield 10%.

You invest £10k into the fund and every year we pay you 10% return on your investment. Through residential alone we can purchase £1.5m worth of bricks and mortor houses, not flats. We do have the option to diversify the stock and go into commercial properties as well. The 10% yield would come from the rents from the property (20 properties renting between £600-£650 pcm, at least £144k per year), all of which have signed long term AST's and have guarantors.

With our access to this level of diverse real estate, we can even buy properties (proper houses NOT new build flats) at huge discounts and sell just as quickly making £20-£50k per deal, and can distribute the profits to investors.

 

[Black Swan]

Martinghoul, thanks, I think people are forgetting in the the opening thread I did state that I am new to this. I would like to ask/remind people what their knowledge was like when they FIRST started, not where they are 1,5 or 10 years down the line.

Like I said, perhaps I should use a different word if guarantee is a word that doesn't bode well. With the residential properties, they're all on 6 and 12 month AST's. We've got access to plenty of commercial stock with tennants already leasing so that is an option to move forward to as well.

This is the kind of nonsense that the Ahuja group spit out as a mantra, only they can spell the word tenant correctly..and the bath that the small commercial landlord will take in the next few years is frighteningly ice cold.

Just concentrate on meeting your payments on your interest only buy to let mortgages over the next twenty years, if you're lucky you may have the houses and some equity left once the payments are finished, then you have the problem of paying off the capital.

Don't think property can do nothing for 20 years+? One word, one country...Japan.

 

[DJ85]

There's a few problems here. The return is far from guarenteed, 10% per annum isnt that great a return given the risks (its equivelent to the type of returns available from well established peer to peer banking oportunities, or even long term buy and hold returns in legitimate property funds who have the benefit of a publically audited track record)

You claim in own 7 properties, but are unable to raise the capital personally or through existing associates. Thats a massive red flag, and I strongly suggest you draw a discrete veil over the fact that you are not prepared to risk your own capital when pitching for finance.

I wouldnt dismiss the project out of hand. You wont attract smart money, but the average mug punter in the UK still believes property to be a sound long term investment, and thats all what matters.

I will be investing and getting associates to invest also isn't a problem. In my first thread post, I was asking how best to go about creating a fund if needed. I have the stock, have people that could and would invest and I have the stock already rented out. I simply wanted to know what back end stuff I would need to do like setting it up, what would be the most appropriate way of going about setting up the fund, etc.

 

[Black Swan]

I will be investing and getting associates to invest also isn't a problem. In my first thread post, I was asking how best to go about creating a fund if needed. I have the stock, have people that could and would invest and I have the stock already rented out. I simply wanted to know what back end stuff I would need to do like setting it up, what would be the most appropriate way of going about setting up the fund, etc.

Bizarre...

 

[meanreversion]

Whilst the signs are all fairly ominous for the UK market, that doesn't mean the opposite can't happen. I'm not an "expert" on property by any means, but I know enough to avoid "expert" opinion, as it's usually unreliable.

This thread is, however, quite odd.. is the OP covertly looking for investors? Otherwise I can't see the value in attempting to discern advice on property funds on a retail trading website, seeking professional advice would be the most obvious option.

 

[meanreversion]

I have access to stock worth around £1.5m and can purchase it at around £1m. There's very little chance of the property values going down anymore in this market on properties below the price of £100k but nonetheless the values has been certified.

I hope you don't come to regret this remark

 

[meanreversion]

Properties in the long term are always going to go up

Er, or this one ... as Swan said, have a look at Japan ....

 

[Martinghoul]

Er, or this one ... as Swan said, have a look at Japan ....

Well, actually, taking the example of Japan, I know a few people who invested in some of these vehicles back in the day. The somewhat lop-sided argument was "Look at the rental yields, they're GRRRRREAT!". Of course, since the 90s whatever you made on the carry you lost on the mark-to-mkt, as your property values just kept going down inexorably. Still, at worst, you broke even. Given this sort of a risk/reward and the fact that, arguably, UK isn't like Japan, DJ85's idea may be worth a punt. I have been looking at things like that myself.

Obviously, as I mentioned, the "GUARANTEED" thing is tres bad. Also, as Swan may have mentioned, they would have to offer a significant discount for people to go with them, rather than one of the more established, big-name entities.

 

[brettus]

Well, actually, taking the example of Japan, I know a few people who invested in some of these vehicles back in the day. The somewhat lop-sided argument was "Look at the rental yields, they're GRRRRREAT!". Of course, since the 90s whatever you made on the carry you lost on the mark-to-mkt, as your property values just kept going down inexorably. Still, at worst, you broke even. Given this sort of a risk/reward and the fact that, arguably, UK isn't like Japan, DJ85's idea may be worth a punt. I have been looking at things like that myself.

Obviously, as I mentioned, the "GUARANTEED" thing is tres bad. Also, as Swan may have mentioned, they would have to offer a significant discount for people to go with them, rather than one of the more established, big-name entities.

The thing is the guy is obviously in a hole having bought 7 properties before the age of 25, and is no doubt in negative equity and is finding his way to dig himself out, and that basis alone I'm out.

 

[DJ85]

I hope you don't come to regret this remark

Thanks for your input. However, the rest of the sentence did say on properties below the £100k. It's properties over £150k that have really suffered. The £100k and under has been pretty smooth in comparison.

Re the thread on property funds being on a retail funding site, I just wanted feedback/advice on the way I should arrange this fund in terms of how to set it up, what things I should look out for and if there were fees I would need to pay to set it up. I will of course being talking to a solicitor, I just wanted some pointers before I did.

 

[meanreversion]

Given this sort of a risk/reward and the fact that, arguably, UK isn't like Japan, DJ85's idea may be worth a punt. I have been looking at things like that myself.

I'd never discount anything; the fact the consensus is so skewed to the downside makes me wonder if now is the time to be looking for cheap bricks and mortar again.

My issue is more with his overt tempting of fate - "prices won't go down" etc. Shaking your fist at providence in such a manner is not to be advised.

As for Japan, I lived there for a year and it certainly IS different from the UK, not least of all the language and demographics. For many years, I've always used Japanese equities as an example of why buy and hold is not "guaranteed" to work in the long run, as some (not as many as a few years back) still believe.

 

[DJ85]

The thing is the guy is obviously in a hole having bought 7 properties before the age of 25, and is no doubt in negative equity and is finding his way to dig himself out, and that basis alone I'm out.

I certainly am NOT in any negative equity. I am NOT finding a way to dig myself out. If you read the start of the thread, you would have read that all I am looking to do is find out what would be the best way to arranging a fund, what kind of costs would I be looking it and the duration of the process. I don't recall asking people here to invest, and I only mentioned my portfolio when pushed on my knowledge of property. Your assumptions are well off the mark.

 

[Martinghoul]

I'd never discount anything; the fact the consensus is so skewed to the downside makes me wonder if now is the time to be looking for cheap bricks and mortar again.

My issue is more with his overt tempting of fate - "prices won't go down" etc. Shaking your fist at providence in such a manner is not to be advised.

As for Japan, I lived there for a year and it certainly IS different from the UK, not least of all the language and demographics. For many years, I've always used Japanese equities as an example of why buy and hold is not "guaranteed" to work in the long run, as some (not as many as a few years back) still believe.

100% agree... The upshot for me is that, exactly as you say, the general idea may have merit. As to the specific implementation as described by DJ85, there are definitely some issues and even bigger questions.