| A rent back investment
is purchased below market value by approx. 15% which
provides instant equity and protects against adverse
property price movements. In addition to this equity gain,
the investor will benefit from an excellent rental yield of
around 8% . In this way both investment bases are covered
which minimises risk and will provide a cash positive
position if the property is financed.
If you are using a mortgage to
finance your rent back investment , you can refinance at a
higher loan-to-value as you are already in the deal at 15%
below market value. How you structure the investment will
depend on your lender, for example you could buy on an 85% L.T.V
mortgage based on the purchase price, and then refinance
sometime after completion. The refinance would then be based
on a market valuation which will be 15% higher than the
price you paid for the property, thus giving you closer to
65% LTV. If this refinance was at 85% of the market
valuation you will effectively get out most of your your
original investment capital.
We will have already discussed the
deal with the seller and negotiated the discount and yield
percentages so if you decide to go ahead we simply need
details of your solicitor who will handle the contract. We
generally agree with the seller that the buyer pays for both
legal costs. This is "built in" to the 15% discount you
receive.
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