Investing in social housing
Discussion
So after a couple if emails and calls, I have had a couple of looks like legit companies offering returns of up to 10% NET Guaranteed for 25 years, These are for tenants with social issues and are looked after by the company that leases the property.
What's the Catch ??
This is the Blurb :-
Introducing our latest launch xxdxxxx ,This is a fantastic investment opportunity that offers buyers guaranteed rental returns of 10% NET Guaranteed for 25 years. All the stunning apartments provide ready-to-move-in living spaces that will suit those looking for spacious and well-appointed living with easy access to the centre of Manchester. The lease is FRI (full repair and insuring lease) so the provider will pay for all service charges, insurance, maintenance, etc. There are no voids, management charges, or ground rent to pay, so this is a true net figure for you the investor.
Financial Forecast
Purchase Price £182,000
Monthly Income £1,516.66
Annual Income £18,200
25 Year Income £467,294
The lease at xxxxxxxxxx includes annual CPI increases, and the graph below forecasts the impressive potential increase on annual rental income at the property, based on an average 2% rate of inflation per year. However, with inflation rising at record rates at the moment, there is a large scope for further CPI increases
This investment is linked to the Consumer Price Index which means as inflation rises, so does your income. This means your income is protected and will always move in line with the market. The last few years have seen CPI in the UK soar. In the 12 months to December 2022, CPI risen by a massive 9.3% in what was one of the highest CPI 12-month inflation since the National Statistics series began in January 1977.
Projection for 25 years – 2% increase Y.o.Y
What's the Catch ??
This is the Blurb :-
Introducing our latest launch xxdxxxx ,This is a fantastic investment opportunity that offers buyers guaranteed rental returns of 10% NET Guaranteed for 25 years. All the stunning apartments provide ready-to-move-in living spaces that will suit those looking for spacious and well-appointed living with easy access to the centre of Manchester. The lease is FRI (full repair and insuring lease) so the provider will pay for all service charges, insurance, maintenance, etc. There are no voids, management charges, or ground rent to pay, so this is a true net figure for you the investor.
Financial Forecast
Purchase Price £182,000
Monthly Income £1,516.66
Annual Income £18,200
25 Year Income £467,294
The lease at xxxxxxxxxx includes annual CPI increases, and the graph below forecasts the impressive potential increase on annual rental income at the property, based on an average 2% rate of inflation per year. However, with inflation rising at record rates at the moment, there is a large scope for further CPI increases
This investment is linked to the Consumer Price Index which means as inflation rises, so does your income. This means your income is protected and will always move in line with the market. The last few years have seen CPI in the UK soar. In the 12 months to December 2022, CPI risen by a massive 9.3% in what was one of the highest CPI 12-month inflation since the National Statistics series began in January 1977.
Projection for 25 years – 2% increase Y.o.Y
visitinglondon said:
If it sounds too good to be true, it probably is.
If they can generate returns of 10%, why don’t they get financing for less than this (which they would do on those figures) and pocket the difference rather than giving you the opportunity to invest?
I wouldn’t go anywhere near this.
My thoughts to, I have asked for a copy of the contract between the leasing Co and the landlord, Still waitingIf they can generate returns of 10%, why don’t they get financing for less than this (which they would do on those figures) and pocket the difference rather than giving you the opportunity to invest?
I wouldn’t go anywhere near this.
Social housing providers are often invested in by large pension funds such Scottish Widows, Legal & General etc. They are also invested in by others, from banks, wealthy individuals via private arrangements, and also by capital funds.
I'm not making comment on if the OP's offer is a good one or not, I am merely stating that money (often huge sums of money) being put into social housing to generate a return is not unusual.
The social housing providers use the money to develop more houses, and increase the standard of their stock, and therefore increase the value of the business.
It is not much different to investing in a large housebuilding company, for example.
I'm not making comment on if the OP's offer is a good one or not, I am merely stating that money (often huge sums of money) being put into social housing to generate a return is not unusual.
The social housing providers use the money to develop more houses, and increase the standard of their stock, and therefore increase the value of the business.
It is not much different to investing in a large housebuilding company, for example.
Greshamst said:
My only question is that if it’s all upside, with no downside, why are they selling the opportunity rather than investing in the opportunity?
My inkling is that there will be a downside that you will have to bare, that they haven’t highlighted.
Indeed why wouldn't the property developer sign the deal with the social housing leasing Co "Guaranteeing the returns" refinance and go again ?. There must be a downside to this or we would all do it!My inkling is that there will be a downside that you will have to bare, that they haven’t highlighted.
Also forgot to add cash buyers only!!
Maybe Mortgage / Finance companies wont touch this ? Why?
Greshamst said:
My only question is that if it’s all upside, with no downside, why are they selling the opportunity rather than investing in the opportunity?
My inkling is that there will be a downside that you will have to bare, that they haven’t highlighted.
Very hard to sell? So it might be guaranteed for 25 years but try and get out of the sale or get your initial investment back. My inkling is that there will be a downside that you will have to bare, that they haven’t highlighted.
There were / are a lot of these in Liverpool but it’s student flats you can’t rent them to anyone else and try selling it.
MiniPro3 said:
MustangGT said:
You are stating a purchase price of £182k and monthly rental of £1500+. That does not equate to social housing, I would expect maybe £4-500 in rent.
The Gov pays the rent as the tenants have special needs need looking after assisted livingYou need to look really carefully at the ownership structure and who your counterparties are.
From what’s been written so far, you’d be investing in a property (or some sort of fund that owned the property) that was then leased on a long term basis to a company. That company then operates the property, collecting rent, managing it, etc.
Initial questions would include:
Would I actually own the property?
Who is the party that would lease it from me? (With obvious follow ons around track record, strength of covenant, etc)
Are they already contracted to deliver such services? If so, what are the terms of that/those contract(s)?
Is the above company the only party I can lease it to (both legally and practically)?
What happens if the above company fails to pay?
How do I liquidate my investment (and what are the costs associated with doing so)?
… and that’s really just the start.
There are some good opportunities out there in special needs/social accommodation but you need to think about why a developer would want to target retail money when there’s a lot of institutional interest. If it were all contracted for 25 years already there would be no problems raising the cash at scale.
An important factor to consider is changes to future legislation surrounding this type of investment. It is highly likely that a future Labour government which leans towards a socialist agenda will have different opinions on such investments compared to a Conservative government which embraces a capitalist agenda.
Who knows but the biggest risk is the quality of the organisation standing behind it. The crowd in Newcastle, High St group sucked loads of people in and on paper the whole scheme worked but it didn't and people lost their entire pensions.
If Blackrock or even L&G were offering this and GUARANTEEING ( this is critical) they would be offering well over double the 30yr US treasury which is about 4.3%.
Do you think us retail schmucks can get double what the biggest funds can without increased risk and based on these schemes the risks are wide and varied and require a lot of research, research that usually meets a dead end.
I would be very sceptical but dig a bit deeper.
The biggest red flag is the duration, just think how good it would be to have good returns, even returns and long term returns and never have to worry.
That's the Hook and it's well baited!
If Blackrock or even L&G were offering this and GUARANTEEING ( this is critical) they would be offering well over double the 30yr US treasury which is about 4.3%.
Do you think us retail schmucks can get double what the biggest funds can without increased risk and based on these schemes the risks are wide and varied and require a lot of research, research that usually meets a dead end.
I would be very sceptical but dig a bit deeper.
The biggest red flag is the duration, just think how good it would be to have good returns, even returns and long term returns and never have to worry.
That's the Hook and it's well baited!
MiniPro3 said:
MustangGT said:
You are stating a purchase price of £182k and monthly rental of £1500+. That does not equate to social housing, I would expect maybe £4-500 in rent.
The Gov pays the rent as the tenants have special needs need looking after assisted livingThey will often receive a grant to help in the purchase/build of the properties, in return they guarantee the social or affordable housing mix and rent levels. Most are run as charities.
MiniPro3 said:
So after a couple if emails and calls, I have had a couple of looks like legit companies offering returns of up to 10% NET Guaranteed for 25 years, These are for tenants with social issues and are looked after by the company that leases the property.
What's the Catch ??
This is the Blurb :-
Introducing our latest launch xxdxxxx ,This is a fantastic investment opportunity that offers buyers guaranteed rental returns of 10% NET Guaranteed for 25 years. All the stunning apartments provide ready-to-move-in living spaces that will suit those looking for spacious and well-appointed living with easy access to the centre of Manchester. The lease is FRI (full repair and insuring lease) so the provider will pay for all service charges, insurance, maintenance, etc. There are no voids, management charges, or ground rent to pay, so this is a true net figure for you the investor.
Financial Forecast
Purchase Price £182,000
Monthly Income £1,516.66
Annual Income £18,200
25 Year Income £467,294
The lease at xxxxxxxxxx includes annual CPI increases, and the graph below forecasts the impressive potential increase on annual rental income at the property, based on an average 2% rate of inflation per year. However, with inflation rising at record rates at the moment, there is a large scope for further CPI increases
This investment is linked to the Consumer Price Index which means as inflation rises, so does your income. This means your income is protected and will always move in line with the market. The last few years have seen CPI in the UK soar. In the 12 months to December 2022, CPI risen by a massive 9.3% in what was one of the highest CPI 12-month inflation since the National Statistics series began in January 1977.
Projection for 25 years – 2% increase Y.o.Y
You need the name of the company that will be signing the lease and guaranteeing the 25 years of gold plated income. It's definitely not the Government, and I'm going to guess that they don't have 20 years of audited accounts behind them showing good steady growth, strong profits and a great balance sheet. Far more likely to be a newco with no trading history that can be wound up once they've sold all the flats to mugs.What's the Catch ??
This is the Blurb :-
Introducing our latest launch xxdxxxx ,This is a fantastic investment opportunity that offers buyers guaranteed rental returns of 10% NET Guaranteed for 25 years. All the stunning apartments provide ready-to-move-in living spaces that will suit those looking for spacious and well-appointed living with easy access to the centre of Manchester. The lease is FRI (full repair and insuring lease) so the provider will pay for all service charges, insurance, maintenance, etc. There are no voids, management charges, or ground rent to pay, so this is a true net figure for you the investor.
Financial Forecast
Purchase Price £182,000
Monthly Income £1,516.66
Annual Income £18,200
25 Year Income £467,294
The lease at xxxxxxxxxx includes annual CPI increases, and the graph below forecasts the impressive potential increase on annual rental income at the property, based on an average 2% rate of inflation per year. However, with inflation rising at record rates at the moment, there is a large scope for further CPI increases
This investment is linked to the Consumer Price Index which means as inflation rises, so does your income. This means your income is protected and will always move in line with the market. The last few years have seen CPI in the UK soar. In the 12 months to December 2022, CPI risen by a massive 9.3% in what was one of the highest CPI 12-month inflation since the National Statistics series began in January 1977.
Projection for 25 years – 2% increase Y.o.Y
Secondly, get an independent valuation of the property on the assumption of Vacant Possession, again I'll bet it's not worth £182,000, more likely to be worth £100,000.
Honestly, I can't believe people are still falling for this stuff - 10% return on 25yrs CPI linked income, give your head a wobble.
JQ said:
MiniPro3 said:
So after a couple if emails and calls, I have had a couple of looks like legit companies offering returns of up to 10% NET Guaranteed for 25 years, These are for tenants with social issues and are looked after by the company that leases the property.
What's the Catch ??
This is the Blurb :-
Introducing our latest launch xxdxxxx ,This is a fantastic investment opportunity that offers buyers guaranteed rental returns of 10% NET Guaranteed for 25 years. All the stunning apartments provide ready-to-move-in living spaces that will suit those looking for spacious and well-appointed living with easy access to the centre of Manchester. The lease is FRI (full repair and insuring lease) so the provider will pay for all service charges, insurance, maintenance, etc. There are no voids, management charges, or ground rent to pay, so this is a true net figure for you the investor.
Financial Forecast
Purchase Price £182,000
Monthly Income £1,516.66
Annual Income £18,200
25 Year Income £467,294
The lease at xxxxxxxxxx includes annual CPI increases, and the graph below forecasts the impressive potential increase on annual rental income at the property, based on an average 2% rate of inflation per year. However, with inflation rising at record rates at the moment, there is a large scope for further CPI increases
This investment is linked to the Consumer Price Index which means as inflation rises, so does your income. This means your income is protected and will always move in line with the market. The last few years have seen CPI in the UK soar. In the 12 months to December 2022, CPI risen by a massive 9.3% in what was one of the highest CPI 12-month inflation since the National Statistics series began in January 1977.
Projection for 25 years – 2% increase Y.o.Y
You need the name of the company that will be signing the lease and guaranteeing the 25 years of gold plated income. It's definitely not the Government, and I'm going to guess that they don't have 20 years of audited accounts behind them showing good steady growth, strong profits and a great balance sheet. Far more likely to be a newco with no trading history that can be wound up once they've sold all the flats to mugs.What's the Catch ??
This is the Blurb :-
Introducing our latest launch xxdxxxx ,This is a fantastic investment opportunity that offers buyers guaranteed rental returns of 10% NET Guaranteed for 25 years. All the stunning apartments provide ready-to-move-in living spaces that will suit those looking for spacious and well-appointed living with easy access to the centre of Manchester. The lease is FRI (full repair and insuring lease) so the provider will pay for all service charges, insurance, maintenance, etc. There are no voids, management charges, or ground rent to pay, so this is a true net figure for you the investor.
Financial Forecast
Purchase Price £182,000
Monthly Income £1,516.66
Annual Income £18,200
25 Year Income £467,294
The lease at xxxxxxxxxx includes annual CPI increases, and the graph below forecasts the impressive potential increase on annual rental income at the property, based on an average 2% rate of inflation per year. However, with inflation rising at record rates at the moment, there is a large scope for further CPI increases
This investment is linked to the Consumer Price Index which means as inflation rises, so does your income. This means your income is protected and will always move in line with the market. The last few years have seen CPI in the UK soar. In the 12 months to December 2022, CPI risen by a massive 9.3% in what was one of the highest CPI 12-month inflation since the National Statistics series began in January 1977.
Projection for 25 years – 2% increase Y.o.Y
Secondly, get an independent valuation of the property on the assumption of Vacant Possession, again I'll bet it's not worth £182,000, more likely to be worth £100,000.
Honestly, I can't believe people are still falling for this stuff - 10% return on 25yrs CPI linked income, give your head a wobble.
The idea that investors can make money out of 'social housing' strikes me as wrong. If investors can make money out it, then the housing could have been provided cheaper.
Furthermore...
'offering returns of up to 10% NET Guaranteed for 25 years'
Anything with 'up to' in it is b
ks. I could offer the same!
Furthermore...
'offering returns of up to 10% NET Guaranteed for 25 years'
Anything with 'up to' in it is b
ks. I could offer the same! Gassing Station | Business | Top of Page | What's New | My Stuff