Buying ground rents for investment purposes.

[jinkster]

Could someone please point me in the right direction for buying ground rents for the sole purpose of investment.

Thanks.

[RichB]

I'd not heard of this so I Googled it. There's a lot of information on the web.

[jinkster]

There is lots of information if your house is leasehold and you want to buy that. Buying other leaseholds for investment purposes is pretty thin.

[princeperch]

most ground rent investments get punted through the auctions such as alsops

[RichB]

jinkster said:

There is lots of information if your house is leasehold and you want to buy that. Buying other leaseholds for investment purposes is pretty thin.

A quick scan reveals these three, I'm sure there's more. Seems like am interesting investment. What are your plans?

http://www.propertyhawk.co.uk/index.php?page=magaz...

http://www.hurford-salvi-carr.co.uk/Investments/13...

http://www.grbuk.com/Investments.pdf

[FLASHG1981]

I'm developing a property into flats which I am going to sell. Is there a standard way of valuing ground rents such as 10 x annual income or something like that?

[otherman]

FLASHG1981 said:

I'm developing a property into flats which I am going to sell. Is there a standard way of valuing ground rents such as 10 x annual income or something like that?

You'd value them according to the annual return. So if you want to get 7% per annum it would be worth paying £1400 for £100 annual income. You'd want a premium to normal investment rates because its a fairly low liquidity asset.

[sideways sid]

Allsop has monthly auctions of Ground Rents. Their September one has c.20 lots with guide prices from £1k to £35k

[z4chris99]

After researching them for fking ages at work I'm the GR king.

At the moment it's a bit of a weird valuation industry with no set standard. most are valued on a crude income multiple of 20-25x

Lease structure pays a big part with the best being 125yr, RPI linked reviews every 10 years.

Smaller units at auction often a premium as the person who owns the lease often bids far far too high.

I have a model I've created which takes into account lease length, reversion, marriage, possibility of extension etc etc. much more accurate than Multiple methods

Alot of people think of them as long secure bonds paying 5%+,

Edited by z4chris99 on Friday 31st August 12:37

[z4chris99]

FLASHG1981 said:

I'm developing a property into flats which I am going to sell. Is there a standard way of valuing ground rents such as 10 x annual income or something like that?

20-25 times income. If your selling the freehold and haven't decided on the lease yet I'd be happy to buy them

[Oi_Oi_Savaloy]

It's 18 times 1 year's ground rent income. There's no yield calculation (7% etc).

[z4chris99]

Oi_Oi_Savaloy said:

It's 18 times 1 year's ground rent income. There's no yield calculation (7% etc).

can you show me where your buying them off that?

[FLASHG1981]

z4chris99 said:

20-25 times income. If your selling the freehold and haven't decided on the lease yet I'd be happy to buy them

This is probably something I will look to do. I will send you a pm when I have a bit more info. I am just about to start the building work so will probably be another 6 months from now until I will be ready to sell.