Exit Strategy - Your Options
As a sensible investor we are sure that you will consider the options for exit prior to making a decision to purchase.
HERE ARE THE THREE MOST LIKELY CHOICES:
- Sell (flip) your investment prior to completion
- Complete the purchase, keep short to medium term and then sell
- Complete the purchase, refinance and keep long term
Let's consider the benefits and drawbacks of each and what kind of investor would best be suited to a specific strategy:
FLIP THE INVESTMENT
A significant benefit of your contract is that it may be assigned to another buyer without conditions. This means that at any time during the build process you can "pass on" your contract to another buyer.
Do this at a higher price and you can walk away with a HUGH profit on your £1,000 reservation fee!
There would be no need to complete on the purchase and therefore no need to obtain a mortgage.
Benefit: Amazing short-term return on your investment over the 30 months until completion!
Drawback: If the prices don't go up enough, and you don't have the funds or ability to obtain a mortgage, you could be in difficulties at the time of completion. To be safe, plan to put a mortgage in place just in case the flip doesn't happen.
Who for? Aggressive investor with active short-term goals. Buy, flip, re-invest and do it again. Higher risk but potentially higher return.
COMPLETE THE PURCHASE AND KEEP THE PROPERTY FOR 1-3 YEARS
This gives you a time span of 3-5 years for your investment. You will need to complete the purchase and then use the 10% rental guarantee to cover the costs in the first two years.
Benefit: You can assess the best time to sell during the 1-2 years post completion and therefore make the most of the potential capital appreciation in the current high growth climate.
Since you are not forced to sell at a specific time it takes the pressure off the choice of timing.
Drawback: The rental guarantee period is not where the maximum return is to be enjoyed. Following the first two years after completion you will receive 50% net of the room rate which will deliver a fantastic return depending on the value of the unit you buy. This is a great way of providing yourself with a passive income.
Who for?: Medium term investor looking for maximum capital gain over 3-5 years with minimal risk.
COMPLETE THE PURCHASE, KEEP LONG TERM AND REFINANCE
Perfect long term strategy, benefit from the two year 10% rental guarantee and the 50% net room rate share and possibly refinancing at some point in the future to withdraw further funds whilst still benefiting from a positive cash flow.
Benefit: Long term you have an appreciating asset with a positive cash flow and significant equity.
Drawback: None as far as we can see.
Who for?: Long term investors looking to build retirement portfolio with positive cash flow and significant equity that can be released as and when needed.
Why not register your interest now and we will contact you shortly
