£400,000 to Invest
Discussion
Eleven said:
I can and will, if you like, sell you a small block of flats in Nottingham that will yield 8-9% gross.
This does seem like the way forward at this sort of investment level... but what would the net yield look like - assuming no finance, so just voids, non paying tenants, maintenance, service charges, insurance etc... must stack up on multiple smaller units?UpTheIron said:
Eleven said:
I can and will, if you like, sell you a small block of flats in Nottingham that will yield 8-9% gross.
This does seem like the way forward at this sort of investment level... but what would the net yield look like - assuming no finance, so just voids, non paying tenants, maintenance, service charges, insurance etc... must stack up on multiple smaller units?UpTheIron said:
his does seem like the way forward at this sort of investment level... but what would the net yield look like - assuming no finance, so just voids, non paying tenants, maintenance, service charges, insurance etc... must stack up on multiple smaller units?
It's 3 flats, few voids (a week on one flat last year in total I think), only ever £150 in bad debt over about 5 years, maintenance is never certain but it's been rewired, re-plumbed, new fire system, new kitchens and bathrooms in the past 5 years. Insurance is around £350 per annum.It also has off-street parking and a big loft which has the potential to turn the top floor into a decent 2-bedroom flat (as opposed to the 1-bd it is at present).
There is the possibility of having the existing tenants on long tenancies if required and I MIGHT even look at guaranteed rent / management for a period of time. Though I would be loath to do it long-term because it's off my patch, which is why I am selling it.
z4RRSchris99 said:
8.25% risk free with 90 day access I would mortgage our property and put it all in that.
I generally just don’t like to write ‘recommending’ funds as it comes across as ‘selling’, which is why I suggested PM.Moderator edit: keep it to PMs please.
Edited by jeremyc on Saturday 16th August 09:26
R77C said:
z4RRSchris99 said:
8.25% risk free with 90 day access I would mortgage our property and put it all in that.
I generally just don’t like to write ‘recommending’ funds as it comes across as ‘selling’, which is why I suggested PM.I'm also a little bemused as to what sort of companies they're lending to for them to be so risk free, yet still have to pay 8% plus whatever profit Lavaux retain to secure financing?
Edited by jeremyc on Saturday 16th August 09:28
z4RRSchris99 said:
sounds like a Ponzi scheme
I appreciate that anything labelled as relatively low risk is approached with caution, seems slightly assumptive though to suggest things like that without looking into it? Everything is completely transparent, people already do this....they are called banks....and they do get substantial returns, but unfortunately they do not get passed on to the depositor, the bank keeps hold of it!If in fact, I recall correctly, there was a program called Bank of Dave, or something like that, which had a similar model! Albeit with a specific 'helping Midlands companies' remit.
I don't remember that being called a Ponzi scheme, and he was offering similar rates of return!
I'm hoping that some who did invest from PH will come along to confirm their thoughts freely!
Edited by J__D on Friday 15th August 18:31
jonah35 said:
Lol at low risk!!!
Just a brief one in reply to this jonah35 - http://www.zopa.com/lendingThe overall model as far as I have read seems very similar - they suggest they are relatively low-risk also, so maybe each person's perspective is different!
Maybe ANY investment of this kind / peer-to-peer lending has a favourable "low" risk/ "average" reward profile and could be another potential market to look at, it's a market that has been well written about in the media as a whole. Albeit each company has their own way of going about it.
Edited by J__D on Friday 15th August 19:04
Cockey said:
It's a bit wrong to call it a low risk investment. It may be in your eyes, but there are official risk category definitions, and this certainly doesn't fall under low risk.
I also wouldn't deposit the entire amount with them, just in case the worst does happen.
I completely agree Cockey, risk is subjective to every single person depending on their financial position/individual circumstances - hence why I said that the OP should be seeking this advice from a professional. Having learnt about the business myself I still believe it is low risk, but that's my personal view and not one that should be shared or relied upon. Lots of people were asking for the business name so I gave it so that each and every one of you could make an informed decision for yourselves and not reliant on any other information. The only other information I wrote was based on my experience with the company. As I've said, I don't work for them and don't benefit anything from telling you in any way feel free to ask them all of these questions, find out for yourself from the people that are involved in and run the business.I also wouldn't deposit the entire amount with them, just in case the worst does happen.
If you are looking for a car you don't take joe public's advice and go and buy it - you go to view the car yourself, you ask the business/seller many, many questions, and you do your own due diligence. That's what I expect anyone to do in a financial situation such as this one.
Edited by R77C on Friday 15th August 19:08
R77C said:
I completely agree Cockey, risk is subjective to every single person
I agree. I have some magic beans to sell - I plant them for you and your return is ~12% pa (net). It is a very low risk investment; fancy-pants financial advisors haven't got a clue. The fact the rest of the world are idiots and haven't piled into the scheme has absolutely no relation to my definition of "low risk".jw673 said:
I agree. I have some magic beans to sell - I plant them for you and your return is ~12% pa (net). It is a very low risk investment; fancy-pants financial advisors haven't got a clue. The fact the rest of the world are idiots and haven't piled into the scheme has absolutely no relation to my definition of "low risk".
It seems odd for you to make such statements without actually learning about the " scheme " and the company behind it. Also, lots of people have " piled " into it too, so I'm also not sure your point here? They have been around for a while now and have an established investor base!
J__D said:
It seems odd for you to make such statements without actually learning about the " scheme " and the company behind it.
Also, lots of people have " piled " into it too, so I'm also not sure your point here? They have been around for a while now and have an established investor base!
Could you explain the secret then?Also, lots of people have " piled " into it too, so I'm also not sure your point here? They have been around for a while now and have an established investor base!
To be able to give their investors an 8.25% return, on top of their own running costs, profits, insurance premiums, etc, etc, etc, they must be charging what, 15-20%+ interest on their loans?
What sort of companies out there are low risk, yet unable to secure financing at better rates than that?
Kermit power said:
Could you explain the secret then?
To be able to give their investors an 8.25% return, on top of their own running costs, profits, insurance premiums, etc, etc, etc, they must be charging what, 15-20%+ interest on their loans?
What sort of companies out there are low risk, yet unable to secure financing at better rates than that?
Closer towards 15-16% yup, and unfortunately for many, bank financing just isn't available in some cases, even taking into account for example perfectly healthy companies in Greece would not get bank financing just because they are not lending. To be able to give their investors an 8.25% return, on top of their own running costs, profits, insurance premiums, etc, etc, etc, they must be charging what, 15-20%+ interest on their loans?
What sort of companies out there are low risk, yet unable to secure financing at better rates than that?
However over and above that, companies who don't want to have large cash sums to match the loan made as security (often banks require a 100% physical security to the amount of the loan) which is often impossible, this is the area where trade finance like this helps most as they cover the transaction itself.
For example a supplier based in Eastern Europe, wanting to supply a product to a large chain in the UK - they need to buy the materials and pay the manufacturer to create X product which the UK chain has given a purchase order for. The Eastern European guys won't receive the money from the UK chain for 60-90 days (pretty standard) but they still need to purchase the material and pay manufacturer to make the next batch, and so on.
So such transactions are perfectly suited and relatively low risk, the company still needs help with cash flow though and putting up the assets as security may not be a route they want to go!
Edited to add - the companies themselves may not be inherently low-risk, but trade finance isn't about providing a general company loan to said company, it is about financing a particular trade transaction - the transaction itself is a lower risk. Then finally, if the whole transaction goes to pot for example cargo ship sinks and all products go to the bottom of the sea, then insurance is there to cover such scenarios.
Edited by J__D on Saturday 16th August 12:00
traxx said:
Property developers have typically been paying 15-18% for Mez financing over the last few years - so the funds that have been supplying this money must be paying 10+% to their investors
Spot onJoe public reads the Daily Mail and watches the News on Sky TV where all we hear is that interest rates are 0.5%
Reality is that the banks on want to lend to SAFE businesses and by safe I mean that they have the businesses by the short and curlys and that the loan will be repaid with a typical safety factor built in of between 20% and 40% in either income or so,e other form of liquid capital
Mezzanine funding operates at higher rates which to the general public look to be unworkable.
In reality they work but take a large chunk of the profit out of the borrowers deal, the key however is that they still allow the deal to go through and therefore allow the business to hopefully grow and go forward to do the next deal and so on.
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