BtL investment - there's a catch...?

[joshleb]

Had a few adverts going round my FB and stuff of BtL properties, that offer up to 10% annual yield; example below:
http://landing.themovechannel.com/26394311/investm...

I've not enquired, but surely there must be a catch? Guaranteed return for 5 years then the market is too saturated so no-one else moves in?

[13m]

joshleb said:

Had a few adverts going round my FB and stuff of BtL properties, that offer up to 10% annual yield; example below:
http://landing.themovechannel.com/26394311/investm...

I've not enquired, but surely there must be a catch? Guaranteed return for 5 years then the market is too saturated so no-one else moves in?

You've probably hit the nail on the head. They're doing it to get the properties away, if they have to subsidise the rent for five years it is more than covered by the inflated sale price.

We are soon putting some properties to market that will yield 10%, but the historic rents can be demonstrated. If I were in the market to buy a ready-made investment, I'd want to see historic numbers and be fairly confident that if there was a guaranteed period things were not going to fall off a cliff afterwards.

[anonymous-user]

13m said:

You've probably hit the nail on the head. They're doing it to get the properties away, if they have to subsidise the rent for five years it is more than covered by the inflated sale price.

Absolutely right. Same tactic used on overseas holiday properties for many years.

As you say, the subsidy is just covered in the original purchase price.

I personally wouldn't look twice at this type of retail offer. There is no substitute to careful analysis of the local letting market when assessing likely returns.

[MWM3]

Try selling the investment.

Wouldn't touch with a barge pole.

[Superbad]

13m said:

You've probably hit the nail on the head. They're doing it to get the properties away, if they have to subsidise the rent for five years it is more than covered by the inflated sale price.

We are soon putting some properties to market that will yield 10%, but the historic rents can be demonstrated. If I were in the market to buy a ready-made investment, I'd want to see historic numbers and be fairly confident that if there was a guaranteed period things were not going to fall off a cliff afterwards.

How much are these properties likely to be put onto the market for?

[13m]

Superbad said:

How much are these properties likely to be put onto the market for?

Somewhere between £150-£200k. I won't go into too much detail here not least because I suspect it breaches PH rules, but the properties will probably go to cash buyers or those with commercial finance because they aren't vanilla BTL.