Updating post from Reddit.
I have some surplus cash which I want to invest in real estate. I’ve come across a btl opportunity which has a guaranteed 12% return for 5 years and a buy back guaranteed option from the developer at the end of 5. For context it’s a vacation lodge in Somerset. Has anyone had any experience which this kind of investment? Would be grateful for your feedback.
The Guarantee and Buy-Back is as certain as the bank balance of the company giving it, here today gone tomorrow.
My biggest "too good to be true" question is, it's a sellers market so why are they offering such incentives?
Mortgage Lenders don't like these guaranteed properties, they have learned their lesson.
Think they were mostly pushed as great investments post recession but then they never delivered and some folded the companies running away with investors cash. Unless they have a track record of doing this going back decades and being successful then I wouldn't bother. Look up the company on companies house then check their website try to see if they are new or scam like. Most times it will just be a site with nice design and lots of AI or stolen images of properties they don't even own.
lol
“Guaranteed”by who? The government? A major bank or life insurer? Or Shady BTL Ltd whose guarantee is not worth the paper it isn’t written on?
Based on a bit of googling, by Knight Knox I believe. I’ve never heard of them but they claim to have existed for 20 years, companies house agrees, I had a quick look back at accounts in 2017 and they seemed to be in the same business and turning over reasonable money. I note they say “assured” income but it’s not clear to me what that term means legally vs guaranteed.
What I will say though is that my parents bought a lodge from an entirely different company, mostly as a holiday home but to let out a bit too and it was a horrendous investment, expensive fees, no guarantee you could keep your lodge on the park after 20 years (and expensive lease if they did allow you), almost impossible to sell due to them having to be involved in the process AND them constantly building new ones. So I certainly wouldn’t touch one without some actual, rock solid, meaningful guarantees and for me that would mean some kind of entirely separate independent scheme. KK seems very opaque on the details on their website and are keen for you to get in the sales funnel instead.
The same Knight knox sold Landal Belvdere holiday homes which went into administration, they were no where to be seen. Investors lost all their capital unfortunately.
This is almost certainly a bad idea.
Good luck on the buy back bit. It is too easy to close a company at 4.5 years and start another leaving you all in the shit. Or not. You may well still have a very let able asset.
Don't touch it!
My dad owns 3 or 4 if these. There are hidden fees, voids and they're difficult to sell.
What are the site fees and therefore what is the net yield?
These investments seem great at first but are really risky and not worth it. These are not supposed to be advertised to retail investors. If you are a sophisticated investor and dont mind losing money, you can give it a try. Im speaking from significant experience in these types of investments. One of the examples- google Landal Belvdere. https://forums.moneysavingexpert.com/discussion/6550621/landal-belvedere-go-into-administration
It’s a scam. Love it how people say ‘I have some surplus cash’ BTL is a lot more than just having some spare cash. It’s a lot that goes into it.