Types of Business Models for a Bricks & Mortar Pension

Posted: March 9, 2012 in Construction Business
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Considering which type of property invest is the most important consideration of your decision to become a property investor.  You can invest in commercial, semi commercial and residential properties.  Your decision may lie in the deposit required. Overseas properties can be bought on a sale and leaseback agreement, and the developments these days require very little capital as a deposit.

Types of Business Models for a Bricks & Mortar Pension

50% Deposit Required:

Commercial property such as manufacturing plants factories and offices, have higher returns for rental income and capital growth, however has a higher level of risk due to its’ need for high capital deposits, higher losses on non tenancy and is more likely to be effected to the economic climate.

Budapest (Hungary):

A strong opportunity in commercial sector, particularly office and warehouse as it becomes regional business hub. Residential property severely undervalued (per sq m)

60% Deposit Required:

Semi commercial properties such as Student Lets, blocks of flats and some shops, require specialist lending and regulations and have past performance of higher critical yields on rents, due to the individual tenancy agreements or higher rents charged with a shop front and residential space. This can be done as a physical assets or through a fund.

30% Deposit Required:

Residential properties can be bought on a Buy to Let basis to rent out to your tenants privately or through approved letting agents. In experienced landlords suffered financially with the downturn in value of the property, loss of tenants and over zealous lending gave up to 90% since 2003-2008. The maximum lending in 2012 is 75% but with lender calculations based on valuation to likely rental income this can fall to 70%.

Popularity over the last few years has been the overseas purchase, and with house prices in most European countries still recovering from the over inflation, Emerging Markets are being sort after for early purchase decisions. Holiday home freehold investments provide an opportunity for a rental income immediately which may cover mortgage payments and future capital in a country which may provide a home when you retire, with better tax breaks than your country of origin. They are not restricted to overly regulated lending bank policy and developments ask smaller capital deposit of the investor.

Sale & Leaseback:

This strategy become popular in France, and historically required a 30% deposit for the property.  There is normally a guaranteed rental paid on a monthly basis which covers the mortgage payments and this way the property would pay for itself and at the end of the term, you have a freehold property.

Types of Business Models for a Bricks & Mortar Pension

100% Lending:

One particular development Ciaran Maguire Group has a development called Palm View in St Lucia & Cape Verde has the following business model

6k Euro Reservation Fee

The apartment/villa is purchased at a 70% mortgage

8% rental guarantee covers the mortgage payments

The apartment/villa is purchase fully furnished with a refurbishment package every 3 years

30% developers loan is gifted at 0% and paid back monthly

4 weeks a year usage

This means that the investment is completely leveraged, as an investor it is low risk as the returns are guaranteed and the amount  required for the purchase is minimal at 6k Euros.

St Lucia:

The tropical island paradise of Saint Lucia is the perfect haven for romance, adventure and home to some of nature’s most precious natural beauties.  The tourism industry booms alongside the neighboring islands of Barbados & Mystique.

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