Investment Property Partners https://investmentproperty.co.uk Thu, 18 Jan 2018 19:07:01 +0000 en-GB hourly 1 Commercial Property Investment – Guide to Investing in UK Commercial Properties https://investmentproperty.co.uk/property-investment-resources/commercial-property-investment-guide-to-investing-in-uk-commercial-property/ Mon, 01 Feb 2016 08:29:37 +0000 http://localhost/investmentproperty1/?p=7127 If you are a property investor considering commercial property investment opportunities in one of the more traditional real estate asset classes of offices, retail, leisure or industrial property then our guide to investing in UK commercial property is certainly a good starting point. The global financial crisis that started way back in autumn 2008 has […]

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If you are a property investor considering commercial property investment opportunities in one of the more traditional real estate asset classes of offices, retail, leisure or industrial property then our guide to investing in UK commercial property is certainly a good starting point.

The global financial crisis that started way back in autumn 2008 has left many investors still questioning just how beneficial investing in commercial property is with many still hesitant to put their money into commercial real estate assets.

What about Commercial Property Investment?

Despite this gloomy assessment taken by some investors, there are a rapidly growing number of property insiders who are looking at the situation without quite so pessimistic an eye and who see commercial property investment as an attractive medium to long-termer opportunity that is now worthy of serious consideration.

The head of global strategy at Standard Life, Andrew Milligan OBE, believes that, in the future, property will yield bigger returns than shares.

At the start of the global financial crisis UK commercial property assets suffered a significant fall in value between 2008 – 2009, with commercial property prices dropping by as much as 44 percent and yet the market has now recovered relatively quickly, sparking growing interest in the commercial property sector as investors seek steady and reliable investments.

Despite some investment pundits arguing that now is not a good time to invest in commercial property, there is growing demand for good quality UK commercial property investments from both home-grown and international investors.

Benefits of Investing in UK Commercial Property

The UK has traditionally used a longer lease structure for its commercial property than many countries throughout the world, and this can be highly beneficial to investors as it provides much more security over a longer term.

While commercial lease terms have tended to fall from the 25 year norm of yesteryear, leases in the UK now average around eight years, meaning that investors can expect an extended regular monthly income.

Due to the nature of commercial buildings, their size and potential, investors can usually expect higher rental returns than typical residential properties.

As mentioned previously, commercial property should deliver a stable income over a specified term, but there is also the additional benefit of capital growth in the value of the property itself.

Many property investment specialists speak of the reliability in “bricks and mortar” investments such as commercial property. They argue that commercial property investment provides an income that other indirect investment asset classes struggle to yield.

Direct ownership of commercial property is a tangible asset that can be modified, renovated, redeveloped and reviewed as the market changes, giving investors better control over how to respond to shifting trends and occupier needs.

In the UK property market commercial tenants are typically responsible for building maintenance and repairs, especially where a full repairing and insuring lease (FRI lease) is in place.

This is in contrast to residential property investments where the responsibility for building maintenance and repairs usually falls to the landlord.

It is also important to choose commercial tenants wisely and shrewdly and an investor should seek a tenant with a good reputation and strong, reliable finances to ensure the risk of the tenant defaulting on their financial and other obligations during the lease term are minimised.

The Risks & Other Considerations

Naturally the higher the financial stake, the larger the risk, and this holds true for commercial property investment opportunities when compared to smaller residential property investments.

Investment in this sector often requires significantly larger amounts of capital and therefore it is important that potential investors thoroughly research the market, location, investment types, anticipated returns and tenant demand before they begin investing.

  • Property Location

    Location is arguably the most important factor to consider when planning to buy commercial property.

    Location can be everything and choosing the wrong area may result in lower than anticipated yields, along with reduced rental and capital growth opportunities in the future.

  • Lease Covenant Strength

    What commercial property investors should also note is that the strength of a tenant and their lease can have a significant impact on the investment value of a commercial property.

    Lease strength of this nature is commonly referred to as “covenant strength” and is a term used in property circles to denote the strength or quality of a commercial tenant.

    A FTSE 100 company would typically be seen as a very strong tenant, much more likely to keep to its lease covenants, to pay its rent on time and not to break any of its lease obligations.

    However, if a tenant’s credit rating deteriorates during the lease term this can affect the income that an investor can expect to receive and also the future investment value of the commercial property.

    It is important to assess and research the reliability of potential tenants before any lease agreements are signed.

  • Market Performance

    It is important for investors in commercial property know their market, and this includes wider market performance issues.

    Despite the financial crisis of 2008, which had an unprecedented effect on the commercial property market, it proves that while the “sector isn’t volatile” it can still fall victim to economic downward spirals.

Investing in Commercial Property

There are many ways to invest in commercial property assets and it is essential for investors to consider all of these routes before taking the plunge.

The two primary options open to prospective investors in commercial property are either the direct or indirect investment approaches.

Direct investment involves the purchase of the physical “bricks and mortar” property assets, while the indirect approach involves investing in Real Estate Investment Trusts (REITs), stocks and shares of companies that specialise in property and real estate, property index derivatives, trust companies or bonds of corporate property organisations.

  • Direct Investment in Commercial Property

    An investor should decide firstly whether they are in a position to invest directly in property and that they are aware of the risks associated with such an approach.

    Direct investment in commercial property is not usually a viable option for the smaller private investor due to the high values associated with this type of property asset.

  • Indirect Property Investment

    The alternative to the direct approach is indirect investment which is considered by some to be the less risky option as the capital sums involved can be much smaller.

    The indirect investing approach is also considered by many to be a low cost and easy way to gain exposure to a range of commercial property investment opportunities.

  • Property Trusts

    There are different types of property trusts; the first, known as a bricks and mortar fund, invests in a property or a selection of properties directly, the manager of which owns the properties.

    Another type is a property security fund, which invests in property companies themselves by investing in shares.

    The disadvantage of this is that it is affected by the performance of the stock market whereas the bricks and mortar fund can be more stable as financial returns are generated by rental income and activities directly associated with the management of property assets.

  • Real Estate Investment Trusts (REITs)

    In 2007 the UK introduced a new form of property company that had started in the USA known as Real Estate Investment Trusts or REITs.

    REITs allow people to invest in commercial property indirectly, like the options above.

    Property companies can become a REIT and then individual investors can buy shares in these companies.

    There are special rules governing the formation and operation of REITs but their main advantage to an investor is that they are exempt from paying tax, resulting in shareholders receiving larger gains.

Commercial Property, Disposal Costs & Illiquidity

Both indirect and direct investors should be aware that commercial property investment is much more illiquid than many other investments, meaning that they can sometimes take much longer to sell than other investments.

Many investment trusts and funds will charge exit-fees if an investor finds that the returns on an investment do not meet their expectations.

Those brave and financially secure enough to invest directly in commercial property assets should be aware that due to the nature of commercial property, liquidating your assets (selling) will often take much longer than other types of investments.

Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are a property investor searching for commercial property investment opportunities in the UK or internationally, residential or overseas property investments please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about commercial property and real estate investment from… here →

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Manchester Property Investment – Buying Investment Property in Manchester https://investmentproperty.co.uk/property-investment-resources/manchester-property-investment-buying-investment-property-in-manchester/ Fri, 29 Jan 2016 15:53:14 +0000 http://localhost/investmentproperty1/?p=7134 If you are considering investing in residential buy to let, student property, or even commercial property then taking a more detailed look at Manchester property investment opportunities and what the wider Salford and Greater Manchester metropolitan areas have to offer could be just what you’ve been searching for. If you are unfamiliar with the city […]

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If you are considering investing in residential buy to let, student property, or even commercial property then taking a more detailed look at Manchester property investment opportunities and what the wider Salford and Greater Manchester metropolitan areas have to offer could be just what you’ve been searching for.

If you are unfamiliar with the city itself and wider region, the city of Manchester is one of the northern economic powerhouses with historic roots set in the industrial revolution. Located in North-West England it is one of the largest English cities with a population of over 500,000. The metropolitan county of Greater Manchester is the UK’s second largest urban area, with a population of over 2.5 million people.

Manchester Property Investment

With two of England’s top football Premier League teams, the city of Manchester has also reached the Premier League heights as far as property investment is concerned.

The opportunities for property investment in Manchester on the buy-to-let, student accommodation and commercial property levels are becoming increasingly attractive for both private and corporate investors.

The reasons for this state of affairs are many and varied, but the undeniable truth is that Manchester has well and truly cemented its place as one of the United Kingdom’s most vibrant, thriving cities, with its population growing by about a fifth during the last decade.

Manchester… The Largest University Campus in Europe

Many property experts consider the city of Manchester to be the commercial and cultural capital of the North of England, and a study of facts and figures makes it very difficult to argue with this assessment.

For example, statistics tell us that Manchester is the third most visited city in the UK, it attracts on average 100,000 domestic and international students each year to what is considered to be the largest university campus in Europe, it is a pioneer in a whole range of spheres, including technology, research, engineering and computing to name but a few.

Were you aware that the atom was first split in Manchester and that the first modern computer was built there?

Or that in the Beetham Tower (also known as the Hilton Tower) it now has the tallest building, stretching to a height of 168m, in the UK outside London?

Or that more than 20 Nobel Prize winners have come from Manchester?

Thought not…

Strategic Location & Excellent Transport Links

Manchester benefits greatly from its location of strategic significance, lying as it does within an hour’s flight of London and only a couple of hours away from most European capitals.

Manchester is also served by some of the country’s main motorway links, and has a spider’s web of extensive rail network links that link Manchester to the rest of the UK.

To put some meat on those bare bones consider the following facts:

  • Extensive Motorway Network

    25% of the country’s motorways run through the Greater Manchester area, the M60 ring road having made the area even more accessible.

  • Rail & Tram Network

    There are over 142 miles of railway track, with trains stopping off at 98 stations and the Metrolink tram system being used by more than 50,000 passengers daily.

  • World-Class International Airport

    Manchester’s airport is internationally renowned.

  • 11 Million People!

    More than 11 million people live within 50 miles of Manchester city centre.

Investment Property in Manchester

If you are seriously considering Manchester property investment opportunities then you should also know that the city boasts a plethora of cultural, shopping, sporting and heritage attractions which act like a magnet to potential visitors from both home and abroad.

Is it any wonder therefore, that the Manchester property rental market throughout the city is now struggling to keep up with demand.

The property rental market is a thriving and much sought-after alternative to home ownership, particularly in the most desirable areas of Manchester and its surrounding suburbs.

Vibrant, Culturally Diverse & Fast Growing Environment

Manchester views with delight the fact that many younger people are being attracted to live in the city, many of them highly skilled graduates looking to kick-start their careers, but many others travelling from all over the country to study and work in a vibrant, fast growing, thriving environment.

The large number of students at local universities including the University of Manchester, Manchester Metropolitan and the University of Salford continue to create a healthy demand for good quality student property and buy to let rental property.

Additionally, with the development of the new city centre business district at Spinningfields, the opening of MediaCityUK at Salford Quays, including the relocation of the BBC and ITV all help to ensure that students and professionals alike are moving into the city and the demand for rental property is rising.

Currently, high numbers of well-paid professionals and domestic and international students living in the city sustain the rental markets in Manchester, Salford and the wider Greater Manchester areas.

Well Planned City Regeneration

The city’s regeneration efforts over the past 10 years have transformed the city into an extremely attractive place to both live and work.

Add to this the prediction that the city’s population is expected to increase further and the potential for property investment becomes even more starkly and excitingly outlined.

Manchester… The Northern Economic Powerhouse

Did you know that Manchester is already the largest economy in the UK outside London?

As the city centre population continues to increase there is even more scope for further growth as multi-national organisations, banks, consulting firms and lawyers recognise the advantages of establishing their headquarters in the city.

Manchester is attracting foreign business too, with more than 2,000 foreign-owned firms being based in the city.

Planners have reacted to the situation by embarking on £4.9 billion of construction over a ten-year period.

More than £1 billion of public and private investment has already been ploughed into new offices, retail and leisure facilities throughout the city.

Manchester property investment opportunities it seems, are endless and the city is certainly living up to the reputation it first earned as the world’s first industrial centre.

Manchester Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are a property investor searching for Manchester property investment opportunities including commercial property, residential buy to let and student accommodation please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about Manchester… here →

More information about Manchester property investment, the economy of Manchester, infrastructure and property development initiatives… here →

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Gross Development Value (GDV) – Property Developers Guide to Financial Appraisals https://investmentproperty.co.uk/property-investment-resources/gross-development-value-gdv-property-developers-guide-to-financial-appraisals/ Wed, 27 Jan 2016 13:23:41 +0000 http://localhost/investmentproperty1/?p=6759 Gross development value, or GDV as it is commonly known in property circles, is an important valuation metric that all investors and property developers need to be familiar with when building their project and financial appraisals. The gross development value of a property investment project can be calculated to give a near accurate figure of […]

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Gross development value, or GDV as it is commonly known in property circles, is an important valuation metric that all investors and property developers need to be familiar with when building their project and financial appraisals. The gross development value of a property investment project can be calculated to give a near accurate figure of what that property or real estate development project may be worth on the open market once all development works have been completed.

Gross development value is an essential tool for any real estate investor or property developer as it forms a key component in the development appraisal process.

Without an accurate gross development value any pre-acquisition or pre-development financial projections may be seriously flawed and the property developers risks increased significantly.

What is Gross Development Value (GDV)?

To many property developers, GDV is one of the most important performance metrics that they will monitor throughout the course of a project as it helps to highlight the capital and rental value of their property or development project when all redevelopment works have been completed.

In other words, it will show if a profit has been, or will be made from the development project, and at what level.

Gross development value should never be underestimated, it is the foundation to any property development appraisal and is the one performance metric that impacts on all other major aspects of the evaluation.

Put simply, gross development value is the estimated value that a property or new development would fetch on the open market if it were to be sold in the current economic climate.

How to Calculate Gross Development Value

So, how is GDV calculated?

Generally, if a near accurate valuation is to be created for a property development project or investment, then current property sales prices and recent transactions in the area for similar properties would be carefully analysed – this would provide a comparable estimate of what properties in the same area are selling for and therefore what you could expect your property to fetch.

Developing to Let & Rental Values

For some property developers however, sales prices aren’t the biggest concern.

Instead, establishing rental values and recent local lettings of similar properties will be of primary interest.

This is because on completion of their project they may want to let the property to tenants either on a residential or commercial basis.

If a developer wants to let a property or development, they will have to look at recent lettings in the same area to find comparable rental values.

This information can usually be obtained from local lettings agents or specialist firms of valuation surveyors.

This will help to establish how much the developer can expect to take in rent on a per month, per annum etc. basis.

Gross Development Value… a Key Performance Metric

As a calculation, the gross development value should never be underestimated.

It is the foundation to any property development project appraisal and is the one performance metric that impacts on all other major aspects, such as the acquisition cost of the building or land, the cost of the construction and enabling works; developers profit; and, more importantly, the likelihood of a successful financial outcome.

Residual Method of Appraisal

The method of development appraisal that incorporates the GDV calculation is the residual method of valuation and you can approach this in a couple of different ways.

The most common and most basic formula to estimate the general value is as follows:

Land = GDV – (Construction + Fees + Profit)

 

Where:

Land = Purchase price of land/property/site acquisition

GDV = Gross development value

Construction = Building and construction costs

Fees = Fees and transaction costs

Profit = Developers profit required

Calculating Property Developers Profit

An alternative form of the residual assessment can be used by reconfiguring the above formula to calculate the property developers profit:

Profit = GDV – (Construction + Fees + Land)

 

The second form of this formula is a more traditional way of assessing the financial viability of a property development project as it helps to highlight the developers profit so an assessment can be made at the outset as to the projects viability.

Specialist Property Investment & Development Finance Solutions

As a leading independent property investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are searching for land, development sites or property finance solutions please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about property and land development… here 

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Buying Land for Development or Investment https://investmentproperty.co.uk/property-investment-resources/buying-land-development-investment/ Tue, 26 Jan 2016 17:01:58 +0000 http://localhost/investmentproperty1/?p=7099 With a saturated UK housing market, it is hardly surprising that many Britons are turning their attention to buying land. If you are considering buying land for development, self-build or investment purposes then our guide, written for property developers and investors could give you a head start to steer you in the right direction, and […]

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With a saturated UK housing market, it is hardly surprising that many Britons are turning their attention to buying land. If you are considering buying land for development, self-build or investment purposes then our guide, written for property developers and investors could give you a head start to steer you in the right direction, and help you to avoid some of the pitfalls that beset many an investor.

The trend for buying land is attracting all sorts of people, from first time buyers that cannot get on the property ladder and aren’t afraid to self-build, as well as more astute property investors and developers who are keen to reap the rewards of redeveloping an existing property or build anew.

Who’s Buying Land?

Land purchase is attracting people from many different walks of life – which is hardly surprising given the opportunities that it brings.

Many people see buying land as a modern alternative to investing in traditional property, whereas others simply relish the challenges that it brings.

There are also others who have been successful in climbing the property ladder and now want to build their own unique home which is perfect to their tastes, and is situated in a location of their choice.

Irrespective of reasons or motives, buying land for building or development could be the way forward for many people.

Market Research

If you are serious about buying land an element of luck is required, as is plenty of time, effort and research into the market for building plots and development land.

It is highly recommended that you spend some time looking at suitable locations, historic land sales, current market rates for land with and without planning permission, and the speed at which it sells.

This level of research will give you some really good background knowledge and plenty of ideas as to what to expect when you come to buy that dream building plot.

If you are serious about buying land for development or investment then you need to have a good, strong foundation if you are to be successful – otherwise your investment plans may crumble.

To help you along your way we suggest that you keep-in-mind four key aspects when evaluating any land buying opportunities:

  • What will you do with the land?

    Ask yourself why do you really want to buy the land and what will you do with it?

  • How much will the building or development cost?

    Have you budgeted wisely?

    Have you taken aspects such as architects plans, planning permissions, legal costs, renovations or redevelopment costs into account?

  • Consider the land itself

    Is the land you are considering buying going to be big enough for your needs?

    If it is a development plot can you use it to create sufficient profit from your scheme?

    Does it have any disadvantages that may affect you further down the line such as access rights, availability of services (power, gas, drainage, sewers etc.), does it suffer from flooding or subsidence.

    These questions all need answering.

  • Selling your development to make a profit

    Will your property development project make you the profit that you need?

    How will you sell your development once it is completed… is there a ready market?

    If you are developing housing is it close enough to transport links, shops and eateries as this will be what attracts people.

    Always think location, location, location!

Preparing your Investment Appraisal

As with any investment, before you jump straight into purchasing your plot of land you need to plan well, budget and ideally create a sound investment appraisal for your property development project that will stand-up to detailed scrutiny, especially if you will be seeking external property finance.

Once you are happy with your investment appraisal and its outcome you should move on by researching the best locations and trying to identify the right plot of land for your needs.

Legal searches, surveys, planning permissions and such like will come further down the line.

Property Development Budgeting

As an essential part of the property development process you need to budget carefully and include for the cost of buying the land, development of the plans and specifications, regulatory approvals, the cost of the build itself, account for any professional fees, and make allowances for sales and marketing costs on completion of the development.

Bear in mind also that if you are looking for plots of land in highly desirable areas you will probably need to pay a premium, and you will also pay more if the land has planning permission already in place.

Are there Different Types of Building Land?

Once you have completed the development budgeting process and you are happy with your figures, you will then need to research what different types of land can do for you and your profitability… Brownfield land and Greenfield land are the most common.

Greenfield Land

Greenfield land is undeveloped land, such as parks and forests and is, unsurprisingly the most popular type of land to build on.

However, greenfield land can often be difficult to obtain planning permission on so you should always check its planning status with the local planning authority (LPA).

Brownfield Land

Brownfield land however, is typically land that was once occupied by another building.

In many ways Brownfield land is the safer development option because you know that something was once allowed to be built on there, making your planning application more likely to be granted.

How to Find Suitable Plots & Building Land?

Once you have completed your research and any other investigations, you should then start to register your interest with all the relevant parties which will include local and national estate agents, land agents, land brokers and specialist Internet development land portals such as Land Bank (www.landbank.co.uk).

If you are serious about buying land take a look in the property sections of national and local newspapers, property and lifestyle magazines and surf the net on a daily basis, as new opportunities often arise when you least expect them.

Land buying opportunities can also be found at specialist land and property auctions, via utility companies who often own large land banks, through your own private enquiries and the government and local authorities.

To unearth the best deals and identify the best plots of land it is often necessary to really do your homework and research extensively your preferred locations.

Buying Land with Planning Permission

If you have spotted a plot of land that you are interested in purchasing, before going ahead and buying you should think about planning permission.

It is always a good idea to contact the local planning authority to determine whether or not they will allow you permission to build in the first place – and in the way you want.

However, be careful not to assume that if you purchase land with planning permission attached that you will be able to press ahead and build whatever you want to.

There are likely to be certain restrictions on any building and development works and you should check these details carefully.

Some areas have restrictive covenants which may thwart your long-term objectives.

It is always highly advisable to make sure you know exactly what you are/ are not entitled to do under the planning permission attached to the land.

With planning permission being so vital in terms of your long term strategy, it is important that you develop a good relationship with the planning officers and other officials at your local planning authority.

If the local planners get to know you well and understand more about your dreams and aspirations for the land they are more likely to work with you to make sure that your plans both meet their rules and are as close to what you need.

Try to involve the planning officers in your work from the start and don’t be afraid to ask their advice when coming up with ideas or alternative solutions for the build.

A good working relationship will mean that the job is done quickly, effectively and, more importantly, how you want it.

Do I need a Land Survey?

If you are determined to press ahead with your land buying project should also get the land professionally surveyed.

A qualified land surveyor, usually a member of the Royal Institution of Chartered Surveyors (RICS) should be appointed to help you prepare the plans you’ll undoubtedly need later on.

A qualified land surveyor will tell you if there are any problems with the land and if anything should stand in the way of your proposed development project.

Registering your Interest with the Seller

Once you have got confirmation that there are no problems with the land itself and that planning permission will be granted based on your outline development proposals, you can then go ahead and register your interest with the seller of the land.

Legal Process

The land buying process and ensuing legal stages should not be too complex, either… certainly a lot less complicated than if you were buying or selling property.

We do recommend however that you get good professional advice in the form of an experienced property solicitor, at all stages of the land buying process so as to avoid any unwanted pitfalls.

Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are a property investor searching for commercial property, residential property, land or property development opportunities please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about buying land for development… here →

More information about self-building… here →

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Parry’s Valuation & Investment Tables for Property Investment Appraisals & Valuations https://investmentproperty.co.uk/property-investment-resources/parrys-valuation-investment-tables-property-investment-appraisals/ Mon, 25 Jan 2016 11:28:00 +0000 http://localhost/investmentproperty1/?p=6699 Richard Parry’s Valuation and Investment Tables were first published in 1913 and they have now become a must-have calculation tool for students, surveyors, property professionals, investors and real estate developers involved in property valuation, development and investment appraisal techniques. Parry’s valuation and investment tables are used extensively throughout the professional property and real estate investment […]

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Richard Parry’s Valuation and Investment Tables were first published in 1913 and they have now become a must-have calculation tool for students, surveyors, property professionals, investors and real estate developers involved in property valuation, development and investment appraisal techniques.

Parry’s valuation and investment tables are used extensively throughout the professional property and real estate investment sectors and form an essential tool that no serious property investor should be without.

What are Parry’s Valuation Tables?

Parry’s valuation and investment tables, often abbreviated to just Parry’s is simply a book that features references, tables and a series of calculations that will help a student, surveyor, property valuation practitioner or investor analyse investments and the detailed numbers behind them.

These valuation and investment tables basically allow valuation professionals, property developers or anyone else interested in property valuation or investment, to compare previous investments and analyse how these historic projects were developed.

Historic Property Investment Analysis

Analysing property investments in this way allows investors to identify factors that need to be taken into account in any proposed investment project.

Historic investment analysis of this nature will also help to reveal what worked well and what did not with individual property investments, and these lessons can be incorporated in to any future investment proposals.

Accounting for Inflation, Interest Rates, Tax, Time & More

So more precisely, why should you want to use Parry’s book of valuation and investment tables?

Firstly, you will be able to see how inflation affects investments over time, and you will also be able to determine what kind of financial climate will be the most beneficial for your particular property investment venture.

Looking at different dates, timings, interest rates and taxes using these valuation and investment tables, you should also be able to determine the best scenarios for maximum profitability.

Using Parry’s to Perform Sensitivity Analysis

Parry’s valuation tables can be used to quickly create multiple desk-top appraisals using different key factors including the investment period, interest rates, tax rates etc.

The ability to run and then review multiple financial scenarios helps property investors to identify the most sensitive factors that impact on the profitability of their investment project.

Parry’s is also widely appreciated for the ease and simplicity at which data can be obtained.

For instance, there is lots of information available to investors that will allow them to determine the facts and figures about particular investment scenarios, but with Parry’s tables, you don’t have to run any complex, number-crunching calculations; all the work has been done for you and is available in a simple tabular format for you to use straight from the book.

A perfect scenario, especially when property valuation and investment analysis is recognised as being time intensive, requiring lots of detailed research and expertise to build the most accurate investment model.

Online Investment Calculators

To assist investors, developers and property professionals in the preparation of property valuations and investment appraisals the experts at Investment Property Partners have created a series of free online finance and property investment calculators that are based on the various formulae used in Parry’s valuation tables.

Our online investment calculators are simple to use and cover many of the most commonly used valuation and investment appraisal tools used by property investors, investment professionals and property developers.

The auto-calculators include annual sinking fund calculations, amount of one pound, present value, years purchase (various scenarios) plus a mortgage calculator.

Online property investment calculators include:

 

Perform Complex Property Valuation Calculations

Our property investment and valuation calculators allow investors to examine different financial scenarios taking account of several alternative property related project and economic factors such as finance periods, taxation, inflation, time related value of money etc.

Using the relevant calculators and valuation tables provided in Parry’s valuation and investment tables you will be able to factor in things such as inflation and other expected rise and falls, as it will detail more complex equations that bring these factors into the mix.

These calculators allow investors to perform complex investment and property valuation calculations.

However, do not worry if you find you cannot grasp the concepts behind the tables and formulas immediately.

In fact, some commentators suggest that it isn’t really necessary for you to understand how the equations work; as qualified property valuation professionals can help build and interpret the impact of such calculations.

As with most things though, if you put the effort in to try to understand how they work and their significance, the process will be quicker and easier, and will give you greater confidence for the future.

Parry’s valuation and investment tables contains detailed cash flow equations and many other complex formulas, and for any property investors interested in doing well, this essential information should be seen as the way to success.

Expert Property Development Solutions

As leading independent land and property investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are a property investor or real estate developer searching for, or currently reviewing investment opportunities please contact our property experts today to discuss how Investment Property Partners can help you. Further reading…

Further reading…

More information on property investment calculators for financial valuations and investment appraisals here… property investment tools →

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Forestry Investment – Investing in Commercial Woodlands https://investmentproperty.co.uk/property-investment-resources/forestry-investment-investing-in-commercial-woodlands/ Sat, 23 Jan 2016 10:20:45 +0000 http://localhost/investmentproperty1/?p=6904 For many property and land investors investing in commercial woodlands and forests is becoming more popular by the day. The concept around forestry investment is not new but attracts significant investor interest because it is considered to be one of the most tax efficient ways to invest in land in the United Kingdom. The UK […]

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For many property and land investors investing in commercial woodlands and forests is becoming more popular by the day. The concept around forestry investment is not new but attracts significant investor interest because it is considered to be one of the most tax efficient ways to invest in land in the United Kingdom.

The UK is known for its lush greenery, rolling hills, and vast forests and woodland areas, and it is this that makes our great country stand out from the crowd.

Little wonder then that so many land investors and speculators want to own a slice of our green and pleasant land to add to their investment portfolios – as well as making a profit at the same time.

UK land investments have always been popular with astute investors with demand often outstripping supply.

That being said however, it is still possible to buy land, commercial woodlands and managed forests as an investment opportunity, and while it is not common knowledge the likelihood of a successful investment outcome is improving all the time.

Investing in Commercial Woodlands

When you delve further in to the detailed financial mechanisms around investment in land and property you will discover that one of the most tax efficient ways of doing so is to invest in the commercial woodlands and forests, which can be found up and down the country, but primarily in the north of England, Scotland and Wales.

Commercial pine forests in particular are especially alluring for forestry investors, and probably offer more in the way of a successful return.

The main reason for this? Pine forests reach commercial maturity in about 40 years… after which time they are then cut down for timber which is then sold… the land is then usually replanted with new pine trees and the cycle is repeated.

Currently, there are significant tax incentives for investors in commercial woodlands and forestry investments from an income tax, capital gains tax and inheritance tax perspective.

Forestry Investment Funds

Of course many investors will know that investing in land, especially commercial forestry does not come cheap, however many private investors who recognise the benefits of forestry investment are now investigating alternative opportunities such as indirect investment, including forestry investment funds.

In the UK forestry investment funds potentially offer an excellent way for investors to access commercial woodland investment opportunities without the considerable financial outlay associated with the direct investment approach.

This type of indirect investment approach to forestry investment is fairly straight forward.

Forestry investment funds operate formal investment vehicles that are based on commercial forestry opportunities, similar to real estate investment trusts (REITS).

Such forestry funds offer their investors exposure to and the management of commercial forestry opportunities that have investment potential.

What are the Tax Benefits of Commercial Woodland & Forestry Investments?

With regard to tax however, what is particularly advantageous about investing in commercial forestry and woodland opportunities are the tax benefits that are currently available.

For UK taxpayers it is currently possible to invest in commercial woodlands and receive an income from the subsequent timber sales completely tax free.

Additionally, the sale of the woodland timber, but not the land is also capital gains tax free.

  • Capital Gains Tax

    Any increases in the value of the timber as it grows are free of capital gains tax (CGT).

    However, you should note that this does not apply to any increase in the value of the land itself which is subject to capital gains tax at the point of sale in the normal manner.

    You can also rollover capital gains into the purchase of commercial woodlands, and if you sell it then any gain held over will not become payable until you sell the woodlands – restrictions to rollover relief do apply in that only certain gains can be rolled over.

  • Income Tax

    Currently for UK tax payers any income generated from commercially managed woodland is free of income tax.

    The same is true for forestry investment companies who will pay no corporation tax.

  • Inheritance Tax

    If you have owned your commercial woodland or forestry investment for more than two years then you will qualify for 100% relief from inheritance tax, which includes both the value of the trees and the land.

Forestry Investment & Investor Risk

Finally, despite the attractive investor tax incentives associated with forestry investment and commercial woodlands, like any other opportunity, whether it be property, land or commercial forestry, investors should always carefully examine the investment opportunities presented to them, reviewing both the risks and rewards to satisfy themselves that it is the right investment opportunity for them.

Specialist Land & Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are a property investor searching for investment opportunities including commercial forestry investments please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about forestry investment… here →

More information about commercial woodland taxation and valuation… here →

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Buying Property in Florida USA – American Property Buyers Guide https://investmentproperty.co.uk/overseas-property-resources/buying-property-in-florida-usa-american-property-buyers-guide/ Fri, 22 Jan 2016 16:41:37 +0000 http://localhost/investmentproperty1/?p=6935 If are considering investing in overseas property or simply searching for that dream holiday home abroad then buying property in Florida, USA could be just what you have been looking for. Florida is a state situated in the far south east of the United States, located on a peninsula between the Gulf of Mexico, the […]

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If are considering investing in overseas property or simply searching for that dream holiday home abroad then buying property in Florida, USA could be just what you have been looking for. Florida is a state situated in the far south east of the United States, located on a peninsula between the Gulf of Mexico, the Atlantic Ocean, and the Straits of Florida and as such it boasts one of the longest coastlines of any US state.

Florida is an incredibly popular location that is the number one US destination for many British tourists, not to mention the tens of millions of Americans, Japanese and other Europeans who visit annually.

Investment Property Partners overseas property buyers guide covers a number of important issues that you will need to consider if you are considering buying property in Florida either as an investment or as a holiday home abroad.

Buying Property in Florida

“I’m buying a property in Florida, you know”… sounds too good to be true, doesn’t it? The stuff of which dreams are made.

Just close your eyes and picture it – glorious sandy beaches if you want to relax and enjoy the sun, some of the most popular theme parks on earth if you want to get out and about – Walt Disney World, Sea World, Universal Studios… the list just goes on and on.

But more than 50,000 Brits have lived that dream… and now some are enjoying the many benefits of a fabulous holiday home for their own private use, while others have invested in property, which in addition to using themselves, they also let out to other holidaymakers to cover their costs and make a tidy profit in to the bargain.

Don’t forget that Florida is one of the most popular US destinations for many of us Brits, not to mention the millions of Americans and other holidaymakers who visit Florida annually. What a great opportunity!

What about getting there? Florida is about a nine-hour flight from the UK, with international airports at Orlando, Miami and Fort Lauderdale.

Types of Property for Sale in Florida

If you are considering buying property in Florida what types of properties are there be had?

Well, there is a choice of purpose-built flats (called condos over there) constructed in blocks; town homes, which are the equivalent of UK terraced houses; and single-family homes or larger villas.

Typically, most properties for sale in the Florida region are generally built to a good standard, are quite large, have an outdoor pool… and usually come complete with one of those enormous fridge-freezers with integrated ice machine… sounds very appealing, doesn’t it?

What is more, there has never been as much property on the market from which to choose from since the turn of the Millennium – and at such prices to boot.

The Process of Buying Property in Florida

If you are considering buying property in Florida and are concerned about the legalities, rest assured as you will find that legal title there is very robust.

All property transactions in the state are guaranteed to be above board and are also generally less competitive than in other countries.

Specialist title companies oversee the property purchase process which is great news as it grants you as the buyer indemnity against a transaction going wrong.

Buying Property to Let

If you are considering buying property in Florida to let to other holidaymakers and visitors you are in luck, as this is a great option to consider as Florida’s holiday rental scene is very healthy indeed.

However, if you do plan on following the buy-to-let property route it is important that you get independent financial and professional legal advice first… and as with any property investment, you will still have to pay your fair share of local taxes.

Homeowner Associations

Also, if you are buying a condo (what us Brits call flats) make sure you speak to the local “Homeowner Association” (HOA) before you buy.

Each association is different and will have its own particular rules and regulations, which can include minimum rental periods and even age restrictions on your tenants.

Financing your Florida Dream Home

If you are seriously considering buying property in Florida and require some form of mortgage or other property finance be aware that Loan-to-Value (LTV) ratios can vary, and that mortgage terms are usually up to a maximum of 30 years, with the minimum loan amount currently being around the £100,000GBP mark.

Repayment and interest only mortgages are also available and it is recommended that you do your research and shop around for the best local deals.

If at any time you sell the property capital gains tax is paid at a rate of 15 per cent on the profit element.

It is also essential that the funds you use to buy your property in Florida are located in the United States in plenty of time before the completion date.

Also bear in mind that you will have to provide proof of where the money has come from in order to meet the USA’s strict Anti-Money-Laundering (AML) regulations.

Settlement Companies

You will then find that a specialist settlement company is appointed to make sure that the title to the property is in order… you’ll find that this process is in several ways similar to the conveyancing process that operates in England and Wales.

The settlement company will also oversee the completion of the property transaction, including the transfer of any balance of agreed monies to be paid.

If it is difficult for you to be present at the completion stage don’t worry, that is not a problem, but you would need to allow plenty of time for the documents to go back and forth for signing.

Also, if you are funding your property purchase using a mortgage with an American bank and you’re not available in the USA you will need to have your signatures witnessed on the mortgage documents by an American Notary at the US Embassy in London.

The settlement company then transfers ownership of the property, and this is registered with the Local Authority.

Getting Legal Advice

Should you feel that you need to hire a lawyer to protect your interests, and we strongly recommend that you do, you can check with the Law Society for international solicitors based here in the UK who have experience of property law in Florida… Law Society →

Fees & Property Taxes in Florida

If you are buying property in Florida then we recommend that you allow approximately four per cent of the property purchase price for fees and taxes, although that figure can be cut by half if you buy without a mortgage, as stamp duty is levied on the outstanding mortgage amount and not the purchase price.

Homeowner Insurance… What about Hurricanes?

As far as Florida is concerned there is one insurance consideration that does not apply in most places in the world.

You may have noticed that this is an area that is hit by hurricanes more than any other American state and you will be relieved to know that most home-owner insurance comes with some hurricane coverage.

However, beware… this will usually protect you only against wind damage or falling objects resulting from it – not against flooding. That being so, it is vital that you get flood insurance as well.

If you are unsure about what type of property insurance cover to get then arrange to meet with a representative from a good local insurance company and ask for a detailed explanation of what exactly is covered (and excluded) by your policy before you go ahead and purchase.

Overseas Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are an investor searching for overseas property investment opportunities or a second home in Florida please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about Florida… here →

More about and buying property in Florida from Florida Realtors… here →

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Tenancy Agreements – Beginners Guide for Landlords & Property Investors https://investmentproperty.co.uk/landlord-and-tenant-resources/tenancy-agreements-beginners-guide-landlords-property-investors/ Fri, 22 Jan 2016 10:41:42 +0000 http://localhost/investmentproperty1/?p=7051 Tenancy agreements are an essential component in the life of any buy-to-let landlord or property investor… or at least they should be. If you are a landlord or you rent residential property to tenants then it’s important that you are familiar with the basics of tenancy agreements, how they operate and how they work to […]

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Tenancy agreements are an essential component in the life of any buy-to-let landlord or property investor… or at least they should be. If you are a landlord or you rent residential property to tenants then it’s important that you are familiar with the basics of tenancy agreements, how they operate and how they work to protect the rights of both landlords and tenants.

Investment Property Partners beginners guide for landlords and property investors covers the most of the basics of tenancy agreements, what information should be included in an agreement, tenant deposits, the rights of both landlords and tenants, and how to end a tenancy.

New Landlords & Property Investors

Renting private property has always been popular in the UK and with increasing numbers of people struggling to get on to the housing ladder and finding it difficult to get a mortgage, more and more are looking at renting as an option – as it is sometimes the only solution left open to them.

From a buy to let landlord’s perspective, it is extremely easy to get involved in the private rental sector – but only if you are familiar with the law relating to tenancy agreements, your legal obligations, the correct procedures to be followed; and you understand the ins and outs of the private rental market.

If you are an investor thinking of becoming a buy-to-let landlord, or you are new to the whole private renting process, it may help you to research the area thoroughly first to ensure you do everything by the book.

There are plenty of reference sources available that can help including many local and national landlords associations.

What are Tenancy Agreements?

If you already own a portfolio of residential properties that you rent to tenants and you need to improve your landlord processes and procedures, you should start with your most important legal documents, your tenancy agreements, and either learn how to draw up a good tenancy agreement yourself or have a solicitor draw one up for you.

A fair, well written tenancy agreement will help protect both your interests and those of your tenants.

It is vital that there is a written document in place so that should there be any landlord-tenant disputes further down the line both parties have some kind of formal documentation to refer to.

What Information Should be Included in the Tenancy Agreement?

As a basic guideline, you should always ensure that the following important information is included in any private rental tenancy agreement:

  • Details of Both Landlord & Tenant

    Personal details, including names of the people involved in the tenancy.

  • Rental Deposits

    Details of the rental deposit and amount required.

  • Rent

    Rental amount, and when and how often the rent should be paid.

  • How to Pay Rent

    Methods for paying the rent.

  • Start Date & Term

    Start date and term of the tenancy.

A tenancy agreement will also include such things as landlord and tenant commitments and obligations; who is responsible for repairs; and whether sub-letting is permitted.

It is also likely that other things will be included in the agreement to make it personal to both the landlord and the tenant.

Agreeing the Terms & Conditions of the Tenancy

It is important that both the landlord and tenant are present to sign the tenancy agreement once it has been drawn up so that if there are any discrepancies, or if there is something that cannot be agreed upon, it can be sorted well before the start of the tenancy period.

Both the tenant and the landlord should always keep a copy of the tenancy agreement as it could be used as evidence at a later date should you wish to clarify the original understanding of the tenancy terms and conditions.

Getting Legal Advice

Even though as a landlord you are able to include your own terms and conditions in the agreement, it is important that you are fair to both parties… always remember to be fair and make sure that the agreement is legal and meets current standards.

Also make sure it covers the points we’ve listed above and clearly highlights all rent payment details and any rental deposits required.

If you talk to many established landlords and property investors they’ll tell you that they don’t write the tenancy agreements themselves; instead they use a qualified legal professional, a solicitor to help draw up the agreement on their behalf.

Finally, as a tenant if you do not like or agree with any of the conditions laid out in the landlords tenancy agreement, you are well within your rights to postpone signing until you get legal advice.

If this is the case our recommendation is not to delay, but to legal advice as soon you can.

Rental Deposits – How Much?

After an agreement has been drawn up and signed off, the landlord and a tenant must then decide on how and when the rental deposit will be paid.

A rental deposit is required by nearly all landlords as it protects them should a tenant drop out at the last minute, causes damage to the property, does not pay their bills, or ups and leaves the without paying the final rent installment or informing the property owner.

However, if a tenant decides simply to leave the property for a new home and the original property is left in a good condition and all payments are up to date, a landlord should return the rental deposit back to the tenant in full.

The size of the rental deposit will vary depending on individual landlords and the type of property the tenants will be renting.

As a general rule though however, a tenant can expect to pay one month’s rent (sometimes one and a half) as a deposit.

What about Rental Deposit Schemes?

As a landlord you need to bear in mind that, once you have taken the tenants rental deposit you must then protect that money with one of the government-approved tenancy deposit schemes listed here:

This is to protect both the tenants’ cash and protect the interests of the tenant.

As a landlord you are also obliged to let your tenant know that this has been done.

From that point on, both the tenant and the landlord should be sorted in terms of paperwork.

Changing the Terms of Tenancy Agreements

But what happens if tenancy agreements need changing?

There are many reasons why agreement agreements may need to be changed.

From a tenant’s point of view, you may wish to ease the rental payments by getting someone to live with you to share the rent.

If you want to do this you will first need to clear it with the landlord, and if given permission, you will need to arrange for the tenancy document to reflect this change in circumstances.

And from a landlord’s point of view, you may wish to make certain alterations to who should be living there etc.

From a peace of mind point of view however, an tenancy agreement cannot be changed without the consent of all parties… the landlord and the tenant.

So there is nothing to fear with regards to someone making alterations that you may not know about.

How to Legally End a Tenancy

Finally, what if you want to end a tenancy agreement?

Whether you are a tenant or a landlord there are a number of reasons why you would want to end a tenancy agreement.

In order to end an agreement correctly however, you must understand and then follow the correct procedures that are in place to safeguard both landlords and tenants rights.

For instance, there are certain criteria that must be met when giving notice to quit.

It is also important that you understand your legal rights so that you can play everything by the book.

  • Ending a Tenancy as a Tenant

    We’ll start by looking at ending a tenancy agreement from a tenant’s point of view.

    If you wish to move out of the property you have been renting, it is only fair that you give your landlord plenty of notice so that they can advertise the property to other would-be renters.

    As soon as you know that you plan to leave the property, you should inform your landlord, and this can either be in person or in a letter or written document.

    If you do let your landlord know in person however, you are still advised to put it in writing to avoid any misunderstandings, and also as evidence for both you and the landlord.

    This written confirmation helps to clarify what has been said and also forms an excellent reference document if required at a later date.

    Always check your tenancy agreement before you decide you are leaving the property as it will probably include the notice period that you are legally obliged to give the landlord.

    If you do not have a fixed term tenancy and are instead on a rolling tenancy you may be able to give notice at the end of the rent period.

    You should also know that you may be expected to pay the landlord compensation should you end the tenancy early (before the tenancy agreement ends) and there is nothing in the contract that covers this event.

  • Terminating a Tenancy as a Landlord

    Finally, what if you are a landlord and you want to terminate a tenancy?

    Again, just like the tenant, you should inform your tenants of your intentions as soon as possible.

    The type of notice period however, will depend on the kind of tenancy that is in place.

    Also like your tenants, a landlord must notify the relevant persons in writing that they wish to end the rental agreement.

    The landlords’ written letter must detail when the property needs to be vacated and the very latest day that a tenant can live in the house.

    Most tenancy agreements are different but the “done thing” is for a landlord to give around two months prior notice for a tenant to leave the property.

    Of course should you be trying to end a tenancy early because of a breach of the agreement that could include a tenant regularly missing rent payments or because they are not meeting the terms of the agreement.

    Under such circumstances different rules will apply because the tenant will have broken the terms set out in the tenancy agreement.

    Instances where you as a landlord may legally be entitled to prematurely end the term would include the tenant being behind with their rent by several weeks, the tenants’ persistent breach of terms and conditions previously agreed, and using the property for illegal or immoral purposes – to name just a few.

    Under such circumstances it is often prudent for a landlord to seek specialist legal advice as to the correct procedures to be followed and the various stages the lease termination process will follow.

Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are a property investor searching for commercial property, residential buy to let or overseas property investment opportunities please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about tenancy agreements… here →

More information about tenancy agreements and rental deposit protection… here →

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