View Single Post
  #6  
Old 10-10-2007, 09:36 PM
The Soup Dragon The Soup Dragon is offline
Senior Member
 
Join Date: Dec 2006
Posts: 144
Default

Hi Loki

Tend to agree with what Investy has suggested. If you want in and out in a 12 month period then off-plan probably isn't the way to go.

I suspect the exit strategy is going to be key for you given you want to get in and out quickly. Established markets have re-sale markets, but they are less likely to see the sort of gains you want over a short time period. If getting in and out over a short period of time is key then guaranteed returns that some developers offer in return for funding may be the best option for you. There are emerging markets where the developers either can not get funding or have to pay extremely high interest rates. Some are happy providing you with a guaranteed return of 20%+ pa in return for the funding. This might sound too good to be true, but there are companies that do it. Here's how it typically works and how the risk for you can be reduced.

Developer can obtain land and build apartments on it for say £5m. They know that sales should be about £10m and that they will receive about £3m in staged payments over the construction period from those buying the apartments. That leaves them needing about £2m funding (£5m total costs less £3m in staged payments prior to completion.) If the developer is large enough they can foot this £2m themselves, but they know that is £2m of their money tied tied up. If they tie less of their own capital up they can take on more projects and potentially make more money. These developers often use the land they are acquiring as security for the investors money. This reduces your risk. They also typically offer 20%pa in interest plus your stake back at the end of the build period.

This is very much a hands off way of investing - once you have undertaken your due diligence. If going down this route then look for a track record. If the developer can't show that they have successfully done this before then walk away.

This sort of investment isn't for most people, so I won't add any more unless you say it could be of interest.
Reply With Quote