Property Investment Alternatives Without Buying In 2020/21
Everyone wants to get into property but most people think it's as simple as buying a property and putting it on rent. In this article, we're going to breakdown the alternative options you have and the types of investors for each.
1. The Hands-Off Investments
The hands-off investor is often a seasoned professional, a great saver or someone who has funds but lacks time and knowledge. In this case, it's best to loan a property developer or a property business the funds for a fixed return.
Why do these investors exist and what are the returns? If you're someone with money sitting in the bank or an ISA that isn't earning you enough, you can earn a fixed return whilst you sleep. If you're investing in a relocation property business or serviced accommodation hotels you can double your money within a few years but it is often made as a simple investment as low as 10k.
If you've got a little more money than that as a senior exec or a contractor you could invest from 30k to 300k with an experienced property developer. We've seen returns up to 12% per annum helping fund developments that are due to be completed in the next two years.
2. The Joint Venture Partnership
Typically Joint Venture partners invest large amounts of money and they're senior executives or considered a high net-worth individual. These investors can also come from family business owners who have set-up an office just for investments. These family offices can either be of one family where the decision is based on the family themselves or for larger investments you have firms who manage the wealth of multiple families.
Joint Ventures are with experienced property developers who don't have cash available as it's tied up in other projects but still have the ambition to grow. The returns are more legally structured where the investor would have a 2nd charge on the development/property. This protects the investor's money as they get their money back before a 50/50 profit split. The split of profits are usually put into a Special Purpose Vehicle which acts as entity that you have shares in. The Investor's profits are paid after the development is sold or refinanced, the bank has been paid and you've got your initial money back.
If you're looking to invest or want to learn how to leverage these investors without managing or investing yourself, connect with me on Linkedin.