Overview / Prospectus & S.W.O.T. Analysis
Of the
L & J Properties (Manchester) Ltd
Private Commercial Funding Opportunities
Overview
Aims and objectives
The Aims and objectives of these Private lending opportunities are three fold.
1)To take advantage of the current low market value of property and the below market value property that is available mainly from the repossessed property market
2)To offer the private lender a high rate of return whilst at the same time offering the highest level of security on their funds during the loan period.
3)Provide quality housing stock for rent and the 1st time buyer market
Key success factors
1)Short to medium lending terms (2-10 years)
2)Guaranteed 6% per annum return on investment
3)First legal charge on the underlying asset
4)All property is UK residential property
5)This lending opportunity is open to cash funds as well as SIPP & SASS funds
6)L&J Properties (Manchester) Ltd has a proven and fully auditable track record.
7)Independent Due Diligence pack available
8)L & J Property (Manchester) Ltd welcomes any professional risk assessment
Structure of the Business
L&J Properties (Manchester) Ltd is a private Ltd company registration number 08066920 has been specifically set up as a conduit to attract private funding that will ensure each investment is ring fenced and fully secured for the protection of the investor/Lender.
The business shall, initially, be geographically focused in or around the Greater Manchester Region of England.
The Investment
Structure of the Loan
The loan structure has purposely been kept very simple.
You act as a private mortgage lender to L & J properties Manchester Ltd
It is an important factor within this scheme that all properties are being bought under market value.
All loan monies shall be held in separate client accounts or deposited direct to the solicitor for the purchase of property.
Each private lender shall have his or her money ring fenced so that no external business or property issues can have any effect on the money they have lent.
Each lender shall have a first legal charge on any property that has been bought using their funds until the loan is repaid.
Each lender shall receive a gross equivalent annual return of 6% on the total loan, payable at 0.5% per calendar month in arrears.
If L & J Properties were to fail to pay the investment returns promised then you as the first legal charge holder would have the right to repossess the property in exactly the same way as the banks would repossess a property if the mortgage payments were not paid
Funding Required
L & J Properties is aiming to get to 100 properties within 3 years for this the funds required will be no more than 4.5 million pounds.
The minimum investment per individual is £40,000
As each investor has their investment to the business ring fenced then the return on the investment works at any level of funding including the minimum £40,000 and should the business fail to attract the projected total funding required it will have no detrimental effect to the individual investor or affect their level of return.
Worked example 1 = £60,000 loan over 3 years (property at M27 8PH)
Rics Valuation of Property = £72,000
Rental income of property = £550.00pcm
Security on investment= First Legal Charge over property
Monthly return to investor = £300.00 (equivalent to 6% pa gross return)
Total investment return over 3 years= £10,800 (30% gross, 6% pa gross)
Worked Example 2 = £40,000 loan over 5 years (property at M38 9UE)
Rics Valuation of property = £60,000
Rental Income on property = £495-00 pcm
Security on Investment = First Legal Charge over property
Monthly return to investor = £200.00 (equivalent to 6% pa gross return)
Total Investment return over 5 years = £12,000 (30% gross, 6%pa gross)
S. W. O. T Analysis
Strengths
1)Higher return for Investor than that offered by most other organisations.
2)High level of security on loan as investor has funds ring fenced and secured against property.
3)This scheme, whilst designed to cover the Social Housing and First Time Buyer sector needs, it is by no means dependant on the Local Authority Leasing or even tenants from the Social Housing Sector as the area that we are in is within commuting distance of the new Media City complex at Salford Quays and lies within the Bolton, Manchester and Salford University student areas and this in itself creates a very strong rental and First Time Buyer demand
4)L & J Properties (Manchester) Ltd has only just been set up specifically for this project, however LJ Properties as a partnership have been established since 2003 and have already trialled this proposition and have the infrastructure in place to handle a large portfolio
5)Property value currently at historic lows
6)Current high market demand for residential property and predicted to go higher
Weaknesses
1)Property prices rise above affordable levels making further acquisitions no longer feasible.
2)Property prices decrease significantly making refinancing more difficult therefore lender has to wait longer for the return of the loan.
3)No control over Government or EU decisions over housing / social housing regulations.
4)No control over Financial Conduct Authority regulation on property financing / mortgage products
Opportunities
1)Social housing shortage is a growing problem.
2)Shortage of suitable First Time Buyer housing stock
3)General strong demand for rental property
4)Inability of local authorities to obtain funding to provide housing stock
5)Strict lending criteria from mortgage lenders reduce mortgage eligibility.
6)Rugg report of 2009 highlights that the only answer to local authority housing shortage is to work with private Landlords
7)Housing demand outpaces housing construction.
8)The new Media City complex has at Salford Quays has increased rental demand.
9)If house prices reduce further greater opportunity to build up rental stock quicker.
10)If Bank of England base rate remains low then this opportunity remains very competitive to the investor if they go high then the potential for sourcing under value property increases as repossessions increase
11)Yields on rental property are much higher in the North West region than in many other regions of the UK.
Threats
1)Property values go down
2)Bank lending criteria alters and does not allow refinancing
3)Social housing provision taken away from the small private sector by Government or Local Government and given to large regional company set up by house builders or housing trusts and such like.
4)New regulation of the buy to let industry