Tag Archives: investment

Rent Guarantee for Cardiff Property producing Negative Cash Flow

Posted on by
Reply

Rent Guarantee for Cardiff Property producing Negative Cash Flow

Are you a landlord or property investor with a lemon property investment in Cardiff or South Wales? Don’t worry you are not alone!

But first what’s a “lemon” property?

According to investopedia a “lemon” investment is a very disappointing investment. A lemon is an investment in which your expected return wasn’t even close to being achieved, and more than likely ended up losing you some or all of the capital committed. Lemon investments can be associated with poor money management, economic factors, financial fraud or just plain bad luck.

So from a property perspective a “lemon property” is a property that is either in negative equity and/or producing negative cash flow on a monthly or annual basis. As we said if you have a “lemon” property in Cardiff you are not alone, thanks to the over development of Cardiff Bay.

There are literally hundreds of landlords and property investors who bought a “lemon” off plan during the Cardiff Bay property development boom when developers were offering cash back incentives. Now thanks to the huge over supply on new build apartments many of the Cardiff property investors and landlords who bought off plan find themselves with substantial negative equity.

It’s not just homeowners, landlords and investors who purchased property in Cardiff Bay who maybe the proud owner of a “lemon”. As we have already said it is not just negative equity, but also negative cash flow that turns your property investment into a lemon!

Negative Cash Flow

It sounds simple but negative cash flow is when the rent received by a landlord or property investor is less than the total monthly outgoings of the property. Prior to 2007/2008 many property investors and landlords weren’t overly concerned if their “lemon” property was producing negative cash flow as they believed equity growth far outstripped the shortfall caused by negative cash flow, but how times have changed!

Causes of Negative Cash Flow

There are numerous reasons why a property may produce negative cash flow on a monthly or annual basis.

These include:

  • Leasehold management charges
  • Maintenance issues
  • Void periods
  • Rental arrears
  • Drop in Local Housing Allowance (LHA)
  • Benefit caps

Future causes of negative cash flow:

  • Interest rate rises
  • Moving from a fixed rate mortgage to a Standard Variable Rate (SVR)
  • Unable to switch to a better mortgage rate
  • Universal Credit (UC)

Don’t worry if you are a Cardiff home owner, landlord or property investor with a “lemon” as Rent Guarantee Cardiff have a number of solutions that can help immediately if you are in negative equity and/or producing negative cash flow.

For a no obligation consultation and to discuss how Rent Guarantee Cardiff can unburden the load of negative equity and stress of a property that produces negative cash flow, contact us today:

Cardiff Landlords the No Hassle 1200 Per Cent Return Investment

Posted on by
Reply

Cardiff landlords the no hassle 1200 per cent return investment, if you were a landlord and began investing in property in 1996 when the first buy-to-let mortgage was released 18 years ago you would be sitting pretty right now!

The research carried out by Wriglesworth Consultancy and commissioned by Paragon Mortgages uses the following reinvestment assumptions, every £1,000 invested in an average buy-to-let property purchased with a 75 per cent loan-to-value (LTV) mortgage in the final quarter of 1996 would have been worth £13,048 by the final quarter of 2013.

This is a compound annual return of 16.3 per cent. The same investment in UK commercial property would have grown to £3,654; in UK equities (shares) to £3,082; in gilts (UK government bonds) to £2,924; and in cash to £1,949.

Around a third (32 per cent) of the total return to the mortgaged buy-to-let investor was income (rent less costs), and 68 per cent capital gains.

A buy-to-let purchaser buying entirely with cash would have seen each £1,000 invested grow to £4,791 by the end of 2013 – a compound annual return of 9.7 per cent.

The alternative of the investor who remortgaged to release equity to expand his/her portfolio more quickly would have turned £1,000 into an astonishing £33,051.

Future projections for landlords in Cardiff, South Wales and across the UK also look promising with projections suggesting that every £1,000 invested at the end of last year using a 75 per cent LTV mortgage would be worth £2,910 by the end of 2023 – an average annual return of 11.3 per cent.

So how can landlords across Cardiff and South Wales lock in the capital appreciation while removing the risk and hassle associated with buy-to-let investment property? The answer is quite simple, Rent Guarantee Cardiff offer landlords a no fee letting solution that guarantees up to 90% market rent with no void periods. So Rent Guarantee Cardiff remove the risk and tenant hassle from the letting process, so landlords can concentrate on receiving their rent on the same day each month and take advantage of the huge potential for capital appreciation.

If you would like to find out more about of no fee letting solution and how we can remove the risk and hassle from the letting process by providing a guaranteed rental income each month, please complete the short contact form below: