The phrase “as safe as houses” means to feel very safe and secure. The phrase is also used for an investment value of a property. When a person buys a house he has an immovable property and it is secure. Have you noticed more and more investors roaring about joint ventures being dead? It’s been hard to miss…
“I’m very nervous about doing joint ventures.”
And now, the herd of investors are running scared.
After what seemed like years of borrowing and investing with no restrictions, investors are now worried about the latest FCA (Financial Conduct Authority) regulations.
What is it?
A document relating to the ways you are now allowed to promote joint ventures or technically ‘unregulated collective investment schemes and close substitutes’ to the retail public. The FCA has a new label for these: Non-Mainstream Investment Schemes (NMIS)
But what most investors might not know is this;
Just over the horizon disruption this rosy regulation lurks.
Like most “black swans,” only a few brave investors have seen it coming and been preparedBREXIT is going to to affect the house building market as there is going to be slowdown in the production and delivery of materials manufactured in Europe that are needed for development projects in the UK. Is now a good time to invest in property?
Most developers may choose to permanently choose to offer site visits by appointment going forwards because it is worked effectively during COVID. So even after COVID comes to an end, it’s likely that developers will only do site visits by appointments and not have a walk-in show homes as we have seen in the past. And this could save developers money.
Digitalisation during lockdown quickly escalated the importance of online material for video tours to social media and increased photography so that potential buyers can see properties in far more detail before actually viewing them. This is likely to continue and a lot of people have liked the idea of doing virtual viewings as it is a lot more convenient for people and developers will also adopt this.
Therein lies the possibility of unbelievably huge profits!
Some investors will get very rich. Others will get crushed – especially when it comes to not understanding these changes
In fact, You’d have to be crazy to do joint ventures like you used to.
Crazy like a fox, maybe.
But you don’t have to be one of them – not this time. I’ve created this article to ensure that you come out on the legal & winning side..
Life is not a bowl of cherries
What is clear after January 1st – is- offering a joint venture partnership to investors where an element of ‘risk’ is involved, such as a ‘profit share’ is no longer permitted – other than where the investor is deemed ‘a sophisticated investor’ or a High Net Worth Individual (in brief, they must have £100k or more income OR have assets more than £250k excluding their own home).
Why is this so important? Because the FCA wants to protect the general public (retail investors) from investments they might not fully understand or face the risk the deal going pear shaped along with their invested funds.
The solution? It’s quite simple. The problem is most investors have no idea they can still profit from it…
You can carry on building a portfolio with the same enormous profit potential as any venture with sophisticated investors. Because these seasoned investors can better evaluate the risk, carry out the necessary due diligence and have a better understanding of the territory they might be wondering into – and then make up their mind whether the investment is right for them or not.
In other words, you can promote, offer and talk about property deals, projected gross & net yields, ROCE, cashflow, locked in equity, in a astute manner.
Solution 2? Most investors don’t realize this. You won’t see it coming, like you might a hurricane. But it’s there.
Should I invest in property?
But what exactly am I talking about?
Helping ordinary people (‘unsophisticated investors’ … ) to get a better & higher rate of return on their savings. They might not want to take high risks (‘split profits’), but are willing to act as a ‘bridger’ to compensate for the paltry returns offered to them by their banking institution by offering you private finance from up to 0.5-1.5% per month..either paid monthly, upfront or all rolled up at the end.
In other words, loans are generally not covered under the NMIS blanket.
So what this means is, PS13/3 shouldn’t really cause investors too much problem if they are taking loans from others. It should still be an excellent year for utilising private finance whichever route you take.
So use these two simple steps to help you out of the conundrum many investors are facing, while still taking part in the biggest rally which will occur in this bull market
Disruption – So, is property a safe investment?
‘Bank of Dave,’ is causing a stir, Bitcoin is making its presence felt & crowd funding sites are pooling ordinary investor’s money and replacing orthodox bank finance.
How about other financial and technological advances such as Square which target individual proprietors, most of whom considered themselves too small to take credit cards before Square?
In international money transfer, Xoom targets immigrants remitting home to their families, not big corporate transfers. Prepaid debit cards like Netspend, Greendot and AccountNow all target the underbanked.
Startups are innovating with an opportunity to disrupt from below and grow fast. Yet in practical terms, these new platforms have opened up opportunities for adventurous investing types who have rushed to embrace these new platforms.
All things considered, things seem quite a bit more positive in general than has been the underlying narrative since the Brexit vote. The evidence is compelling that considering investing in property could be a shrewd move and one that could net you a significant yield in the long term, particularly as all the signs point toward a strong UK in the next 5 years, regardless of the outcome of Britain’s exit from the EU.