Property Consultants

Frequently Asked Questions

Unfortunately most of the population will die poor. Not only are we living longer lives, but the Government is struggling to support us into our retirement. In addition, pension schemes are no longer sufficient. Unless we do something now to look after ourselves in the future then we will probably have to work past the normal retirement age and suffer from a poorer standard of living.

Investing in property is both useful and flexible for many reasons. Aside from the obvious financial gains, it can be used to help you achieve specific goals. For example, if you want:

To earn a higher interest rate than leaving your money to sit in the bank
To earn a higher interest rate than bonds, ISA’s and other saving schemes
To build a portfolio that will give you enough income to retire
To earn more money to improve your lifestyle
A hands off investment that requires very little of your time
High yielding returns on capital
To invest for your children’s future
A safe and secure investment

Is property investment reliable?

According to the Times Rich list 40% created their wealth through property.

The other 60% invested in property as a means of growing and protecting the wealth that they created in other industries. In fact more millionaires attain their wealth through property than any other type of investment.

How does property investment compare to other popular forms of investment?

There are basically three things we can do about this.

Start a new business
Invest into the stock market
Invest into property

From our experience, we have found that investing in property is by far the most risk-averse, hands off and financially rewarding option. One of the main reasons is that the UK has always been and will always be a hugely popular place to live. It is just an island with a very stable population. Therefore prices will continue to grow, even though we currently find ourselves in a deflated market (which is actually great for investors).

However, the main reason that investing in property performs so well, is because we can invest using other people’s money, typically in the form of a mortgage or other lending facility. For example, if we had a sum of £50,000 to invest then we could buy £50,000 worth of shares. If they performed well and achieved a growth rate of, say 7% per annum, then after 10 years the value would be £98,358 (say £100,000). This is a 100% return on our investment!

If we used the same £50,000 and invested it into property then we could purchase a property that was worth approximately £160,000.

As mentioned previously, this is achieved through using a mortgage or other lending facility. Given the current market conditions let’s assume that the property market also increases in value by 7% per annum (even though it increases at a higher rate in normal market conditions).

After 10 years the property has increased in value from £160,000 to £314,744 (say £315,000). Our original investment of £50,000 is now worth more than £265,000. That is a return on our investment of over 500%!

However, we must consider that we will have interest to pay in borrowing this money. But the great thing is that this cost will be covered by tenants who will rent the property from us and there will almost certainly be a surplus income which we can spend however we want.

Therefore our investment has significantly increased in value over time and it has given us additional income to help improve our lifestyle.

The most important thing, is that the property will be tenanted as much of the time as possible. Therefore it should be in areas of high rental demand such as City Centres, close to good transport links, nearby bars, shops and restaurants or close to University’s and office districts.

Why is Buy 2 let strategy so popular?

Buy-to-let property is now a very popular form of investment due to its simplicity and potential to provide a healthy rental income and capital growth.

With the number of people renting privately owned accommodation on the increase and the number of tenants continuing to rise, now is the ideal time to jump on board and take advantage of our property opportunities, with low prices, great yields and instant equity gain from day one.

With buy to let investment, profit can be achieved in two ways:

Rental Yields – the amount your tenant(s) pay in rent, minus any maintenance and running costs Capital Growth – the profit you earn when you sell your property at a later date with capital gains.

Our safe and secure, buy to let investments are perfect for investors looking to successfully build their own property portfolios, or for those looking for a higher return than they currently get from banks, pensions, bonds and the stock market. (For our more experienced investors we also provide options for more creative and complex investment strategies.)

We have heavily discounted buy to let property available for sale in excellent rental locations, including the Manchester, Liverpool, Leeds and London where void periods are kept to a minimum.

In Manchester for instance, following the huge economic investment over the last decade
it has become an extremely trendy place for young professionals to live meaning that rental demand has remained consistently strong for several years. Using our ability to negotiate bulk deals, our investors are able to achieve yields that far surpass those found in any other major cities around the UK.

What do you mean by "cash flow" in property investment? How is CASHFLOW and ROCE (Return on Capital Employed) different to YIELD?

YIELD is the % Return on the price of the property BEFORE taking out any expenses.

YIELD = (TOTAL RENT ÷ PROPERTY PURCHASE PRICE)%

CASHFLOW is the net takeaway income from the property AFTER all expenses have been deducted (Borrowing, Maintenance, Agency fees, etc).

ROCE (Return on Capital Employed) is the % return of the cashflow from the property on the actual capital invested in the property.

ROCE = (CASHFLOW ÷ CAPITAL EMPLOYED)%

Yield can be very misleading when assessing properties as an investment because Yield does not take into account the expenses on the property and these could vary significantly for different property types based on their use, type and location.

eg. An Apartment may be seen to have a high yield but when you account for its high maintenance costs, the cashflow and ROCE turn out to be much less.

So the best way to assess property investments is not Yield but ROCE.

Let us take a £100,000 property:

A typical yield we look for in Buy 2 Let investments is 8%, this equates to an annual rental income of £8,000 or £667 per month. The typical deposit needed to buy this property would be 30% which equates to £30,000. This means that we would need to borrow £70,000.

The interest payment on this would typically be around 5% per annum. This equates to £3,500 per annum or £292 per month. Monthly rental income (£667), minus monthly mortgage payment (£292), equals £375.

Let’s assume monthly costs of £75 per month. This equates to a net income of £300 per month which we can use how we like. This is called the cash flow on the property.

Once we build up a portfolio of say five properties we have an extra monthly income of £1,500 from the cash flow. This doesn’t even take into consideration the capital growth discussed in the earlier question (How does property investment compare to other popular forms of investment?).

In this case the ROCE will be (£300 x 12 ÷ £30000)% = 12%

If this was a flat with same purchase price and rent earnings, but an additional maintenance charge of £100/month, the Yield would still be 8%, but cashflow would be £200 per month and ROCE would be (£200 x 12 ÷ £30000)% = 8%

So as you can see, Yield is very misleading when assessing properties for investment.

ALWAYS use ROCE for comparing and finalising your investments.

Why should I invest with Dreams Unlimited?

Dreams Unlimited is a property investment company, founded by Rajesh which provides free education and investment services for people interested in investing in the UK property market.

We research, analyse and interpret long-term property market trends and present the information in free articles, blogs, videos, articles and reports.

If you don’t have the time or expertise we provide our set and forget strategy. We take care of everything for you from start to finish!

Investing in property is both useful and flexible for many reasons. Aside from the obvious financial gains, it can be used to help you achieve specific goals. For example, if you want:

To earn a higher interest rate than leaving your money to sit in the bank
To earn a higher interest rate than bonds, ISA’s and other saving schemes
To build a portfolio that will give you enough income to retire
To earn more money to improve your lifestyle
A hands off investment that requires very little of your time
High yielding returns on capital
To invest for your children’s future
A safe and secure investment

It is important that you know what you are trying to achieve from investing in property.
Realising this will help you plan an investment strategy and work towards achieving those financial goals.

What is BMV (Below Market value) property and how do you get them?

There are many different situations which can cause a property seller to be motivated to sell below market value (BMV).

The most obvious reason being that the owners cannot maintain them, due to defaulting on their payments or other financial arrangements, causing the lender, usually the bank, to take action.

Prices for these properties are usually significantly reduced in order to promote a quick sale.

We have access to properties that both banks and developers need to sell quickly and discretely. Whether you are looking to purchase a property for buy-to-let investment, or to turn a profit on the property by selling at a higher price, such BMV properties provide great investment opportunities.

Furthermore, due to our ability to negotiate bulk deals, the properties you will be buying are heavily discounted from their open market value. Therefore, you don’t have to wait several years for capital growth because you are making instant equity as soon as you own the property.

If you are looking to invest over the long term then earning instant equity in conjunction with strong yields creates the perfect platform from which to build a well balanced portfolio that can be developed over time.

Properties on our portfolio have a proven discount on actual list price, offering excellent investment opportunities with a rental income and in many cases are already pre-tenanted and include a luxury furniture pack. We have extensive links with receivers, financial institutions, solicitors, banks and auction houses to bring our clients the best deals and discounts available in the market today.

Can any Nationality buy property in the UK?

Yes. The UK is open for investment and all nationalities can buy. A lot of our investors are non-UK nationals. We also work with expats who are resident in Middle East, Australia, and Africa amongst other expat bases.

I am familiar with buying property – Why should I use Dreams Unlimited?

If you have the time and are willing to take on the responsibilities & liabilities, and want to deal with things yourself, then it is indeed best to do it yourself. Many such houses will need renovation and will have to be legally compliant before renting out. They will need on-going maintenance. This is easier if you are living near your investment property location. Otherwise, our company will deliver better overall value with no hassle for you – over the long term it will be more profitable for you to use us.

Should I consider buying under-construction or off-plan property?

Take extra care when purchasing an investment property that is yet to be built or is under construction. The risks with such properties remain high and almost all are “leasehold”. The project could be cancelled and there can be delays in completion and then in renting the properties out. High rise properties may also fail the local authority fire regulations which are now very strict and may entail extra costs for leaseholder. Prices are often inflated by developers, as properties are difficult to compare. For investment, only consider property that is built and already rented out. Further, you should buy from a company that has control over the property and remains responsible to you after the sale. Many apartment sales involve multiple parties (Developer, Builder, Seller, Eventual Freeholder, Leasehold Management company, Letting Agent, Sales company). The Sales company may not have control over what happens in the long term.

What is the biggest purchase issue for overseas buyers?

The biggest issue for overseas buyers is identification to the satisfaction of your solicitor. For this, the following ID information is required:

Passport
Address ID e.g. driving license, ID card or utility bill

You will also need to state the “source of funding” – normally this is from ‘savings’ or ‘business profits’ and 3 months of bank statements will be needed to prove funds. If you are not able to visit at present and are not in the UK, we will need attested copies of ID documents prior to the exchange of contracts. These can be attested by any UK solicitor beforehand (e.g. at the viewing visit) or by a Lawyer in the buyer’s own country, in which case the Land Registry form ID-1 will need to be completed. Full details and instructions are provided after reservation.

Can one get cheaper investment properties?

Yes. For investment properties, prices vary property type, its condition, area (prices sometimes vary across adjoining lanes), duration of lease left etc.

Our suggestion would be that you look at the Return on your capital employed to compare your options rather than the sum you are paying for similar sounding properties. The ROCE calculations take all predictable costs into account.

Do I need a bank account to buy property in the UK?

No – Most of our non-UK national clients do not have a UK bank account. It is not required. Rental payments can be made into their accounts overseas – usually on a quarterly basis. Later once property is acquired, some may wish to open a non-resident UK bank account. Some may also open a GBP currency account with their own overseas bank. Under new rules, a standard UK bank account cannot be opened if you are not resident in the UK.

Will I have to pay UK tax?

Most of our customers e.g. those from Europe, commonwealth or those from countries with Treaties with UK may qualify for an allowance of about £12,500 per person per year – which means that the first £12,500 per year in the UK is not taxed. This may enable you to get TWO standard 2-bed houses tax free. Then, if your annual income is more than £12,500 you will have to pay 20% tax on net rental income after all costs that is above this level. After purchase, we can help you with HMRC NRL registration process, so that your rent is paid to you without any deduction of tax. Vast majority of our overseas customers are able to do this. If you are a couple then you have a total allowance that is double these figures.

Is the purchase process secure?

Yes. When purchasing the investment properties, the reservation agreement clearly lays out the terms. Funds are held in client accounts (where, legally, funds belong to the customer) and your solicitor ensures registration is completed under your name at the UK Land Registry after exchange of contracts and full payment. All of the Solicitors recommended and used in the purchase process are full regulated members of the UK Law Society.

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higher returns

buy to let portfolio

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high yielding investments

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Frequently Asked Questions

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Live a life of your dreams

through investing in properties

Our Story

What We Offer

Personalised Service

Hands-off experience

Coaching

How you can get involved

HIGHLIGHTS

Guaranteed Returns

HIGHLIGHTS

100% Control

Hear From Our Happy Guests

Read our recent reviews

Blogs

Frequently Asked Questions

Contact Us

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