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Edge Investment Syndicates - Why Invest In Property

Why Invest with Investment Syndicates?

Your retirement is looming or has already arrived, you want to retire early, you need an investment to pay for some event that is going to happen in the future, you want to pay your mortgage off earlier, or you want a nest egg, just in case…

Edge Investment Syndicates has been set up to give people alternative investment opportunities run by professionals.

People who have savings:

  • Are earning little or no interest on their money in the bank with the base rate set at 0.5%.
  • Are having their money eroded by inflation. £100 this year will not buy the same amount next year (the current rate of inflation at the time of writing is 5.2%). The UK government is printing money and raising fuel taxes and both of these will have the economic effect of increasing inflation further.
  • Are running the risk of losing their money even when it is held in banks. The new £85,000 deposit compensation limit is the British equivalent of the €100,000 limit which has come into force in all European Economic Area (EEA) member states however some banks are in the same group and if you have your money in two banks within the same group you will not becovered for the second deposit. Also, there is no guarantee that this is going to continue and may change at any time, remembering that the UK is on the brink of being downgraded in regard to financial stability. The UK government are over extended already according to the International Monetary Fund (IMF). The UK government cannot keep this up forever.
  • Want a reasonable annual return.
  • Want their money to appreciate over time so they can at the very minimum maintain a reasonable annual return in the long term.
  • Want peace of mind and not to have to worry about their investments on a daily, monthly or even annual basis.

Why invest in a property syndicate?

  • Property in the UK has doubled in value approximately every 7 years since the early 1970s.
  • Warren Buffett said "Be fearful when others are greedy, and be greedy when others are fearful". We have probably all heard people saying buy when the market is down and sell when it is up. This is the time to buy in the UK residential market. Many millionaires today made their money in recessions, including James Caan of the "Dragons Den".
  • Property in the UK has gone up int he last year despite the economy.
  • Property in the UK is being repossessed on a daily basis and auctions are producing opportune prices.
  • People are struggling to purchase property because it is difficult for them to get a mortgage, even if they have a good credit record, and mortgage companies now require large deposits. How many properties have you seen with a sold sign on them, only to be back on the market in a few weeks? This is usually because people can't get the finance.
  • There is still a large net influx of people into the UK, because the pay is much better in the UK, with teachers and even doctors doing menial jobs to earn more than they are paid in their own EU countries. People always need places to live.
  • Wouldn't we all like to buy property at the prices that our parents could have bought property when they were young? What will prices be like in an equal number of years in the future? Wouldn't you like to be on that ladder now?
  • What survives in a recession? People still need to eat and live somewhere, whatever the state of the economy.
  • What if prices go down? Prices will go up in the long term, we all know that. If we wait until the market is rock bottom it will be too late to get the bargains because everyone else will be out there doing the same thing. One property investor has just bought 95 flats in the Basingstoke area.
  • Large discounts can be had by paying cash for property, creating an instant return on market value which will offset any prices going down in the short term if they do. Up to 30% Below Market Value (BMV) can be achieved giving a 30/70 = 42% instant gross return.
  • You can use gearing by opting for a mortgage syndicate where the rent pays for the mortgage to increase your returns. If a 50% mortgage is taken then twice the amount of property can be bought returning twice the capital gains. In the example below a £10,000 investment could see a £70,000 capital return after paying back the original mortgage of £10,000 which is 700% the original invested over a 14 year period.
  • You can sell some or all of your shares at any time, therefore spreading capital gains tax.

Example approximate comparative investments are:

Money in the bank
Money in Property - Capital Appreciation
Rental Return of Property
Year
Beginning of the year
Plus Interest
Value at End of the Year
Year
Beginning of the year
Plus Capital Appreciation
Value at End of the Year
Year
Proprotion of Rent Per Year
Accumulated Rent Received
1
£10,000.00 £300.00 £10,300.00  
1
£10,000.00 £1,040.90 £11,040.90
1
£600.00 £600.00
2
£10,300.00 £309.00 £10,609.00  
2
£11,040.90 £1,149.24 £12,190.14
2
£619.20 £1,219.20
3
£10,609.00 £318.27 £10,927.27  
3
£12,190.14 £1,268.87 £13,459.00
3
£639.01 £1,858.21
4
£10,927.27 £327.82 £11,255.09  
4
£13,459.00 £1,400.94 £14,859.94
4
£659.46 £2,517.68
5
£11,255.09 £337.65 £11,592.74  
5
£14,859.94 £1,546.76 £16,406.71
5
£680.57 £3,198.24
6
£11,592.74 £347.78 £11,940.52  
6
£16,406.71 £1,707.77 £18,114.47
6
£702.34 £3,900.59
7
£11,940.52 £358.22 £12,298.74  
7
£18,114.47 £1,885.53 £20,000.00
7
£724.82 £4,625.41
8
£12,298.74 £368.96 £12,667.70  
8
£20,000.00 £2,081.79 £22,081.79
8
£748.01 £5,373.42
9
£12,667.70 £380.03 £13,047.73  
9
£22,081.79 £2,298.48 £24,380.27
9
£771.95 £6,145.37
10
£13,047.73 £391.43 £13,439.16  
10
£24,380.27 £2,537.73 £26,918.00
10
£796.65 £6,942.02
11
£13,439.16 £403.17 £13,842.34  
11
£26,918.00 £2,801.88 £29,719.88
11
£822.14 £7,764.16
12
£13,842.34 £415.27 £14,257.61  
12
£29,719.88 £3,093.53 £32,813.41
12
£848.45 £8,612.62
13
£14,257.61 £427.73 £14,685.34  
13
£32,813.41 £3,415.53 £36,228.95
13
£875.60 £9,488.22
14
£14,685.34 £440.56 £15,125.90  
14
£36,228.95 £3,771.05 £40,000.00
14
£903.62 £10,391.84

Profit from money in the bank:-
Original investment: £10,000.00
End of 14 years: £15,125.90
Profit: £5,125.90 51%

Profit from property investment:-
Original Investment: £10,000.00
Value at end of 14 years: £40,000.00
Rental Income: £10,391.84
Profit: £40,391.84 403%

Profit from property investment with 50% mortgage:-
Original Investment: £10,000.00
Mortgage £10,000.00
Value at end of 14 years: £80,000.00
Rental Income: £0.00 Rent pays mortgage interest only
Profit after mortgage repayment: £70,000.00 700%
 
Assumptions:-
Interest Rate: 3.0%
Inflation Rate: 3.20%
Property Appreciation - Doubles Every 7 Years which is equivalent to: 10.408951% pa compounded
Net Property Rental Return after costs and below market value purchase: 6.0%
Average Annual increase of rent per annum: 3.2% (equivalent to Inflation)
Mortgage arrangement fees not allowed for in calculation.    


Notes:

  1. Property has doubled on average every 7 years since the early 1970s even taking into account the recessions along the way.
  2. There is no inflation in the property column because this is incorporated into the Capital Appreciation column.
  3. You will have to pay tax on interst earned.
  4. Capital appreciation is only taxed on the sale of it however if you have shares in a company owning that asset then you can sell some shares off each year therefore avoiding the lump sum tax on sale.

What you can do now:

Contact Edge Investment Syndicates now by going to our Contact Us page.

 
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