Given the number of individuals interested in the real estate market these days due to the opportunities and economic impact, strategy is the most crucial component an investor must consider in order to be successful in this market. Many first-time investors assume that in order to be a successful investor, they must purchase a home in their name in order to acquire an asset and climb on the property ladder. Following that, an investor would typically rent the property as a single let, which may be to a single individual or a family. While this is the most common form of investing, it is one-dimensional and will soon become obsolete due to the introduction of more robust alternatives that deliver significantly higher yields, entry levels, and returns on investment. A high rental demand is the primary driver of the success of a rental property investment. Potential empty periods are every investor's greatest nightmare because they can cut off your income stream.
At Novyy, we have established a strategy that strives to allow investors to access the property market with a very low minimum investment in contrast to other options while also prioritising our clients' financial security. That strategy is none other than Fi-To-Let, which is short for ‘Fractional Investing’.
Overview
Entry Level
Our business model is constructed to allow investors to enter at a low entry price; customers are our first priority in our investment model, and we want as many investors as possible to be able to access the property market. To be qualified for a BTL mortgage, most Buy-To-Let (BTL) properties demand a deposit of 15% of the property's value. Due to the volatility of BTL, certain lenders may want a greater deposit. According to Land Registry, the average house price in the United Kingdom in July 2022 was £292,118, with 15% of that amount equalling £43,817. That is the deposit required to acquire a BTL mortgage.
The costs of mortgage repayment, maintenance, and management would also factor into an investor's decision to keep this property.
Novyy aims to alleviate all the inconveniences associated with property paperwork, legal ramifications, and management and maintenance. With our assets, we will contribute 75% of the property's capital. The remaining 25% will be accessible to investors as equity. Taking the average UK property price into consideration, 25% of this value is £73,029. If you, the investor, want to buy all of the available stock, you can do so through Fi-To-Let. We will handle all property management and maintenance, so investors will not have to worry about these difficulties. The available equity is often divided into five fractions; 5% of £292,118 equals £14,605, indicating that the entry level to a property corresponding to the average UK house price with Novyy would be over £30,000 less than a normal BTL mortgage scheme.
Stability
Novyy takes pride in offering sound investments. The areas we target for our properties are among the fastest growing in the UK. Our current prospects include investment opportunities in Coventry, which has the second highest rental yield among West Midlands cities and towns, according to Zoopla. Economic and population growth is a key driver in the success of our properties; therefore, the due diligence we perform is to ensure the long-term success of a property based on its environmental factors. Due to the lower than market average entry level and annual equity that is approximately double that of a standard BTL scheme, our Fi-To-Let service allows investors to establish a very steady position in property ownership. This equity rate is expected to rise year after year, providing investors with even greater returns on their investment. The SPV will store investments in a portfolio and distribute revenue straight to a client's nominated bank account.
The properties in which we invest are usually already rented to tenants or have an agreement in place, which means that once the investment agreement is closed, the investments can begin generating revenue immediately. We make certain that our properties are stable before making them available. Many property owners make the mistake of selling or renting their properties without first having them inspected. Evidence of structural damage could derail negotiations or prove to be a poor investment for the buyer.
Exit strategies in the normal real estate market are typically complicated due to the pre-requisites and paperwork that must be completed in order to commence a sale. Novyy strives to make exit routes as seamless as possible with our trading market, which is expected to be operational by the end of 2023. When an investment is made, we have a 5-year lock-in period; however, once this period expires, investors can choose to trade their property fractions on our secondary market, sell it individually to a companion, or seek our assistance for exit opportunities that will be carried out through refinancing.
Outlook
Over the next decade or so, we hope to establish Fi-To-Let as an industry leader, used by many investors from across the UK. We believe in wealth building for all and welcome investors of all ages and backgrounds to participate. We are currently focusing on the West Midlands, specifically Coventry. Investors should concentrate their efforts in this sector because it is poised for one of the largest market booms, and at Novyy, we want to provide clients with convenient entry points. Coventry's population is expected to reach 417,000 by 2037, according to Property Insider. The present population is approximately 345,000 people. With a projected 72,000 increase in population, property prices, monthly rent, regional yields, and supply and demand are all likely to rise.
We anticipate achieving a high equity multiplier over time, given our goal of providing consistent financial yields aims to outperform market inflation. Our low entry barrier allows clients to invest minimal and get significant rewards. A low-risk investment with the potential for exponential growth. We are working hard to make this the norm for all properties offered through our Fi-To-Let plan now and in the future. Our mid-term ambition is to own 10,000 rooms in key UK markets that are owned in part by our clients and managed by us. Following this achievement, we will aim to reach 100,000 rooms across the UK.
Novyy's projects are not designed to be terminated at any time. We feel that long term is stable while the short term is volatile. The key variable driving this decision is the property and equity price multiplier over time. The initial investment amount will remain constant, however the market value of the property will fluctuate depending on the economy. The current annual yield rate on our Coventry properties is usually between 13-15%; however, we expect this to climb to roughly 19-21% within the next decade. What distinguishes us from the competition is that we enable investors to possibly earn one-fifth of their initial investment as annual income. With this strategy, we hope to establish a welcoming and rewarding atmosphere for investors, where they won't have to be concerned about risks and volatility.
About Us
Novyy is a Community Investing Platform that enables individuals to invest in UK Buy-To-Let, Leading Real Estate Private Equity Funds, and Premium Homes across Europe with as little as £10,000. Novyy users enjoy seamless digital investing like never before, in opportunities that were earlier unavailable to most individuals. This piece should not be construed as tax advice. Please refer to your tax advisor before making any decisions on owning properties through Limited Companies.
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