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  • Holiday Lets

    Afan Valley Adventure Resort development

    Hi

    I came across this development which is on sale with 10% return and 268% Return on investment. I was pressurised to but as the price are going up 15% from the May.

    Buy back is 125% after 5 years .

    Following is the summary:

    • up to 268% Return on Investment
    • Developer Finance Available from £82,000 cash in
    • Exit from year 5 at 112.5%, up to 125% at year 10
    • 10% returns p.a. for 10 years
    • Full legal ownership, title in your name
    • 2 weeks usage per annum from completion
    • No Stamp Duty Land Tax (up to £150k)

    Any experience or tips about this development will be appreciated.

    Thanks.

    MB

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    This video from Graham Rowan gives a good overview of the development and Northern Powerhouse Developments...

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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer

    What they have not gone into any detail on is the Service Charges/Ground Rent which I would imagine will be £5 - £8k per annum minimum, maybe more....

    No mention of Management/Cleaning Fees?

    No mention as to restrictions on Sales / Rentals as to whether Lodges can only be bought and sold through them only which I think will be the case.

    You really need to do in-depth due diligence on these types of investments/parks.......hopefully someone else may have further insight into this specific development.

    I'm not a big fan as I saw many people loose money on The Bay, Filey https://www.ariaresorts.co.uk/the-bay-filey/ similar opportunity.

    Example 1 Bed Flat Sold Originally £120k now on the market for £35k https://www.rightmove.co.uk/property-for-...98558.html

    There are annual charges comprising of three elements; amenity licence, service charge and ground rent. At present, this total annual cost is £4,965.72 + VAT. That's nearly £500 a month!

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    If it sounds too good to be true.........

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    The project in Wales sounds very interesting and would be good for the area, but I would never invest in it.

    For me high pressure = run away

    I'm really surprised of the service charge on the other place. £5K is a lot of money and that will take some time to be able to get the money back from rental income

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    Honestly I would try to exit at the first opportunity you get and count your lucky stars for income in the meantime.

    This is a high risk investment as you are investing more in a business than property. If the business doesn’t perform, then you don’t get paid.

    Hotels / students pods / carehomes > it’s the same deal. 

    Investing into these deals requires a deep review of the business model, projected returns, contractual documentation and acceptance of having zero control over your investment. How do you value the property with few comparables and no open market for selling your unit? Are you qualified to review their business and long term viability?

    Working in the corporate world and knowing people can get screwed over, I would never invest, though very tempting and could by all means be a genuine opportunity.

    I view this more as a joint venture albeit you have zero control and defined returns, together with risk associated with more of an equity investment ie potentially very high returns as a business owner would have.

    This is not a property investment. You can’t get a mortgage on it from any provider I’m aware of.

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    It's notable how, when it comes time for the buy back, many companies have gone bust or simply say they don't have the funds.  We have an example of that happening here on PT, but I can't find it at the moment.  If that happens, there are very few routes of redress, and you are stuck with a depreciating asset with limited exit possibilities.

    As others have stated, intense due diligence on the business model, the company, and the individuals behind it is needed, especially as this is definitely one of those deals that looks too good to be true.  I suspect that is the case here.

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    Thanks Vennesa. Really appreciate your input and PT is a great platform to bounce back ideas / thoughts  and learn from each other.

    MB.

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    There was a story on the news last night about the people behind this development -  it didnt look good for investors.  https://www.itv.com/news/2019-07-04/gavi...usinesses/

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