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  • Buy-to-Let

    Deansgate Square M15

    Hi guys

    I came accross an off plan opportunity in manchester . the claim is that the 1 bed flat comes at a 10 % discount versus market value ( 235 k vs 262) and will be delivered next year. The developper is reneka and they seem to have a great reputation. https://www.deansgatesquare.com/

    rent is expected between £1000 and £1300

    Do you see it as a long term winner or is it likely to be dragged down by the competition in the area ?

    Thanks

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    My biggest concern is actually the service charges given all the facilities on offer. I'd also take the rental figures with a pinch of salt. I'd definitely work on the lowest figure or a little below that.

    I'm not going to guess the market I prefer lower risk 3 bed semi type investments

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    Service charge was advised at £135 / month , ground rent £ 17 . I tend to agree with your concerns about the rent , i struggled to find anything around that postcode that would confirm this level of rental. However it may be because there is nothing comparable (highest residential building in the UK )

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    Hi Yvan,

    I'm certainly no expert and have just exchanged on my first off plan apartment in Liverpool with a completion date of July 2020.

    Like yourself I was attracted by the discounted price and lack of maintenance but the developer I went with also offered 5% return on the deposit paid which comes off the final  sale price (meaning less stamp duty) and I also have a guaranteed rent for the first 3 years. (Admittedly a lower rent than if I were to rent it directly to tenants)

    Being my my first and out of area I felt it the safest way to go.

    Obviously it hasn’t completed yet so could all go wrong but I feel quite confident it won’t.

    (Just letting you know what else is out there as a comparison)

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    Hi Shane ,

    Thanks for sharing your experience , I hope it goes well . I was not able to get the 1 bed I wanted.

    All they had left were 2 beds at 328 k instead of 365 k and 3 beds which I think are much better investment than the one bed.

    Keep an eye on the market value as you may be able to sell before completion and lock in your margin.

    All the best

    Yvan

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    If you dont mind sharing details, what is the purchase price, I heard that guaranteed rent generally means overpriced purchase which covers the developer paying the rent

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    Slowly working towards financial freedom


    Forgive me for adding a dose of realism, but I would be very mindful of buying anything off-plan in the current market conditions as I would regard it as exceedingly high risk.

    Furthermore, in the recent Deloitte Cranes Survey, Manchester was right up there, meaning there is a huge amount of building going on, meaning that supply is dramatically increasing.

    Also worth noting the Liverpool property developer Paul Nicholson, in an article for Property Tribes wrote:

    "I have recently moved away from investing in the ever-popular cities of the North which are becoming over-crowded with investor-led development and investor activity soon creating an oversupply depressing not only values but rental demand – the more stock the less demand so prices will drop".

    If I was going to purchase in any of the Northern cities I would be buying a two bed terrace in a good street near transport links on the outskirts.  These will benefit from all the investment into the area, but, unlike shiny new flats, will not become over-saturated and there is always a steady demand for family homes.

    If a lot of flats are purchased by investors, then you will all be competing for tenants at the same time when the block completes.  Rental guarantees are very often just a higher purchase prices, where you are paid back your own money in rental instalments, and developers do not always honour them.

    Off-plan is a high risk strategy, but, in the right market conditions it can be high reward.  With Brexit in the mix, no one could possibly guess what the conditions will be when your flats complete, so essentially you are gambling.  I do hope it all works out for you and nothing would make me happier to find out I was wrong.

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    Exactly my view. For information I do have 2 flats in Manchester city centre, although over a decade old the 2 bed with parking gets £850, the 1 bed without parking gets £775.

    I haven't bought any flats for 15 years.

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    Personally having bought properties off plan in the past, I would never do so again. Especially not Leasehold Apartments......

    Do you know what the services charges & ground rent numbers are?

    These are an ongoing cost to you, the landlord and will increase over time and are generally expected to be paid upfront every 6 or 12 months.

    I have not seen many 'True' BMV deals, many may be promoted as a 'Discount Off Plan' these will be a 'Discount Off THEIR List Price' rather than their worth, but everything will be calculated into the deal including any guaranteed rents for example......

    Due Diligence is key, knowing the developer, how they are funding it, competition, realistic rent analysis with ALL your other associated costs, management, services charge and ground rent etc.

    I believe their is starting to be oversaturated areas in Manchester.

    https://www.propertytribes.com/crane-surv...38685.html

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    Thanks for your comments . Well I could not get a 1 bed and could not afford the 2 beds + . I will sit back and keep an eye on it for learning purposes and see if the rent and market value stay where it was promised.

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    I agree with the post above, although the city center apartments appear good investments I would go for the local houses in the suburbs for the reasons stated above. I also think that as each new apartment block is finished and i am sure rented out quickly the next new fashionable block becomes finished and then the next so within 6 months your block is now not the fashionable one that attracts the trendy tenants.

    Happy to chat if you want about Manchester investments just pop me a email

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    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724