How To Invest In UK New Builds For South American Cash Investors
Cash heavy investors and corporations may very well want to consider investing in UK new builds. The real estate market in the UK has made a dramatic comeback and investors from all around the world are riding the wave of increased real estate prices throughout the UK. Approximately 70% of new builds were purchased by foreign investors and 30% of luxury properties valued at 1 million GPD or greater were purchased by foreign investors.
The UK is about to pass, if it has not already, New York city as the world’s number place to invest in foreign real estate.
There are several ways South Americans can invest in the UK real estate market with new builds. They can buy and flip, buy and hold or they could just lend money to builders and developers in the housing market. All methods are proven and profitable ways to invest in new builds.
Buying and flipping may be the least attractive way to invest in new builds but it also may be the most attractive depending on how active you want to be with your investments. If you are looking for a more hands off approach I would recommend staying away from buy and flips unless you have a trusted advisor you want to task with this approach. If you like being active with you investments than this may be the route you choose to follow. Depending on the amount of capital you have to invest this could turn into a full time operation. You will need to work hand in hand with a good real estate agent that will find you’re the opportunities and lay it all out for you. Virtually all new builds will be pre-sold. In other words you will purchase the property before it is built. There is some risk in this but the real estate market is so hot in the UK right now that it is unlikely you will end up with an unfinished house.
Buying and holding is what most foreign investors are doing. They simply pay cash for the home, the home get’s built and then they turn the home over to a letting agency to handle the management of the property. For the most part you as the owner simply verify checks for rent are being deposited and just watch your investment grow as the housing market continues to appreciate. This is as about as hands free of investing as you can get. You still need to be following the real estate market both in the UK and nationally. If there is another housing bubble approaching you need to be prepared to either sell the property of to ride out the economic storm.
The final option for investing in new builds would be to act as a private money lender. You can use your cash to finance the construction of new builds. Your greatest task will be to find a private lending broker for these loans. What you need to make sure is happening is that you are not over exposing your investments. You will typically want the home builder to own the lot free and clear or have other assets you can place a lien on if the builder bails on you. This is where a good private broker comes into play. They will be able to put together investment portfolios for you. They will manage the funds and disbursements as construction proceeds. Typically a third part will collect monthly payments and deposit the checks into your account. This method is not as passive as buying and holding as you will typically get your investments back within 3 to 9 months depending on the size of the property being built.
If you decide investing in new builds in the UK is a good option for you then there are a few more things you want to get lined up. First and foremost you need to get a good accountant on your team. You need to know what the tax ramifications will be for any of the real estate investing you do. For example, the UK just recently announce a new tax for foreign investors. This will tax any capital gains on the sale of property a 28% starting in 2015. A good accountant may be able to find ways to mitigate this tax or show you how due to exchange rates that it won’t affect you at all. Next you need to find a good real estate lawyer (solicitor) and finally you need a good real estate agent that has experience in dealing with foreign real estate investors.