The Club Activities
Once you have been welcomed to the club, you will have access to all our well researched Investment Opportunities on offer, our upcoming Events and Opportunities to participate in Good Causes we have identified. Feel free to apply the ‘Double R, P’ formula to any:
Investopedia describes Property Investment simply as the purchase of a future income stream from property. PiNergy endorses this definition.
PiNergy caters for every member; offering a diverse selection of sensible, well researched property investment opportunities in and around England’s most cosmopolitan and metropolitan cities.
The joys of purchasing an investment property:
As the property market is more stable than the other markets, investment property generates fixed returns to the investors.
The income is more certain because you receive constant rental payment from the tenants. In the case that the rental income is higher than the mortgage repayment, you do not need to put any extra funds to pay off the loan and you may also have surplus funds to cover any property costs incurred.
If you purchase the property in a good location, the property value will increase and you can generate more profit.
Any tax associated with the expenses paid on the investment property, such as property maintenance, council rates, fees charged by managing agent can be claimed back at the end of the financial year.
If you have an investment property, you can also use the existing equity in the property to get another loan or to purchase another investment property.
The risks of purchasing an investment property:
The initial costs to purchase an investment property are normally high. It may take a long time to sell the property. Especially when you are facing financial hardship and you need to quickly sell the property, you may need to sell it at a lower price. If your property is not located in a good area, it may stand in the market for a long time before it is sold.
After you purchase the property, you may not be able to rent it out straight away. You will need to spend some time to find the tenants. If this is the case, you may need to pay extra funds to cover all the expenses, such as mortgage repayments or property maintenance.
The most common case is that your tenants move out after they finish contract, it normally takes some time to find another tenants. As an obvious, you will be short of income during this period. You may also need to cover difference when the rental income is less than the repayments on your mortgage.
The property value can increase but it can also decrease depending on the market. Especially during the financial crisis, most investors face financial difficulty because they spent all their funds in the investment property but it could not be sold or was sold at a lower price.
Mitigating the risk:
Now that we have identified some of the risk, how do we mitigate against them. Note that mitigating risks does not mean that the risks will disappear. It only means that measures can be put in place to minimise the burden of the identified risk.
Synergising to purchase an investment property is one way of mitigating the risk. Simply because, there will be 4/5 investors carrying the burden of the risks. As the saying goes… a problem shared, is a problem half solved…
The following are the advantages of investing via an SPAV:
i. Investing in collaboration with other through an SPV means a smaller initial amount to invest as the investment cash layout will be share with 4/5 Directors per SPV.
ii. More advantageous tax breaks for mortgage interest relief from 2017 onwards.
iii. Lower rental coverage required compared to a personal Buy to Let.
iv. Personal mortgage deposits can be withdrawn from the Limited Company by a director’s loan with no tax liability.
v. April 2018 utilise £2000 tax-free dividend allowance (reduced from £5,000). For PAYE clients there is no further tax liability.
vi. Add your adult son/daughter as a shareholder of the company to utilise their dividend allowance.
vii. Retain the net profit within the company and utilise it to fund additional property purchases, without suffering income tax on the retained amount.