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APW Investor Profile Series: the expatriate in the Middle East

By December 22, 2017 October 5th, 2018 No Comments

Continuing our series which looks at how individual investors have used property investment in their own circumstances, we consider a couple based in Muscat, Oman.

The investor couple are both from the south of England, aged 57, and would like to retire by the age of 67. They are looking to supplement their pension, but are unsure of the current unstable market conditions.

From their calculations, they believe they have a need for an additional GBP10,000 per annum during retirement. Their money is currently spread across the stock market and they stay up-to-date with economic news and market developments.

Market Corrections

The classic problem that happens with the money markets is based around periodic corrections, which tend to happen every 7 – 10 years. This wipes out a proportion of the value of the portfolio: it is similar to a minor recession. The last one was the Global Financial Crisis of 2007, and in their judgement, a similar event is going to occur in the next few years – with the potential to wipe out a tranche of their portfolio as the market corrects itself.

They have come to the conclusion that, in this case, money would be more secure in ‘bricks and mortar’, which is a less volatile asset.

How APW helped

We researched the market and found a development in Derby that hasd two bed apartments for sale at GBP139,000. These units provide a rental yield of 6% ­– or GBP8400 per annum.

They had sufficient capital to cover a 50% deposit on this property, and were able to take advantage of a ‘builder’s loan’. This meant that there was no need for a mortgage.

Builder’s Loan

A builder’s loan is a financial agreement with the developer who is able to offer a 50% loan on the property purchase price. This requires no credit check, no qualification, and no interest payable. The value of the loan is paid off by rental income over eight years, leaving the annual rental income in the hands of the investor in a relatively short period of time.

Property Management

The next area of concern for the investors is of course the question of management of the property itself. Naturally, this would be very difficult to do from Oman. However, we were able to arrange an agency at the outset to handle all of this.

The agency is responsible for finding the tenants, doing a credit check and reference check on them, collecting the rent, and ensuring that the loan is paid off within eight years.

This kind of ‘hands off’ approach is very convenient for expatriates investors who are outside of the UK.

The End Result

 The end result of these efforts was that, by age 65, they had an apartment which was fully owned and paid for with a rental yield of GBP 10000 per annum.

What’s more, by combining this with their UK National Insurance contributions at age 67, they reached a total annual income of GBP21,520 – certainly a case of success for the retirement investor.

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