Investment Example

The example below is based on a one bedroom fully furnished appartment on the Merricks Beach Resort, Barbados.

Property price                                                                               £265,000
Current comparable ( neighbouring resort )                          £385,000

Appreciation @ 7.5% over 2 years                                           £444,916

Purchase price                                                                             £265,000

30% deposit                                                                                  £  79,500

Balance                                                                                          £185,500

The developer will pay the interest payments on the deposit and the stage payments so that the client has no outgoings for the build duration.

Interest on deposit @ say 7% over 2 years                             £  11,130

Stage payment interest approx.                                                 £  22,260

Balance outstanding including interest                                   £218,890

Guaranteed mortgage @ 70% of valuation ( £444,916 )      £311,440

Less balance outstanding                                                          £218,890

                                                                                                          £  92,550

Less original deposit                                                                   £  79,500

Surplus funds available                                                               £  13,050

Mortgage repayments on £311,440 @ 8%                              £  24,915

Guaranteed rental @ 10% of purchase price                          £  26,500

Most clients would raise the 30% deposit required from their existing home.This is normally a straight forward process but in some cases the extra outgoings can put a strain on cash flow.This is where our investment example is unique.The developer will not only pay the interest on the deposit but also the stage payments for the complete build duration.The interest will then be added to the purchase price upon completion.

Due to the significantly discounted off-plan contract price and the capital appreciation during the construction phase, it is anticipated that the £265,000 purchase price will have easily grown to a property value at completion of circa £444,916 ( Prices on new build in Barbados are expected to increase at the rate of 15% p.a. over the next 4 years.Our figures are based on 7.5% ) 

At this point a 70% loan to value guaranteed mortgage is available and therefore you will be able to borrow up to £311,440. This is clearly ample to pay for the £218,890 balance that is due to the developer. At this point you could either pay off the 30% loan that you had used for the initial deposit or you could reinvest.

The rental guarantee of 10% of your purchase price of £265,000 will generate you an income of £26,500 for the first 2 years which would more than cover your mortgage payments. At the end of the 2 year guaranteed rental term you then have a choice of selling your property and taking a 4 year capital growth or entering into a 5 year 50% share on the rental income generated by the hotel management group who will be running the resort. ( Please contact me for further details. )