Residential Property Investment Proposal

Return to Investors

By combining a limited amount of property dealing with sound investment in quality rental properties in established residential areas, a typical rental return of 5% net of expenses should be substantially enhanced. As section 7(i) illustrates, a 14% return in Year 1 could compound into 85.7% over five years, given positive capital growth throughout the period.

An annual capital growth rate of 6% has been assumed for the purposes of the financial illustration. Since property price growth averaged 13.4% in London over the past seven years (source: Nationwide Building Society), investors may feel justified in harbouring somewhat higher expectations. It must always be borne in mind, however, that property prices and rents can go down as well as up, whilst interest rates can rise as well as fall.