Four things you should know before embarking upon a turnkey property investment project

Defying all expectations, the property market has managed to remain remarkably buoyant coming into 2021. With a pent-up desire for property across London, prices are set to rise, and there is the potential for a great return over the next five years. With historically low interest rates and little prospect of them increasing, property has the potential to be the asset that makes the most sense in this financial environment, where other investment opportunities have become too volatile for many investors.

When considering a property project, one of the most crucial aspects of success is having the time and the expertise to source the right project. At Rive Gauche, our clients are international high-net-worth individuals and are often entrepreneurs running multiple businesses around the world. They aren’t short of drive or a savvy eye for an investment, but they are short of time and knowledge of local markets. This is where a turnkey investment service works so well.

A turnkey property is one that has been completely renovated so it readily finds a buyer, renter or long-term investor to either use or sell it immediately. We undertake this service on behalf of our clients, managing projects from conception to completion, bringing in specialist knowledge to ensure that our busy investors achieve maximum return. The process has been designed to be hassle free, and our system of transparent management means they understand exactly where their money is invested. If you’re considering a turnkey investment, here’s what you need to know.

1. Not all turnkey projects are the same

The level of investment and timeframe of the project will be informed by which type of property investment you choose. As an illustration, at Rive Gauche we generally focus on three main types of investment:

• Single property with immediate exit strategy investments are for people who want to buy, develop and sell the property. This is a more straightforward investment, but still requires an exacting understanding of both your market and how to manage costs.  

• Single property with longer-term capital grown objective investments are for those who want to grow their property portfolio. This will potentially give a longer-term return so you must ensure the money invested in the property can be retrieved once it’s completed.

• Multi-unit residential developments constitute a more complex investment suited to a discerning investor. They take longer and are higher risk to deliver and require specialist planning risk. However, your ultimate exit strategy is spread across a number of units at a lower price point. Currently there is enormous opportunity here with distressed commercial property being ideal for conversion into residential developments.

2. There are some golden rules to successful property investment

Sadly, it’s no longer the case that buying a property under market value will guarantee a good return. Good stock is becoming rare and the costs of construction and materials may rise post-Brexit, meaning that overall margins become tighter. The good news, however, is that an understanding of the following will certainly pave the way for a successful and profitable property investment:

Rule 1: It’s vital you understand the market in which you’re investing; both where to buy and the expectations of your future buyers (if your intention is to sell).  Every local area is different from the other.

Rule 2: Source a property that has the potential to be extended and remodelled. A simple renovation is unlikely to generate a premium return in today’s market.

Rule 3: When designing and developing the property, you must understand the needs of your future buyers and create something that will stand out in the market for its quality. All of this needs to be done while keeping costs under control – probably the most difficult balance to get right.

Rule 4: Timing and preparation are key, especially in today’s market. Having a team in place to identify a deal, carry out an appraisal or risk and opportunity assessment and swiftly move through conveyancing, will give you the best chance of securing a good deal. Too many times, clients search for a property before having a team in place, meaning when they finally identify the potential property they miss a deal because they’re not prepared.

3. It pays to have experience in your corner

As a private individual you can take on a pre-packaged investment from a developer or you can source an investment property for yourself. The former is logistically easier, but your profit would be lower as the developer is taking most of the risk, as they are doing most of the work. The latter means you’ll be on your own and it will be up to you to find a suitable property, source contractors and project manage the build. It’s a full-time job and, if you don’t know your market, might not provide the hoped-for return. 

A more effective alternative might be to work with an experienced team, such as we have at Rive Gauche, where a turnkey service delivers an end-to-end experience. From sourcing the property and running feasibility studies, through design and development, and to completion. Each investment is tailored to the investor, depending on location preference, investment value, risk appetite and exit strategy.

4. You should always keep profit in mind

For every project we undertake, we are targeting between 10% and 25% profit on cost with a return on investment within 18 to 36 months. A great example of this was a central London turnkey development we undertook for an international client. The brief for this project was to reconfigure the two-bedroom Grade II listed apartment. It needed to be carefully modernised so that the design blended seamlessly with the history of the building and additional space created. The apartment sold after only three days on the market and achieved a record price for the area.

When bringing a team on board, insist on total transparency of costs, including understanding any incurred fees. It is only then that you can be sure that your expenditure is geared to ensuring you maximise profit on your investment.

At Rive Gauche, we offer a different approach with a world-class end-to-end turnkey investment service. We source, package and renovate property with value-added potential for investors looking to maximise their financial return. If you would like to find out more about our specialist turnkey service click here or get in touch.