Are you an investor looking to diversify your portfolio and increase your returns? If so, you may have heard of property promissory notes and bonds. But what are they and how do they work? The information below offers an introduction to property promissory notes and bonds, so you can decide if they’re a good fit for your investment goals.
Typically, the minimum investment size is £10,000 with no upper limit. Interest rates vary depending on the length of the investment: 12% annually for one year (paid monthly or bi-annually) or 35% (17.5% per annum) for two years, with interest paid monthly or bi-annually.
Property Developers and investors use bonds and promissory notes to raise funds for real estate projects. This can be for a new development or to acquire distressed real estate at a lower than market rate and then redevelop it and retain or sell it. Often, raising finance in this manner is less restrictive than conventional bank lending requirements and conditions.
The bonds and promissory notes are set up with an independent trustee to administer the agreements and control the money. The trustee holds a debenture, or a charge on all the company’s assets should the money not be re-paid. Additionally, an independent lawyer is involved to ensure the set up and agreements are legal and correct.
Once projects have been identified, a prospectus is issued with information about how the money will be invested, the interest payment, and the investment options.
At Magnate, we have identified and partnered with a trusted and well-established Real Estate business that has been trading for the past 30 years. In the past two years, they have re-paid investors over £15m and have a 100% repayment record.
For example, one recent project was the purchase and development of a UK Holiday Park that had closed due to Covid. Funds were raised to purchase and redevelop the holiday park with lodges and facilities to attract guests as the staycation market in the UK grows substantially following the Covid pandemic.
If you’re interested in learning more, please complete the form on this page and someone will contact you, or book an online meeting here.