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Property
Investment
RDA ESTATES LIMITED
(We arrange it all)
THE FINANCIAL FORECAST
A FINANCIAL FORECAST INCLUDED WITH EACH PROPERTY DETAIL
ENABLES CLIENTS TO IDENTIFY PRINCIPAL COSTS AND INCOME UNDER A NUMBER OF
HEADINGS. THIS FORECAST CONTAINS THE VITAL INFORMATION TO ENABLE
CLIENTS TO MAKE PROPERLY CONSIDERED DECISIONS TO PROCEED WITH A PURCHASE OR NOT.
WE HOPE THE FOLLOWING NOTES WILL ASSIST IN UNDERSTANDING THE FINANCIAL FORECAST
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1. ASKING
PRICE
This is the price of the property appearing on the vendor's estate
agents property details.
2. SET UP COSTS
These are the costs associated with the purchase but not related to
the operating costs following completion of the purchase.
Research fee.
This covers RDA researching the property market in Brighton & Hove to
determine the best properties promising virtually constant rental and good asset
potential within the location East to and including Kemp Town, West to Sackville
Road and North to Old Shoreham Road, or properties with special potential
in other nearby locations. Any information pertaining to
Lease details, Searches of Local Council and any Planning Permissions must be
verified by purchaser's solicitor.
The fee is £1,500.00
The fee is payable in two parts. The first part of
£500 becomes payable upon client's decision to
proceed with a purchase and the second part of £1,000 upon exchange of contracts
of sale. The first part of the fee is non refundable and, in the event the
purchase of the selected property should fall through for any reason, the first
part will be carried forward to
an alternative property choice.
If requiring a mortgage loan, it will be necessary to also consider the cost of
the lender's mortgage arrangement fee and the cost of the lenders survey.
3. PURCHASE COSTS
These are the costs directly associated with the property and on which
annual income & expense can be concentrated.
Assumed Purchase Price is the price at which RDA in consultation with the vendor's
estate agent considers the property could be purchased.
Estimated Update is our estimate for any redecoration, modernisation,
kitchen appliances, carpets & curtains etc which may be necessary to present
the property in best condition for maximum rental income, and asset
growth. This estimate is made upon first viewing by RDA Estates when the
property will be furnished which might not fully reflect the final
cost. Most surveys recommend that the purchaser obtains an electrical
report to ensure the installation is both safe and meets the stringent standards
set by UK and EEC countries. The cost of electrical works cannot be known
until a qualified electrician's report is received and is therefore not included in the estimated
Update costs.
Stamp Duty is a UK Government charge made at 1% of the agreed price of
properties purchased at over £125,000. Over £250,000 to £500,000 the
charge is 3%, Over £500,000 the charge is 4%. There is no charge for
properties which cost £125,000 or less.
4. ESTIMATED RENTAL INCOME
Rental per week, calendar month and per year is shown, together with the Yield
on total purchase costs as shown in Item 3.
5. OWNERS ANNUAL OPERATING COSTS.
Owners costs are...
Rental Agents Fee of 15% plus UK VAT (currently 17.5%) of gross
rent shown under item 4. These are deducted by the rental agent on a
monthly basis
Ground Rent charged by the Freeholder of a Leasehold property.
Maintenance which is the share of the costs of maintaining the
building (including Buildings Insurance but not owners contents
insurance) & public ways and which share is stated in the
Lease document.
Half of these charges are usually invoiced
by the block's Managing Agent twice per year. The
costs of Ground Rent & Maintenance as appearing in the Financial Forecast should be quite
accurate but will be confirmed by the solicitor during the conveyancing.
There will be need for occasional repairs and the costs and
financing thereof with a leasehold flat is explained in the Head
Agreement which will be presented to clients during the purchase
of a property.
Council Tax, Water & Sewerage Rates, Electricity, Gas and
Telephone charges are payable by the tenant from day of
occupation.
6. SUMMARY
This item shows the result!
Gross Annual Rent
minus Annual Operating Costs provides the Nett Cash in
Hand per year and the average per calendar month.
7. MORTGAGE ...ASSUMING 80% LOAN
The Amount of Loan Shown is simply 80% of the
Assumed Purchase Price shown in Item 3.
There are many different lenders rates published but for ease of reference, the
current Variable Rate is 5.95% or thereabouts.
Total Cash Outlay is calculated as 20% of
Assumed Purchase Price plus Estimated Update, Stamp Duty and Set
Up Cost.
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March 2006
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