FREQUENTLY
ASKED QUESTIONS
Get all the answers to the most frequently asked questions (FAQs) regarding Property Investments, Homes, Suites, Finance or any other services that Adivo Investments provide
Property Investments
Commercial property is a core asset class among institutional investors, family offices and High Net Worth individuals, favoured for a portfolio diversification, strong income return and providing a hedge against a more volatile stock market. The established sectors are retail, office and industrial, with alternatives such as care homes, clinics, petrol stations and car parks attracting a growing share of investment in recent years.
- The returns can be fantastic with the investment being not too dissimilar in risk to a secured Fixed Income Bond.
- Leases made with high grade covenant businesses often guarantee rental increases and protection against inflation.
- Commercial property is less management intensive than residential with the tenant taking responsibility for the maintenance of the building and refurbishment. This practice is commonly formalised with a full repairing and insuring lease (FRI) agreement.
- It is fairly simple and inexpensive to hire highly skilled and professional Property Managers to ensure tenants are keeping up their terms of the lease and critical issues such as lease re-negotiations are managed appropriately at key stages during the investment cycle.
- Excellent Total Return on Investment when considering high income during tenure and good Capital Growth if asset exited at right time with good lease terms in place.
Our typical recommendation would be for a passive long income – Typical dividend yield 4.5% – 5.5% p.a. non leveraged. Returns can be higher if leveraged around 50-60%. Such a deal would typically be:
- Let to a large, well established business with a high-grade covenant
- Minimum of 12-15 years remaining on lease
- Let on full repairing and insuring terms (FRI)
- Regular upward only rent reviews with protection against inflation
Higher yields (in excess of 5.5%) are achievable if investor is prepared to consider some risks within the investment such as shorter lease, a lesser grade covenant tenant etc. These types of deals we only propose to our clients once we are confident that our investors are fully aware of the risks and yet wish to pursue such a strategy.
An investment in commercial real estate is typically by investors who are looking for strong and stable income with little risk and no real downside. It is often taken as a hedge against more volatile investments such as Private Equity or the Stock Market investments and is a common feature in a stable well diversified portfolio. Residential investment on the other hand typically has lower yields (lower annual income from rent) but greater potential for Capital Growth if purchased correctly and held for sufficient period of time. Residential investments also have an emotional aspect to the investment in terms of potential to be a holiday home, an asset for the next generation, located in a desirable area etc.
What is important to understand is that both investments are proven to be best in class and the decision to opt for one or the other is purely based on personal circumstances. We would be happy to discuss your requirements with you and advise what in our opinion seems like a more suitable investment option for you.
As with buying property directly, purchase costs such as stamp duty, solicitor’s fees, agents fees, search and registration fees and survey costs are incurred. These costs can vary depending on the asset value and are funded by the amounts raised from investors and are clearly communicated before you make an investment. All invoices of costs are shared on a transparent basis with the investor. You will be made aware of all costs prior to engaging in the deal and we always take them into consideration when calculating yield.
Yes, absolutely. However, it is your responsibility to satisfy yourself that an investment in the UK complies with and is permitted under the laws of your jurisdiction. This includes complying with any governmental or regulatory requirements or other applicable formalities.
We will help you to consider the most suitable structure for your property investment. UK property can be held in a number of ways (either directly or indirectly) including via a limited liability company, a traditional partnership, a limited liability partnership and unit trusts.
It is important to consider the tax implications when deciding what structure is most appropriate. The tax consequences will depend upon a number of factors including your tax residence and domicile and the investment vehicle you choose. We will work with you alongside the chosen tax advisors to ensure that we put in a structure that is most suitable to your needs and circumstances.
To be very clear, not Adivo. We are simply the advisors. The asset will be 100% owned by you under a variety of structures that we can help you arrange. If the asset is being purchased by a number of investors then an SPV is typically formed and shares sold of the SPV based on investment contribution. In no circumstances does Adivo ever own any asset or hold any of your money at any time.
Most properties in England and Wales are registered on a public register at the Land Registry. It is referred to as Registered Land. Registration provides conclusive evidence as to the identity of the owner and the owner’s title to the property. The register also provides details of the extent of the land and the rights benefiting and affecting it. If a property is registered, there is a state guarantee of title that guarantees the accuracy of the public register. If a defect or error is found in a registered title, compensation is payable by the Land Registry in certain circumstances.
Yes. In addition to having legal advisors to assist you with your property transaction, other property consultants may include a property agent, surveyor, tax specialist and a valuation expert.
There is no defined period of time as each transaction is different in nature and complexity. Typically, commercial transactions are more complex than residential ones and can take longer to complete.
The seller will always push to exchange and complete as quickly as possible and often may put deadlines, but at Adivo we don’t let the sellers deter us from the doing the checks we feel necessary to finalise the deal.
It is in everyone’s interest to move ahead as quickly as possible and our serious intent to proceed will always be made clear to the seller. However, under no circumstances will we cut corners or rush a deal to completion until we are fully satisfied that all your interests have been investigated, presented to you and dealt with in a suitable manner.
Stamp duty land tax (SDLT) is the main tax on property acquisitions. It must be paid by the buyer within 30 days of completion of the acquisition. Failure to pay on time results in significant penalties and interest. SDLT must also be paid before the Land Registry will process the registration of the transaction. SDLT is calculated using a % based on the value of the property. We will always advise you of SDLT due on any investment as part of any initial proposal we share with you.It is in everyone’s interest to move ahead as quickly as possible and our serious intent to proceed will always be made clear to the seller. However, under no circumstances will we cut corners or rush a deal to completion until we are fully satisfied that all your interests have been investigated, presented to you and dealt with in a suitable manner.
The whole idea of working with Adivo is to have a stress free investment and that is what we deliver. Post-acquisition, all lettings and property management issues can be managed by Adivo if the client so wishes. Many of our clients simply provide their bank details where the income is to deposited on a monthly/quarterly basis requiring no further involvement from them.
There are 2 approaches that we use:
- Our clients advise us of the type of investment they are after (value, location, type, expected yield etc) and we source the right deal for them through our network of private sellers and real estate brokers.
- Quite often we are made aware of fantastic deals in the market which we believe are great for any investors portfolio and bring such deals to our existing clients for investment or alternatively we purchase ourselves and look to place in the market at a later stage.
Regardless of the approach, it is the decades of UK real estate experience in Adivo as well as hundreds of more years of experience with our established partners that goes behind reviewing each and every property before a decision is made. We visit all properties, conduct the initial due diligence to confirm the facts for what they are and conduct all the necessary checks to ensure that it is an investment grade asset before we bring the deal to our clients.
Hundreds of days of work every year is spent looking at deals and rejecting them so that you only see the deals that we believe are right for your portfolio.
Yes, we can. 80% of our revenue is from commercial transactions however we do help our clients with residential investments if they so wish. On many occasions, we have had investors approach us with residential requirements and ultimately end up investing in a commercial property after discussion and consideration. Historically, the majority of residential property returns have been delivered through capital growth. However, we look to balance income and capital returns when we select our properties, to maximise the ‘total returns’ that this combination can bring to our investors over time.
Yes, we can help but we cannot guarantee. We partner with a number of institutions that are happy to lend up to 75% on a real estate investment but final discretion lies with the lenders based on their evaluation. Typically our clients have managed to secure lending of at least 50% with only a small handful having been refused based on their personal circumstances.
Yes, we would, as it is an effective and risk free way to increase yield if arranged properly. However, bearing in mind our conservative outlook we are always cautious to advise our investors to not over leverage as markets can temporarily come down as well as go up and it is important to be ready for such eventualities as well. A leverage of 50-60% in our opinion is both a healthy and safe place to be at to ride any short term correction in the market.
Investing in Commercial Real Estate is no different to any other complex project. The research, sourcing and due diligence requires a huge amount of investment of time and expertise. The question you need to ask yourself when deciding whether you need a firm like Adivo to help is, can my time and that of my team be used better elsewhere? If the answer to that question is yes then Adivo is a very cost effective and efficient way of investing in the UK real estate market.
We are carefully structured to make sure we don’t make money until our investors don’t start to see a return. Our income is derived from an agreed fee paid to us upon completion of a deal. It is typically 1.5% + VAT of the deal value. We also charge a 12.5% + VAT of the rent on an annual basis if the client requests us to manage the property on their behalf post an acquisition.
Investing in Commercial Real Estate is no different to any other complex project. The research, sourcing and due diligence requires a huge amount of investment of time and expertise. The question you need to ask yourself when deciding whether you need a firm like Adivo to help is, can my time and that of my team be used better elsewhere? If the answer to that question is yes then Adivo is a very cost effective and efficient way of investing in the UK real estate market.
Homes
For a relatively simple, three metre, single rear extension, construction time should be around three to four months. For a larger or double height rear extension it may be more like six months. This does not take into account the design and planning phases of the project, which will vary depending on whether you need to apply for planning and other permissions. A sensible timeframe for most house extensions (where planning permission is needed and perhaps a party wall agreement), from appointing your architect to completion, would be around a year.
You do not usually need planning permission for a loft conversion, as this falls within normal permitted development rights.
In certain cases, you may need to apply for planning permission when undertaking a loft conversion. This is often the case if your plans exceed certain parameters or if your plans for converting your loft impact your neighbours’ property. It can also be the case if you need to factor in special building regulations, such as if your building is listed.
When calculating the price of a loft conversion, planning to add stairs is a very important factor.
If you want to add stairs into your plans for a loft extension, this will impact the total conversion costs. This is because building stairs requires more resources and time than other types of home conversions.
Fitting your new kitchen will take a minimum of two weeks, but usually no more than three.
There is a preliminary week for preparing the space in which we remove the old kitchen and send in the electricians and plasterers.
The following week your fit team will complete most of the installation and – depending on your choice of work surface – the appropriate company will come out to template. They will return the following week to install the surfaces and then the fitters can complete the kitchen.
We keep your current facilities and appliances in use and accessible for as long as we can. The particulars of what you will or won’t be able to use at any given time are entirely dependent on the project.
Once delivered and onsite, depending on the complexity of the design we try to complete a bathroom installation within 3 – 4 weeks.
Yes, we will project manage every trade, all deliveries and give you one point of contact. We will even unlock & lockup if required. After a project has been signed off, we believe the client should be able to carry on thier day without the stress of their ongoing refurbishment.
The time it takes to complete the vast majority of our driveway jobs is usually dependent on the size of the particular project, and we will be able to give a more specific timeframe following the assessment of your property. However, we can advise that a medium-sized driveway for an average house takes approximately 1 week to complete.
Yes, items can be designed custom built to suit your individual needs.
While it can be simple to tally the up-front and monthly costs associated with a security system and alarm monitoring, attaching a price tag to peace of mind is a difficult thing to do, especially if you have children or teens in the house.
Many modern home security systems are controllable via smartphone apps. Systems with app compatibility are known as smart home security systems.
There are several components in a security system that might be controllable with a smartphone or tablet. You would need to refer to your package to determine what would be on offer to you.
A great set of surround sound speakers can make any home theatre system come to life with rich and vibrant sound. However, there’s more to a great set of speakers than just the speakers themselves. Setup, room calibration, amplification, interconnects, speaker wire & related electronics all have their part to play.
The answer to this depends on your driveway’s features. Our team will take into consideration the style of your home, the type of driveway you have and how much privacy or security you desire.
Factors to consider are:
Driveway size – The size of your driveway entrance determines whether your gate should slide or swing. Swinging gates are suitable for average sized driveways, but for larger entrances, sliding gates can be a better option as the swing radius is larger.
Sloped or inclined driveways – Sloped or slightly inclined driveways should be fitted with sliding or rolling gates, this is because when the gates are opening the incline will constrict the swing of the gate.
Style of your home – If you live in a modern or period home, we can match your home’s style and colour to your brand new gate.
Definitely not; We have designed gardens as small as 2 x 5 metres and as large as 3 acres with lots in between. The concept behind a good garden design is to make the most of the space you have available and to ensure that your garden and house sit comfortably together.
That would depend if your furniture can be replaced very cheaply then it’s likely that re-upholstering it will cost more.
However, if your furniture is of good quality and has many years use left in it, then our clients often feel it is worthwhile having it professionally re-upholstered, rather than throwing them out.
Suites
Yes, the yields from rental income are considerably better but the Capital Gains may on some projects be less attractive than traditional residential.
Yes and Adivo will assist in arranging suitable finance. Lending rates tend to be slightly higher than traditional buy-to-let but the yield more than justifies this slightly higher rate.
The Adivo team is responsible for arranging all legal, licencing, tenancy and property management issues for these properties with no involvement required from investors/landlords.
Yes, we have a number of clients who have let out such properties on long term lease to local councils, assisted living companies and other such enterprises for an excellent guaranteed yield. This option is always available for those who seek it.
Absolutely not. Many of our investors are based outside of the UK and have invested in such properties for the safe and high yields they offer along with the opportunity of good Capital Gains. Adivo is fully equipped to manage these types of investments fully on behalf of our clients and hence you can be as much or little involved as you wish to be.
Absolutely not. There is always an abundance of income seeking investors looking to park their money in high yielding properties. In our experience, we haven’t even needed to look beyond our own investor base to sell such properties.
FINANCE
Yes, the minimum amount is £250,000 and our loans are for a minimum of 6 months with a maximum of 24 months.
Yes, we charge an arrangement fee on start of the loan but there are no exit fees at the end of the loan.
There is no one fixed rate as we review every situation and project on its own merit, determine the level of risk and then offer a bespoke solution for every customers individual needs.
No, loans can be given to individuals as well for refurbishment projects as long as we are first charge holder on the asset.
It is very unlikely that we would agree to that, but it has been done in the past in exceptional cases.
No, we are selective about which properties and developments we will work with and limit our lending to mostly London and Home Counties. In some instances, we have lent on projects in Oxford and Cambridge.