7.5% Return Per Cycle

Our joint ventures allow us to partner with like minded property investors and take advantage of the historic buying opportunities in the UK residential property market. A lack of finance is restricting the level of buyers in the marketplace making cash on account a very strong buying position.

The structure of the joint venture is simple. You provide the capital needed to fund both the purchase and renovation of each property and we provide all associated services. We will identify suitable properties, negotiate a discounted price, provide the renovations teams and both let & sell the finished properties. The JVs offer security to both parties. They give a secured return over a set period to the investor and each joint venture secures further business profits for us through our service fees of sourcing, renovating and lettings.

All money is held by the JV partner and is requested in stages set out by the joint venture agreement. No monies are held by Castle and Gatehouse at any time. The terms of the agreement are simple, clear and prescriptive. Capital is requested only in accordance with these terms. When the bulk of the capital is requested to complete the legal purchase it is then sitting in an asset owned directly by the joint venture partner. Each JV is separated for accounting purposes giving added security and comes with a robust business model that should comfortably exceed 7.5% return per cycle. It is a very safe, well covered strategy.

Multiple cycles

The joint venture lasts as long as you choose to continue.

Our joint ventures put you in full control. You control the capital, you own the property and you take the major decisions. Each joint venture is scheduled to last around 6 months although we aim for between 3-4. 6 months allows two cycles per year which is a comfortable, deliverable pace. At this rate the return of 15%pa is conservative. When factored with the capital secured element our joint ventures offer remarkable risk vs return. A product featuring 100% secured capital with a 7.5% return is a stand out product in any market.

The collateral for the capital protection is the property that the JV is used to purchase, which will be an asset of equal or greater value than your capital sum. Ownership is immediately arranged on the day of completion, in accordance with the land registry, that allows a clear and executable claim to a separated asset so that your capital is asset backed at all times.

You return is paid at the end of each cycle. The joint ventures are a simple 50:50 split of profits so whatever the profit turns out to be we share in our success together. It is then at either parties discretion to re-invest or move on. The headline expected return is 15%pa but may be better in practice as it is a simple 50% profit share of any profit made.

JV Background

How our JVs originated.

Our joint ventures are our response to the huge opportunities available in the property market at present to those with funds. Importantly they allow us to service our order book without the need for expensive and inflexible mortgages.

The credit crunch severely tested the security of guarantees offered by banks and institutions over 2007-2009. The recognition is that the old way of investing with only paper guarantees has forever been tarred with the stigma attached to mass collapses like Icelandic Banks, Lehmans, and Northern Rock. However, the financial system has thrown up similar experiences before with institutions like Barings Bank ceasing to exist.

Our partners believed this demanded a new solution which offered greater security and transparency than the products that had preceded it. Through the benefit of experience we have designed open book systems, processes, checks and balances to produce a remarkably safe advance channel that has tangible, real assets built into the security.

We are very experienced in formulating bespoke strategies to meet our client's individual needs. In this market we find that means increased security, good income and short timescales with effective recourse built in.

As a starting point our partners felt it should be a core principle that Castle & Gatehouse should not handle any client money directly. As a property business Castle & Gatehouse is not regulated by the FSA and the FSCS does not apply – your protection is the fact that you own the asset and our capital guarantee of any shortfall. This gives a level of security that is unusual in today's market and goes beyond the £50,000 offered by the Financial Services Compensation Scheme. Against our average JV of £150,000 that only represents a 33% guarantee over capital which we feel does not represent the security that the Castle & Gatehouse brand stands for. Fortunately we are not a financial services company nor do we trade derivatives or otherwise – we are a property company and that offers a number of advantages. It allows us to offer ownership of the property we have used the JV to purchase, giving full security over the capital invested. We then limit the effect of movements in the market by trading the deals quickly; usually within 6 months.

A cash buying position is highly valuable as it allows us to evidence proof of funds to agents or vendors and move quickly to secure opportunities as and when they arise. The cash representation also allows us to command a substantial discount from the market value of properties, and on the day the property is completed the JV partner receives the title deeds in their name. Your money either sits in your bank account or it sits in your property.

We then consistently achieve the return through a variety of exit strategies. Due to the fact that the assets we create are mostly student properties with 10%+ yields they are very saleable investments. We have an occupancy rate of over 95% so in the event that we take a few months to sell the property the lettings income provides a healthy return in the meantime.

Castle & Gatehouse have spent years perfecting an in-house supply chain that allows us to consistently deliver returns year by year. We're proud of our business and the outstanding returns we can deliver through our very refined business model.