Buy, Renovate & Sell
A simple plan.

We buy discounted residential properties in cash, renovate them using great handpicked construction teams, find great tenants and then sell them to cash rich investors as a fully managed property investment.

What we do is very simple yet highly effective. We align several skills sets which individually are ordinary but together compound to generate exceptional returns. The model has worked well since 2002 which comes down to having control over the entire supply chain and ensuring that we always have great product to sell. Our houses are aimed at affluent property investors looking for a passive investment which will offer a quality income and a long term capital growth strategy. Each house is a fully managed property with tenants and certificates in place.

High Yelds Properties

Historically, tenanted houses have reduced the value of what they may achieve at sale as opposed to being untenanted. The trend is changing and in today's market cash investors are looking for a better yield than ISAs, Bonds and shares. If the property is renovated to a high standard and the tenants are prequalified with a strong management contract in place then it can actually add value to the property or at worst prevent it from further market depreciation. This is due to the high demand for a tangible investment that is asset backed which is yielding higher than 5%. Our multi-let student properties typically yield well in excess of 5% as a cash net return.

The Process

Sourcing

As a business we buy discounted residential assets using our cash purchasing power which allows us to command a discount from the RICS market value. We use various strategies to achieve great discounts for ourselves and our partners.

Renovations

We renovate using in house teams to ensure a high quality controlled 6 sigma approach to ensure all of our properties have the best chance of attracting good quality tenants.

Lettings

We always have between 95 and 100% occupancy rates with our in house lettings agency. We carry out strict due diligence on our tenants to ensure we get off to a good start and we carry out regular checks as well as tight rental controls. We have less than a 1% rental arrear track record. We believe in looking after our tenants and they look after the yield which in turn looks after us.

Sales

Our sales team work diligently networking in high net worth circles as well as holding seminars for Independent Financial Advisers to keep them updated with which properties we have available. Some of their clients want ready made property deals for an instant income and others want to be JV partners for a tried and tested model to increase their capital reserves. Many often opt for both.

It is our sales executive's role to balance both the supply of investors into the JV product as well as the readymade deal. This closes the loop and keeps the supply chain moving.

Principles of Business

World class conduct & approach to business

For some people even the word 'property' conjures up conditioned anxious responses and in many cases at best it induces a degree of scepticism. This anxiety can be extremely useful when looking through the plethora of websites nowadays promising high returns as it forces you to look deeper into the mechanics of the models each company are advocating. We welcome this as our houses and processes are tested and thorough.

Our model is built on several core principles which are now regarded as laws of property investing and business per se. We execute this philosophy with a world class standard.

Position at the top of the market

In cases of houses of multiple occupation for students, the properties come with parental guarantees and insurance policies to protect the investor against parental default on rent payments. The fact that our properties come already producing a good quality income means the investor who is always buying in cash receives a rate of return often 5-6 times what the bank can offer. It also offers a long term strategy for capital growth as it is largely agreed that we are past the bottom of the market and already slowly moving in the right direction.

We have literally hundreds of cash buyers who are waiting to buy the JV properties which we produce each day. Our sales team never has a problem selling each property in a timely and efficient manner. By making sure the market is there and carrying out substantial market research to ensure this the vacuum at the end of the supply chain is thus created.

Our approach to property purchasing

When buying the properties in the first place buy at a discount. This can be achieved in many ways but the key driving factor is the fact that we are always cash buyers and have been throughout the recession whilst other companies and individual landlords have been relying on mortgage lending.

Agents like to work with us as they know we complete on deals in volume. By achieving a discount, we build in a margin of security for ourselves and our partners. We build in a margin for market depreciation should anything drastic happen. If we buy a property at a 20% discount and the market was to fall 10% in the 3 month period whilst we buy, renovate and sell, then we would still look to achieve 10% uplift just simply by trading the discount.

Cost effective renovation and high end sale price achievement

Renovate the property to find the minimum amount of cash outlay needed to reach the highest end sale price, whilst at the same time ensuring the appearance of the property is good enough to also achieve the optimum rent for the end buyer to maximise their yield and thus making the property easier to sell to yield hungry investors.

When possible, especially for student and professional HMOs, we will look to add an extra room to increase the yield whilst not compromising the living space for the rest of the tenants. We pride ourselves on having the best student HMOS in the UK.

Find good quality tenants.

We carry out due diligence which consists of credit checks, 2 character references, next of kin, copy of passport, spot check on previous property if possible and finally an interview. Getting good tenants from the start is the key to minimise problems later on.

Strict credit control for rent collection.

This allows us to minimise arrears. An example of this is from September 09 to June 10 we had £68 in arrears from over 600 rooms managed. An impressive statistic against trends which have pointed at the many arrears in other landlord's portfolio.

We operate with military precision.

Our in house IT team works diligently to create better systems for us which in turn means better systems for our JV partners. We are currently working towards an IT system which allows our partners and ourselves to check remotely from any point worldwide whether it is from your office in London or your sun lounger in Barbados. One click on a website or our bespoke App and you can see the purchasing, renovating, lettings and sales as well as graphs and statistics of company in house records and any relevant news. This level of transparency in today's market is essential and allows you to track every micro detail and know where your money is at any one point.

Be exceptional.

Go the extra mile. Nothing in the pursuit of excellence is too far or too strange. So as long as it is moral, ethical and legal we will go there. If it means an extra 50p week per room we will go there as the compounding effects of small changes can often be staggering in the long term.

The great thing about these principles is they work at any time in any market and can be applied in any cycle. These are the core elements which have allowed us to take advantage of some key conditions the recession has presented i.e. an abundance of stock from motivated sellers where a discount has never been easier to achieve, an abundance of cheaper labour as unemployment reaches all time highs, an overwhelming demand for rentals from students UK wide and from families who cannot afford to get their foot on the property ladder. Add to this the highest appetite ever for high yielding asset backed investments fully managed and maintained with a long term capital strategy and you have the Castle & Gatehouse Joint Ventures.

Managing Risk
Highlighting the risk management process we have in place.

It is important to outline any risks which may be involved in all of the aspects of what we do. All investment carries risk and altough it is fair to say that our joint ventures are low risk in terms of capital default, they are not risk free. We manage the risk by a simple, strict process:

1. The investment capital sits in your bank, not ours, from day one.
2. A property is sourced in an area we know we can both rent and sell to an investor who wants to buy a tenanted property from this area.
3. The investor is lined up to purchase this particular property before anything begins and is sent the property fact sheet with a RICS report to say what the purchase price will be, which for us, is equivalent to the end value after renovations. They will also be sent the rent we expect to receive as well as the yield.
4. At the point of purchase the house is in your name from day one.
5. The property is always bought at a discount meaning you have made equity on day one
6. The renovations money is sent in staged payments to mitigate as much exposure for the investor.
7. Each stage of the renovations can be checked by you personally.
8. Tenants are lined up for the property using our show home nearby whilst renovations are being carried out to ensure the letting is seamless. When the contractors leave, the tenants move in.
9. The purchasing of the asset by the end buyer begins during renovation in many cases with those investors we have done business with many times over and who trust we do not miss on end values.
10. The property is sold and the profits are divided as per the contract.