Freehold Ground Rents
Not a lot of people will know that you can invest in freehold ground rents. Most of us will have paid a ground rent to our freeholder at the end of each year if we owned a flat that is, but not many people will have actually invested their money in buying these types of investments.
They are becoming increasingly popular amongst property investment companies as they generally offer a good return on the money invested and you can more or less guarantee that your ground rent will be paid each year. If you purchase the freehold of a building you will be the person that receives the ground rent income each year. If you decide that you want to try to manage the property yourself (good luck) you will normally be able to charge your lessee a fee for doing so but be warned you will have to deal with the day-to-day running of the block and be on call for any emergencies that need tending to.
Most investors simply just want to collect the ground rent each year without dealing with the management of the building and therefore instruct a management company to look after the building. As a general rule ground rents are paying a return of between 5% – 7% so whilst interest rates are this low they may be worth having a look into. I will be updating this blog regularly but if in the meantime you have a ground rent to sell please visit my site at http://groundrentsforsale.com.
Whilst the stock market and the commercial property market appear to really struggling the ground rent market is still very buoyant with many people waking up to the fact that ground rents are a safe bet. We are still registering lot’s of private individuals as well as corporate investors. Whilst ground rents are not very exciting, the lessee must pay the ground rent when demanded or possibly be penalised. Some investors like to carry out their own management and obviously make money from this aspect. There are specialist management companies that have been set up just to deal with the day-to-day management of these buildings. Block management has become big business in recent years as the management companies charge the lessee for any work that is carried out via the service charge. They can also insure the blocks thus enabling them to collect a nice commission from the insurer.