The structure of ownership is simple and well established. Each consortium is set up as a UK Limited Liability Partnership. Members (partners) can be individuals, companies or trusts and can be resident anywhere in the world - so there is the opportunity for tax planning if appropriate. The property LLP is registered at the offices of a major firm of property solicitors who oversee the property purchases, all legal matters, and who act as a sort of "company secretary" for the partnership.
The overall responsibility for the management of the partnership is by way of regular partnership meetings, but the partners appoint a managing agent to carry out day to day activities, including selection of properties for purchase, on their behalf. All partners get regular financial reports and are involved in planning property acquisitions etc. (if they wish).
If you have read the information page for LLPs you will see that one of the drawbacks is that LLPs cannot normally get more than 75% loan to value and this makes it problematic for individuals who want to wring as much property as possible out of their available money. However, this isn't such a problem with a consortium which by its nature will have more liquid capital and thus be able to fund a mortgage based on 75% of the purchase price whilst it remortgages to release capital.
An advantage too is that by putting down 25% deposit the LLP is able to take advantage of opportunities to pick up the last one or two units in a development at really keen prices. Developers want almost immediate completion and will give massive discounts. We do get these offered to us but we never put them on the website as they go almost immediately, usually to corporate investors with ready cash. As a member of a consortium you would benefit by partial ownership of such properties
Another advantage is that the renting out of the properties is managed by one or more rental agents, who having a number of properties to manage on behalf of the consortium charge less than they would do for small investors.
All in all, investing via a consortium is an ideal way to maximise your investment at reduced risk. A consortium with 20 or 30 properties which has one or two empty isn't going to hurt as much as an individual investor with 2 or 3 properties one of which is empty!
For more information please email us.
To consider the pro's and con's of different types of company structure including trading as a Limited Liability Company in greater detail visit the following website: AR Corporate - Types of Company or download the following document Why Trade as a Limited Company.
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