Part 4: How To Choose a Life Tenancy Investment

Choosing a property for your Life Tenancy Investment (LTI) doesn’t need to be complicated if you know the process. 

Following up on last week’s Part 3: What Asian Investors Should Look Out For In An LTI, Mark Blackwell, Co-Founder of MacBeale shares his expert tips on how to choose a Life Tenancy Investment in this exclusive series. 

WealthUp (WU): Life Tenancy Investments are a great opportunity for overseas investors. On that note, what are the 5 factors to consider when choosing an LTI?

Mark Blackwell (MB): When it comes to choosing an LTI, here are the 5 factors to consider:

  • Investment Price
    As with any property investment, the position held is not particularly liquid. Hence, not all of one’s money should be put into an LTI. At MacBeale, our investments start from just £50k and may go up to £400k.

  • Age of Tenants
    Secondly, the age of the tenants directly determines the proportions that an investor and a tenant pay towards a property. For instance, having older tenants would mean smaller discounts for the investor [based on average] as the tenants are likely to pass on earlier.

  • Local Area
    Similar to other long term property investments, it’s a great idea to find out what developments and activities are going on in the local area that may affect property prices. At MacBeale, we include a write up on the local area in each brochure that we send out.
The last factor to consider is actually what you should NOT consider when it comes to choosing a property – how the property actually looks. 
  • Share of Equity 
    Some of our Life Tenants like to retain a small portion of equity in the property. With that said, some investors prefer this option as it hints that tenants might have greater respect for the property and thus, are more likely to increase the value of the property. In turn, this increases the ROI value for the investor.

    However, some investors prefer not to share the equity in fear of probate issues when the tenancy agreement is over. I would say neither is particularly better than the other, but it is certainly a factor to consider. 

  • The Numbers
    The last factor to consider is actually what you should NOT consider when it comes to choosing a property – how the property actually looks. At MacBeale, we deal with genuine real estate all over the south of England that people actually want to live in and not fancy unaffordable homes in prime central real estate.

    When we send our brochures, we include a breakdown of all the numbers – that’s where the magic is. Afterall, this is an investment and when you analyse the numbers, then you see just how powerful Life Tenancy Investments are

What Now?

The first step for investors is to be kept updated on new properties as they become available. For updates, investors can register at MacBeale to get the latest information

Written by

Cheryl Toh

Last updated on

October 9th 2019, 4:04 pm

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