When’s the last time you got a 39% pay rise?

At a time when Barclays Bank and Banks in general are providing little interest or dividends for their investors, the FSA fined Barclays Bank £7.7 million for mis-selling to 12,000 investors that stand to receive £42m in compensation. Barclays pre tax profits rose 32% to £6 billion and paid Bankers  Bonuses of £2.6 billion, and their report showed total pay averaging £236,000 for each Banker, a total pay rise of 39%. So what are you doing with your money?

Propertyrush case study

Indeed it isn’t a fluke, nor is it too good to be true. Within the theme of success, here’s another great case study from our clients who have kindly agreed to share their 45% per annum return on capital (ROC) and experience of Propertyrush Ltd opening opportunities that they thought had been slammed shut by a drop in house prices. Although it is a commonly held belief that house prices had fallen off a cliff in the last few years, this is not the case.

“Imagination is everything. It is the preview of life’s coming attractions.” – Albert Einstein

Overview

Paul and Desra Brown age 47 and 50 respectively, live in Peterborough and started their buy-to-let adventure in September 2002, more than six years before Propertyrush was founded. However Propertyrush enabled Paul and Desra to realise the benefit of growth in their property value by £40,000 that added to the £30,800 rental income generated over that time, after accounting for letting fees and a BTL mortgage. That’s £70,800 in total or an equivalent return on capital (ROC) of 45% per annum.

Clearly Propertyrush Ltd had no part in Paul and Desra’s original deciding to purchase their first buy-to-let property, however we have since helped them develop their portfolio. Initially they came to Letsrush Ltd in August 2009 to find a new tenant. After successfully renting their property Paul and Desra looked at Propertyrush Ltd and joined in May 2010.

Considering their objectives to be financial independent, secure income and go touring when Paul is age 55, we reviewed their financial situation. Analysis highlighted an opportunity to reconfigure assets and allocate money towards building wealth. Though from their personal experience, performance of their conventional investments had compared poorly with their buy-to-let property.

First Steps to Financial Freedom

Paul and Desra had originally bought a 3 Bed buy-to-let property in 2002 for £60,000 at what was then, more or less the normal market value. In June 2010 Propertyrush achieved a valuation of £100,000 on that property allowing them to liberate £40,000 for the purchase of their next buy-to-let property, despite the fact that a neighboring property sold for £94,000 in April 2010.

Proof of that great valuation was confirmed when Propertyrush Ltd secured another fantastic purchase for one of our other clients, of which was effectively the same size and type property, in the same street for £76,500 just 4 weeks after Paul and Desra’s property valuation of £100,000.

Their rental will continue to be £625 per month and after accounting for the new BTL mortgage and letting fee, their rental income is £242.02 per month with £20,000 Equity left in there buy-to-let property. Better still, this property now owes them nothing, not a penny of their own money.

Effectively it’s cost them nothing and will continue paying them an income of £2,904.24 per annum, provide a decent home to a family that needs a safe environment; and more potential for capital growth in the next five years as UK communities grow.

Propertyrush then found Paul and Desra a 4 Bed terraced property, negotiated the purchase price to £85,000, arranged a £68,000 buy-to-let mortgage costing £291.25 per month, assisted with the conveyancing and surveyed the property. Paul is a builder and opted to refurbish the property himself.

Letsrush Ltd (Propertyrush’s sister company) rents the property at £825 per month. This nets £451.25 after the 10% letting fee of £82.50 per month and the interest only mortgage. Based on rental income alone the ROC is 21.66% per annum without consideration of any Equity gained by virtue of purchasing at the right price or property price growth.

Further thoughts

“You create your own universe as you go along.” – Winston Churchill

We should always remember that a challenging economy also creates incredible opportunity and excitement too. This is a further case of people taking control of their money away from insurance companies, banks, brokers and foreign markets by investing locally in the UK. Paul and Desra now have local accountability for their money, whilst providing decent housing and work for local companies and tradesman etc.

If you have pension funds, ISAs, Bonds, Unit Trusts most of these holdings are linked to Shares, Corporate and Government Debt in "The Markets" which are at best chaotic and at worst schizophrenic as Benjamin Graham’s "Mr Markets" is up one minute and down the next. (The Intelligent Investor)

Do you know where your money is invested? No I don’t mean the name of the bank, insurance company, fund or stock broker you signed your cheque over to. Do you actually know who handles your money on the ground, who profits from your money before you do, especially when the Wizard of Osborne’s Project Merlin appears powerless to stop banks squandering our profits on Bankers Bonuses.

Is your money in a country you like, is it in companies you like, is your money actually contributing to the economy or community in which you live or is it just being used for pure speculation by money brokers? If you care about these issues you should start thinking of different solutions for your money, wealth and family’s future security in the UK.