high yield property investment by adavo

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Step 1: Sign the Joint Venture Agreement
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

After completion of proof of funds and money laundering checks, the Joint Venture Agreement contract is agreed and signed by the investor and one of the partners of Adavo Limited.

Step 2: Place the agreed capital on account
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

£200,000 is allocated by the investor to a designated project. The funds remain in your account throughout the buying process. All that we ask is that you are available to release the funds as they become due (i.e. upon purchase or phase completion). Funds to purchase and renovate the property can only be released in accordance with the terms and conditions set out in the Joint Venture Agreement.

Step 3: Designate a project
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

The next suitable project available is allocated to this specific JV and its purchase is progressed. Professional fees relating to the purchase (such as RICS survey fees, searches etc) are paid from Adavo's existing cashflow prior to purchase. The property will be approximately £300,000-£500,000 in value (confirmed by an independent RICS valuation) and we will aim to buy it at below £30 per square foot as a guide. Typically we look for buildings around 25,000-35,000 square foot as the size eliminates a lot of the competition and makes the buying process easier.

Step 4: Complete the property purchase
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

Once all valuations, searches etc have been returned without issue and the conveyancing work has been carried out, we then complete the purchase. The necessary funds are drawn down from the holding account and the joint venture partner's legal charge to the asset is arranged on completion of the purchase. We undertake a purchase completion checklist to ensure everything is in the file and each joint venture partner can oversee this at any point.

Step 5: Renovate the property
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

The renovation works take place over an 18-24 month period on a phased delivery basis. On each project we would expect to see an uplift in value from the works themselves but most of the value is subsequently created by establishing the rental income over the next few years. The renovation budget can vary from £500,000 to £900,000 depending on size, condition and scope of works. In this example of a £1.5m project we would expect the renovations to come in around £900,000. It is crucial that the total budget be able to cover all costs associated with the project including land purchase, renos and all associated costs. The renovation costs are paid on a on-going basis as we complete each phase, with each project typically having 7-9 phases depending on size and layout. You will recieve a full set of photos showing the property's condition on day one and then periodically on every phase afterwards until work is completed. All JV partners are welcome to visit the property throughout the process and check up on progress and this is encouraged as it remains the best way to get a feel for how each project is progressing.

Step 6: Rent the offices
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

We begin to market each phase during the renovation stage using stock images from previous projects and typically will have a few parties interested or ready to move in upon phase completion. We will aim to progress the lettings of each building on an 'existing and next phase' approach as marketing too far in advance has a much higher attrition rate. From experience many tenants want to see the finished office, finished and furnished, before moving forward. We market the offices via the open market, existing networks and agent partners as a first stance but will typically find a good number of the tenants through direct marketing and networking. We are currently servicing a strong demand but retain a belt and braces approach; never assume your standards, make sure to drive them day by day. Ultimately a well presented, furnished office & building in showroom condition that is well priced and catered for against the competition is expected to let on the open market inside 1-2 months.

Step 7: Refinance the Building
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

Once the building has surpassed an 80% occupancy rate and established its projected income as tangible we will look to refinance the project onto traditional mortgage debt. At present we obtain our mortgages through Nat West and they are happy with both our figures, approach and standard of building works. We don't take this for granted and look to improve step by step and view each project as an opportunity to surpass our previous works. This is being validated in ever faster take up of each phase we release at present and all evidence suggests the market will support this readily in the coming years. The whole process is expected to take around 20-30 months from start to finish; i.e. from purchase to refinance.

Step 8: Return the capital to the Joint Venture partner
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

On the day of legal completion of the refinance the original investor capital is returned to your account. The whole process is expected to take 20-30 months from start to finish. The income has been paid monthly throughout the project but on the repayment of the original capital a final month's pro-rata payment is made.

In this example of a £200,000 joint venture with a 7.5% return per annum we would pay £15,000 income per annum or £1,250 per month. The profit for the 3 year term would be £45,000. The investor's return from each project is fixed at 7.5%pa for simplicity with Adavo taking the remainder. Our share will vary depending on the profit margin in each particular project. Logistically a fixed return has proven easier to for property investors to understand and the 100% capital security and guarantee prevents investors (who may not be property professionals) trying to judge which deal is better than the next. If each deal is fixed at 7.5% and all carry the same security overall then the system speeds up because there is little difference from one deal to the next.

Step 9: Repeat the process
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

We are aiming to grow a portfolio of 30 business centres over the coming years. We are building up a trusted pool of investors to provide the development funding for the start of each project and several of our existing partners have re-invested with us over the years with great success.

Adding projects adds stability. As we grow the portfolio becomes ever more diversified with 100s of tenants and many different and varied industries. Adding more projects only strengthens this diversification which is an intrinsic benefit of our business model. This diversification limits the effect of any movement in the general UK commercial property market as each property has 50+ offices and lots of possible tenants in terms of industry. For example, if Oil & Gas as an industry is diminishing then the renewables sector is booming in its place. This prevents the occupancy level and in turn the commercial value of the property being affected to any great extent by the general ebb and flow of the market. Even in recessions our flexible approach is a much a strength as a weakness because we often has people downsizing to save costs which we can offer. There is scope to grow in all aspects of the market.

It is important to highlight that reinvestment is entirely at each investors discretion. Whether they would like to re-invest into the next project or use their funds elsewhere is decided entirely on the investors own terms. With Adavo, the investor is in control of all the major decisions and timescales.

Step 10: Repay the capital
Example: £200,000 Joint Venture, 3 Year Agreement, Paid Monthly.

At the end of the joint venture agreement the capital is repaid along with the final month's income due. Ultimately each joint venture lasts as long as you want it to and, if you are happy to, can entail dozens of projects over several years. In this example the original capital of £200,000 would earn the expected £15,000 per year for as long as you wished to continue.


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high yield property investment by adavo