18% profit from high-end Manchester homes
BACKGROUND
Vine was invited to raise capital for six partially constructed, 4-bedroom detached high-end family homes in Oldham, Greater Manchester. The development had approved planning permission for a total of 37 houses. At the time of invitation, buyers had deposits and finance in place.
OPPORTUNITY
With the site’s value reaching an anticipated £9m when fully completed, the developer required a £1m capital raise to complete the first six homes.
INVESTMENT METHOD
The investor’s capital would be repaid on a stage-by-stage basis, based upon the construction and purchase of each of the first five properties. This was based upon a 25% capital return per property (for the first four homes), and then a fixed interest payment of 14% upon the purchase of the fifth home.
It was anticipated that the total loan would be repaid inside 12 months, including a return of capital, and the fixed return of 14% interest. Financial protection was introduced for any delay in construction and the purchase of the five properties set at 2% per month after the initial 12-month term.
OUTCOME
Despite delays in construction due to the pandemic, the developer secured a new investor who had declared interest in the entire development on a long-term basis. This investor purchased the entire site while retaining the original developer to complete the construction of all 37 dwellings.
Having supported the £1m capital raise, investors received a profit of 18.66% return on investment (representing the fixed 14% return), and the initial capital. Default interest was also paid to investors due to the delay.
