8% is Too Good to be True


I recently received a spam email inviting me to buy an off-plan, bulk standard apartment in the north of England. The headline was ‘8% net guaranteed for three years’.

I know that as I have become older, I have become more cynical about eye-catching headlines promising the earth.

I also know through experience that based on market rents and all the relevant costs, the net yield will not be 8%.

To achieve anything like that in the residential sector, you need to invest in a niche market, such as a multi-tenanted HMO – you would get it in a bulk standard two-bedroom apartment in a city centre.

Quite honestly, if you could, every developer would be developing them and offering the same guarantee – us included.

I once read a statement which said ‘we suffer because we know the facts’.

Knowing the trust facts should prevent you from making favourable or self-serving statements or promises that are incorrect or just downright false. That is the theory anyway.

If you don’t know the true facts, don’t make the statement. Guessing rarely works out well, and as for telling lies…

Why am I mentioning this? ‘If it sounds too good to be true, it probably is’ springs to mind.

High returns can be very appealing, but they have to be achievable in the sector if it is not to end in disappointment and recriminations. Make sure the facts stand up and remember: caveat emptor.


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