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What Is A Property Bond & Why Are They So Popular?

What Is A Property Bond & Why Are They So Popular

What is a Property Bond?

It’s a Bond Investment like all others but linked to returns from property. Bonds pay investors a fixed return over a set period of time. This is particularly useful if you know that you don’t need the money for a set period of time. For example, if you are 50 years old, then you still have 5 years until you can access money in any private pension that you may have. This might cause you to look at 5-year bond investments because you would be able to calculate your exact return and also the value of your pension when you reach age 55.

Why Choose a Property Bond as an Investment?

Protecting your investment is always the top priority. A Property Bond normally has a capital asset offered as security to the investors. Property Bonds also generate returns from a sector which is easy for the investor to understand. The development of property creates profit which is paid to the investors as agreed in a contract at the outset.

 

Can I Invest my Pension in Property Bonds Before age 55?

Here at The Landlords Pension we have helped over 1000 people take control of their existing or frozen pensions at any age to invest in property based investments. With regard to the pensions, these are usually arranged through the use of a Small Self -Administered Scheme also known as a SSAS pension. There are various reasons why people decide to transfer their frozen or existing pension schemes over to a SSAS, the main ones being the investment choice and flexibility offered by this type of arrangement, control over their own funds and the fixed returns offered in lieu of the volatility and uncertainty of equity-based investments, where the vast majority of peoples funds sit.

 

How Does a Pension Bond Investment Work?

Whether a bond is purchased through a trust such as a SIPP or SSAS pension or with cash funds the process is exactly the same and very simple to do. When the funds are available the individual can choose which investment bond suits their own personal requirements with regard to term, location and perceived risk. A legally binding contract is then produced specifying the investment amount, term, agreed fixed returns and the specific property or properties on which a legal charge will be secured to protect the investor.

 

Where Can I Invest?

The Landlords Pension only ever work with bona fide property development companies who have undergone extensive due diligence, have a proven track record on repayments of bonds in full and on time and offer a 1st legal charge on the property as security to our clients. As an example we have worked for many years with German property development company Dolphin Trust who specialise in the conversion of unused listed buildings into luxury apartments. This particular property bond currently offers 2 and 5-year terms with 11% and 12% per annum fixed returns respectively for capital growth.

Closer to home there are UK property bonds with 1, 2 and 4-year terms which offer a return of between 6% and 12% per annum. Again, these bonds offer a 1st legal charge on specific properties and have a proven track record over a number of years which confirms a 100% payback record of all investments made.

How Safe are Property Bonds?

Everyone has a different view and concept of risk. Some institutions will consider any investment in property as a high-risk strategy while promoting equity-based investments as a low or medium risk. On the other hand, many property investors would consider a property bond, with fixed returns and a 1st legal charge over the physical property as a low risk and unsecured stocks and shares investments as high risk.

 

Summary

Read more about property bond investments.

If you are looking for an alternative investment for poorly performing cash funds or wish to take control of your pension fund and invest your pension in the property then there is a straightforward and cost-effective way in which you can achieve this.

Find out more about how The Landlords Pension could help you grow your retirement fund and call us on 020 3907 8400 to speak with one of our experienced consultants.

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