Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.

Landlord Invests in 10% Loan Note Instead of Buying Another Rental

A landlord has shared his decision to invest in a 10% fixed coupon loan note rather than purchase another rental property, according to a report by Property118. The article outlines the considerations faced by landlords after selling a property, particularly regarding how to use the proceeds.

The landlord describes the process of selling a rental property, including repaying the mortgage, accounting for tax and selling costs, and receiving a substantial sum. He notes that buying another rental would recreate the work and exposure he intended to leave behind. Instead, he sought an alternative that would provide regular income without the responsibilities of property management.

The article details the landlord's choice to invest in a 30-month company loan note with a fixed annual coupon of 10%, paid quarterly. He states that the high fixed return and defined term were attractive features, especially for someone accustomed to regular rental income. The landlord emphasises the importance of due diligence, noting that a high coupon should prompt careful assessment of the business, its profitability, and its ability to repay at the end of the term.

The company behind the loan note provides specialist mortgages to older homeowners, including Retirement Interest Only (RIO) mortgages and lifetime mortgages. The landlord highlights that the company lends against residential property and serves borrowers who may not be well served by mainstream banks.

The article includes a risk warning prescribed by the FCA for promotions relating to non-readily realisable securities, and notes that Property118 may receive a commercial introduction fee if a reader invests. It also states that Property118 does not provide regulated investment advice and that such investments are high risk.

This case may be of interest to letting agents and inventory clerks monitoring trends in landlord investment behaviour and the alternatives landlords consider after selling rental properties.