An online platform claims it has found a new and easy way for investors to become landlords, describing itself as ‘PayPal for real estate’.
Dot sets up a company for investors, meaning they pay corporation tax rather than income tax on rental earnings - a large number of existing landlords have already incorporated, taking advantage of similar tax benefits.
“All Dot properties sit within their own pre-financed, tax efficient structure; the Dot Container. This allows us to provide the first ever point-of-sale mortgage (our Dot Instant Mortgage), saving a typical investor the usual two to three months of back and forth they’d encounter when trying to arrange traditional financing” explains Lucy Sharp, a co-founder of the Manchester based company.
“The result is the ability to purchase a Dot investment property instantly online with just a 30 per cent deposit. Notably, our Dot instant mortgage is available to investors globally, subject to them clearing anti-money laundering” she continues.
The Dot mortgages levy an interest rate of 4.99 per cent although the firm is reported to have said it expects many of its investors to remortgage with specialist providers at lower rates.
Dot subsequently manages each property through its lifecycle, using short-term Airbnb-style lets during voids in long-term renting, to optimise income.
The investor pays up to £5,000 for a furniture package and £500 to £1,000 a year for Dot to file accounts and cover other compliance issues. Service charges are reported to be at least 10 per cent of the rent.
Dot says it has successfully piloted the model in Manchester and says it is now looking to partner with property developers and portfolio landlords in other major cities across the UK.
The Financial Times says Dot is expanding to the US this year and targeting locations where millennials move to, having been priced out of big cities.
“Once it has greater scale, it could provide a secondary market in Dot companies. Until then, investors wanting to leave could dissolve the company and sell the house” says the FT.