Exit Strategy in UK Land Investments: Three Key Attributes

By: lm
Every investor understands the rewards of capital growth that comes with tying up their money for long periods, and this is especially true in the arena of UK Land Investments. What every investor needs to better understand is an intelligent exit strategy when and if the time comes to liquefy the investment.

The term "exit strategy" refers to the method by which the investor plans to dissolve his or her investment. The exit strategy plans when and how the investor plans to sell the investment in order to achieve the greatest financial benefit. Investors in any asset class must have a good strategy for exiting from their investment, especially those who are investing in land or considering an investment in land development. Although this article mentions UK Land Investments specifically, the exit strategy aspects discussed can be applied to investing in land in general.

There are three key attributes to consider regarding an exit strategy when one is investing in land or considering investing in a land development venture. The three key exit strategy attributes are as follows:

First:

A legal contract that is both detailed and clearly written is key to an effective exit strategy. The potential investor, as well as his or her legal advisor should have ample time to examine the contract and to discuss possible revisions before any commitment is made.

Second:

“Transparency" is key to what investors term a “point of exit" Point of exit refers to the value of the land when the buy-back is exercised. Such transparency can only be achieved if the land is valued by an independent chartered surveyor appointed by the RICS (Royal Institution of Chartered Surveyors).

Third:

Understanding the term “ransom stripping" is essential to ensuring that there is zero risk to the land investor in the contract. A “ransom strip" is a segment or piece of the land that may stop the development of the property if it is not included in the final sale of the land to the developer. This ransom strip can be as small as two meters wide along the entryway to the site. It can even be a small section of the land, which is integral to the properties entire design.

It is essential that option agreements exist between the land developer, and all landowners to make certain that the land can: a) be sold in its totality, and b) developed without obstruction from the previous owner. , The land value, and therefore the profit margin of the development can decrease if a single developer does not control every part of that site. Without the proper option agreements the land development could be even be delayed indefinitely.

Remember:

Careful exit strategy planning is essential! A good exit plan can help you realize higher profits from UK Land Investments and when investing in land in any location.

For more information about UK Land, Land Investment in the UK and UK Land Development please visit http://www.land-investment-uk.com

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