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Messages - CryptoBrit

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Thank you for the clarification. One more.. If half the profit is being used to buy more property should the 19% tax be calculated on the full amount? Apologies if this is a naive question.

Yes that's correct. As you can see from the table, the Net profit has tax taken from the full sum. The remaining profit after tax is then split 50% for the buy back / burn and 50% for reinvestment in property which increases the portfolio size and the size of the buy back for the following quarter / year.

Ah. I didn't realise you would pay tax on 'profit' if it was used to buy more property within the same financial year.

Yes this was intentional. Obviously rents and property inflation are not a straight or linear line and tend to go up in "steps and stairs". We have used a low level for property price inflation as mentioned in the documents and rents generally outstrip property price inflation. For example, there are restrictions on student property in a number of towns (look up Article 4) which means while the value of the property could be seen to increase in line with national and local price inflation, rents can go up considerably more depending on supply and demand. Again our 3% airs on the cautious side.

Thank you for the clarification. One more.. If half the profit is being used to buy more property should the 19% tax be calculated on the full amount? Apologies if this is a naive question.

I notice in the financial model document that you have calculated the rent increase based on the previous years gross return which in turn is calculated from the property value including property inflation.

As far as I can see this would give a rent increase of 3% over the rate of property inflation (6%) giving 9+%. Was this intentional?

While it is impossible to tell the future, your figures are certainly possible. Some research into property price inflation over the past 30 years may show that this is on the low side. Also researching some of the properties that Kexgill have owned for more than 30 years and sold recently would project figures far in excess of your figure.

Thanks for your quick response. You've been so very patient!

Yes I see my mistake. You said that the yield increases over time because rents go up but of course the yield is calculated on the original purchase price not the current market value of the property. Would you say that rent prices are pretty much following the property value increase over time? IE rents go up by the same % as the property value or do they outstrip even that?

Thanks for your assistance so far. I am trying to estimate what the total property portfolio could be after 30 years.

With the current price of bitcoin of around £3300, if all kexcoins sell in the ICO at the minimum price that gives a portfolio of around £70m

Given a gross yield of 11%, costs at 27.5% of yield and rent increases of 4% p/a I've calculated a total portfolio value after 30 years of just over £600m

I just wanted to check, am I way off or is this in line with your forecasts?

Important update
After listening to the community we have great news to announce!
In addition to the buy back and burn policy we are now also offering a profit share to anyone who takes part in the ICO or that holds Kexcoin at the end of the buy back / burn period. If you do both, you benefit twice!
So how will it work?
When the ICO ends, we will take a snap shot (within 48hrs of ending) of all of the accounts that hold Kexcoins on the bitshares network making note of the account and the sum of Kexcoin held.
The ICO will be deemed to have ended either by selling out of Kexcoin or reaching the end date (14.59 UTC 14th October 2017).
In order to qualify you must hold Kexcoin on account at the time of this snapshot.
You hold Kexcoin at the end of the buy back / burn period (again a snap shot will be taken).
If you hold Kexcoin at the point of both snapshots you will benefit twice.
What is the profit share?
The profit share will be calculated as 50% of the increase in property value from the initial purchase price.
Simple example - if £50m of property is initially purchased and by the end of the buy back period the said property is valued at £110m the sum paid back to ICO participants and Kexcoin holders at the end of the buy back period would be £30m (£110m - 50m = £60m x 50% = £30m) Please note taxes and costs of sale would be deducted.
How will this be distributed?
The number of Kexcoin sold at the ICO and the number held at the end of the buy back period will be added together and the profit share will be divided equally by this number. It will then be paid to the accounts noted on the snapshots.

This is our thanks to all that support us and participate in the project.

WOW. That makes things really interesting.

I'm trying to figure out what the formula is for what you have described above. As far as I can tell it is....

Myshare = ((myICOKexQty + myKexQtyPostBB) / (TotalICOKex + TotalPostBBKex))  X (PropertyIncrease / 2)

Is that right?

Thank you for the clarification. Would you be able to give a rough estimate of that setup cost either as % of the ICO receipts or a £ figure?

A rough estimate would be around 3% for Legals, valuations, finders fee (if property comes through an agent), small improvements etc.
In addition to this there is then SDLT (stamp duty / land tax) that is 4%, so 7% in total as an estimate. These costs would vary depending on the size of the property purchased. These figures are also taken into account / included when calculating the gross return.

Thank you!

Are these costs included in the 25-30% of gross figure you gave me earlier?

I think you have some confusion as to the day to day running costs against the actual set up.
In order to begin the project we need to purchase the properties. There are a number of costs to doing this such as legals ect. We would regard these as set up costs and should be seen as one off costs.
Once the properties are purchased they then start to generate a profit and require management / costs which we referred to earlier. These costs are ongoing as you would expect.
The percentage return that we generate on a certain property will depend upon both of these costs (set up costs and ongoing costs). Gross profits would take into account the one off costs and net profit would take into account the management / reoccurring costs.

Thank you for the clarification. Would you be able to give a rough estimate of that setup cost either as % of the ICO receipts or a £ figure?

2. No, that's unrealistic / impossible. There will be other costs such as legal fees, searches, property improvement and other business expenses that will need to be covered before profit is generated. This being said, these costs would be regarded as small / minor compared to the bigger picture.

Are these costs included in the 25-30% of gross figure you gave me earlier?

A few more questions..

1. The buyback ends after 30 years but 30 years from when?.. the ICO, the first buy back etc. Will there be 120 buybacks in total?
2. Is ALL the money from the ICO put into property purchase or will there be other expenses that come from it?
3. 50% of profit is put back into buying property, but how long on average does it take for that profit to start generating revenue?

Thanks in advance.

Hey CryptoBrit,

1) Gross Yield - we have purposely been very conservative on this figure in order not to mislead. Gross yields are generally from 8% to 15% depending on the type of property purchase (PBSA or HMO) and can be higher in certain circumstances. As we are not using bank funding you could expect the net profit to be around 25-30% less than the gross. Please also note that this is now. Over time and as rents increase, both the gross and net figure will increase substantially.
2) We are unlikely to dispose of property however, if we did sell property (say for strategic reasons) the funds would be used to purchase more property - so yes!

Thanks for that reply (x2)

What is a reasonable figure to use as a % year on year rent rise?

Can you please tell me.
1. If the Gross Yield will be 8-12% What you expect the profit % to be (to calculate buy back value)?
2. If a property is disposed of, will the money go back into the fund for buying new property?


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