Novyy is a digital platform at the crossover of Real Estate Shared Ownership and Asset Management. Our business model combines FinTech, PropTech, WealthTech and Asset Management. While our initial intention was geared towards cross-border home buying, we found a bigger opportunity existed in the property investment space which has a bigger scope for innovation and category creation.
Our medium-term vision is to have 10,000 rooms across key markets, owned by our clients, managed by us, and used by students, young people, young families, new workers, migrant workers, temporary workers, and anyone else who is looking for quality walk-in accommodation at affordable pricing. Our end game is to provide stable, income generating assets to our clients who have the potential for significant equity multiplication over medium to long terms. We strongly believe in wealth creation for everyone. Once we have achieved 10,000 rooms, we’d like to add a 0 to our next goal.
Novyy's Business Model can be divided into several parts for ease of understanding: a) Sourcing of Assets b) Investment c) Asset Management d) Wealth Creation For our investment clients, Novyy is a 360-degree platform provider for property investments. For our consumption clients, Novyy aims to be a benchmark in the private renting space – the ideal home before they can buy their own.
Our core objective for our clients can be classified in two categories:
a) For clients who invest in our assets – Our objective is to achieve (a) stable financial yields annually and (b) significant equity multiplier over time. Our 2-prong approach will help our clients generate an ongoing income as well as inherit a bigger pot that not only beats inflation but also contributes to significant life events. Our core objective is to help clients start small and build big – we do this by lowering the entry barrier so that you do not have to wait for that big deposit traditionally required to play this game
b) For clients who use our assets – We strongly believe that today’s users will be tomorrow’s investors. We’d like all our tenants to be elated with their stay at Novyy Rooms and Novyy Homes so that their word of mouth becomes viral for us, in favour.
Our platform company charges a one-time arrangement fee of 4% which is inbuilt in the acquisition cost of the asset. When compared with standard acquisition models, our arrangement fee is half or less than what one would have paid multiple parties to put together a transaction of this nature. In our case, the client has only one party to deal with – i.e., Us. In addition, we charge an ongoing 1% Asset Management Charge which is calculated on the value of the asset or NAV (Net Asset Value). This helps us take care of our operating costs. Our Asset Holding Company is entitled to a 25% share of the capital gains of the asset – i.e., the Carried Interest.
Majority of our financial interest is embedded in the Carried Interest in assets thereby aligning our clients’ interests with ours. For every £ that our clients make, we make 25p which incentivises us to make more for our clients. For us to continue adding value to Novyy’s Balance Sheet, we must continue to source the right projects and continue to keep them occupied at the highest possible levels to ensure appreciation of capital for our clients and Us. To further solidify our commitment, we will not charge AMC for periods where the Occupancy Rate falls below 50%. This will further align our incentives to that of our clients.
In the UK, every project will be held in a UK Ltd. Co., i.e., the SPV (Special Purpose Vehicle). In some cases, we may hold more than one project in one company, which will be clarified in the offering document, but this will be a rare occasion. Our clients’ investments will be made in the SPV via issuance of Preference Shares which carry financial and asset rights ahead of our Carried Interest. We intend to follow the same legal structure in other parts of the world, as we grow.
Every 6 months, we will distribute 90% of the Operating Income and carry forward 10% of the Operating Income to the Reserve Account on a cumulative basis. For example – if the Operating Income for H1 was £1,000, then £900 would be distributed and £100 would be retained in the Reserve Account. In the following period H2 – if the Operating Income was £1,000 (plus we would have £100 in the Reserve Account), the total distributable income would be 90% of £1,100, i.e., £990. These would be paid directly to clients’ nominated bank accounts by the SPV.
Lending is key to solidifying due diligence of any real estate project. It ensures the right price. With the decades of experience that Novyy’s team brings to the table, we believe that lending solidifies the transaction even if one does not need the money. Our lending arrangement is one-on-one and does not affect the portfolio. Each SPV is lent between 50 and 70% Loan-To-Value which helps in pushing up the Equity IRR of the Project. This is win-win for both our clients and us because lending ensures (a) we are as committed as our clients (b) we are buying at the right price and (c) we will be able to maximise Equity Returns for our clients.
We follow a detailed checklist while selecting projects, but broadly they should adhere to the following needs: a) The project should be in the vicinity of a captive letting audience – for example, within walking distance of a University or a Corporate Park b) The lettings value should be able to deliver target yields at 85% occupancy c) The interest coverage ration should be higher than 2 at 85% occupancy d) The breakeven should be at an occupancy lower than 60% or thereabouts e) The project should have a strong potential of 3X Equity Multiplier over the medium to long term
As is with all property investments, occupancy is a realistic risk to be mindful of. While we take all reasonable measures to mitigate these risks, they exist. We are mindful that projects should break-even at 50-65% occupancy to be deemed as fairly safe and profitable. To mitigate occupancy risks, we take the following measures beforehand: a) Location – we prefer walking distance / within 1 mile radius for most projects, or a short bus ride at best. b) Insurance – for unknown variables, we plan to keep all our projects covered by business disruption insurances. However, in the worst-case scenario, we might have to call on additional Equity Capital from existing or new clients, if occupancy is below Interest Coverage Ration for longer than 6 months, although looking at the market demands where UK National average is well over 80%, we believe it is highly unlikely for these projects to be occupied below sustainability levels.
Novyy does not intend to exit any of our projects at any time. We strongly believe that the property price multiplier cannot be beaten over time as the base amount remains the same for clients, but the market value changes based on the previous market value. The compounding effect is the largest denominator of stable wealth creation. However, we will be able to provide exits to clients who wish to cash out by (a) developing a secondary market in the near future and (b) via refinancing of the income generating assets. We are however, a platform for long term investors with patient capital who wish to have a fixed income product and do not look at us as a “get-rich-quick” scheme. Here’s why – rental yields usually remain stagnant over time with little variation. However, with prices going up, absolute rents go up with time. Therefore, a property purchased at £500,000 today with a 6% yield delivers £30,000 as annual income and the same property when worth £750,000 (in a few years) delivers £45,000 which is 6% of the property value but 9%yield on the investment value.
Subscribing to FI-To-Let is a matter of few clicks. Once you have set up an account at novyy.com and completed your KYC-AML verification, you can browse offerings available, look at their documentation, request a call for any clarifications, or simply subscribe via the Request Allocation section. Once you have requested an allocation, you will be taken to the Subscription Agreement signing page (or this would be sent via email in some cases). Once the project is entirely subscribed, we will issue Capital Call letters to all clients for final legal closing.
At Novyy, we have determined a lock-in period of 3 years after which clients can exit in one of the following ways: a) Trade on Novyy’s secondary market which should be up and operating by the end of 2023. Alternatively, send us an email requesting a cash-out. The investment can be cashed after the lock-in period at the NAV, less our Carried Interest. b) Sell it on your own to someone you know – the same valuation applies c) Wait for us to offer Exit Opportunities which we intend to do once every 3-5 years – this will be carried out via refinancing. However, we reiterate that our intention is to create long term wealth and FI-To-Let should be cashed out only when required. Property prices, especially in markets like the UK, never come back to the levels they were a few decades ago.
Novyy Co-Buy is based on the belief that second homes are now a necessity, not a luxury anymore. However, we also understand that second homes are not used for more than 5-10 weeks a year in most cases. Co-buying solves both these problems. If you have a million £ for a second home, why buy 1 second home when you can Co-Buy 5 of them in different countries. And if you have a smaller budget which has been keeping you out of the luxury second home market, here is an opportunity to start with one.
We have kept 2 weeks a year as non-use weeks leaving us with 50 weeks a year, which we are able to offer to a maximum of 10 co-buyers depending on the price of the property. This means, each owner gets to enjoy a minimum of 5 weeks a year at the property in a mix of peak, mid and off season, as well as key dates and bank holidays. Our reservation system is being designed to intuitively allocate spaces and each owner will be able to book from 1 week in advance to 3 years in advance. It is however important that owners try to plan in advance so that every family gets the break they deserve. At any given time, each owner will be able to hold upto 2 weeks only, making availability equitable to all owners.
The initial investment comprises the price of the property and closing costs vary from country to country. We will aim to provide you with the most accurate estimates during the launch period. These include local property taxes in the country, stamp duties, notary fees, legal and conveyance costs, and similar expenses needed to transfer the freehold from the current owner to a UK Limited Company. In some cases, Novyy Co-Buy may have to structure a local limited company in countries where overseas companies cannot hold freehold interests in properties.
Whether you buy a new home or an old one, some costs will be required to make it habitable to the highest standards. For new homes, we estimate a 5-6% cost of furnishing and fixtures. For resales, upgrade costs will include painting, finishing, furnishing, kitchen appliances and other installations required to give it an interior experience of the highest standard. Depending on the current status of the property, we estimate 1-4% as upgrades cost.
We want to provide you with a seamless experience of co-buying a luxury holiday home. This includes identifying the best properties suitable for this purpose across countries and continents, negotiating prices, completing due diligence, marketing it to other co-buyers like you and investing in technology to continue improving our offerings. This is expensive. Novyy Co-Buy is not an estate agent - it’s an experience. It is stress-free ownership for you!
No - we do not charge a commission to the Seller. Novyy Co-Buy is not an estate agent - our job is much more than merely introducing buyers and sellers of luxury villas. However, we might take properties that we find suitable for our platform, from estate agents who might be charging a fee to their clients who own the villas we decide to offer on Novyy Co-Buy.
Operating expenses are initially estimated based on the local prices for utilities, taxes, property management, maintenance, housekeeping - to keep the property in perfect shape every time you reach there. The estimates are then negotiated and finalised with local, independent, established service providers with strict SLAs (Service Level Agreements) to keep your experience at the highest level every time you visit. A well maintained property also reduces unforeseen maintenance costs and increases the value of your property.
We charge a simple monthly fee of £99. Once the sale is closed, it is our job to provide you with the experience you have signed up for. This fee helps us offset our ongoing estimated cost of servicing your requests, continue updating our technology and pay your Account Manager. The closing of the sale is just the beginning of our our relationship with you, not the end.
While we are committed to serving you for life, we are happy to leave the deal any time after 3 years from the closing date if all co-owners vote in favour of us leaving. However, with us leaving, the property will also lose access to all the services providers contracted by Novyy Co-Buy since we negotiate preferred, bulk rates with them in lieu of the volume of work anticipated as we grow. Thus, we recommend any problems that you might have which might lead you to want to remove us from your Novyy Home.
Great experiences require in-depth knowledge and an eye for detail. Novyy Co-Buy Administrative Fee is to ensure that all systems are in order. Look at it like a Chief of Staff whose job is to ensure that all the other staff are working properly. We will charge 10% mark-up and divide the total expense among the co-buyers, to be your “Chief of Staff” and ensure that all is well while you are away!
Signing up is simple via email and a phone number. For the next steps however, we must carry out due diligence on co-buyers before accepting them into the deal as a shareholder of a UK Limited Company formed by us. Standard KYC and AML checks will be performed once you have shown interest and are willing to put up a deposit to secure your spot.