Dot Residential | Instant property investment
Gray Stern, founder and CEO, shares how Dot Residential allows investors to become residential landlords at the click of a button, with tenants ready to move in.
Name | Dot Residential
Target audience | Investors and tenants. When an investor purchases a property, it’s put up for rent and the Dot team manages the tenant experience throughout their stay.
Price | Flats available for investment start from £81,060. Dot manages the tenancy of each building, and residents can expect to pay a premium of around 20% above market price. The startup furnishes the buildings to a ’boutique’ standard, and covers the cost of utilities, amenities and a weekly cleaning service.
Challenges | I founded Landbay in 2013, a specialist buy-to-let mortgage lender based in London. There he witnessed a shift from the amateur, dinner party landlord to a more professional, regulated industry where portfolio landlords and institutions significantly increased market share. This has been driven by various legislative changes, particularly around tax and compliance. Major institutional money is now moving into the sector, typically developing large built-to-rent projects that proclaim to offer a better standard of accommodation and service for residents.
Solution | Dot allows anyone to buy designed investment properties online with a click of a “buy with Dot” button. When you buy a Dot home, we create an individual special purpose vehicle, or SPV, that contains your asset – meaning your property is pre-financed, interior-designed, tenanted and managed, all within its own corporate structure. This allows the investor to pay corporation tax at 20%, rather than income tax of 40%.
We aim to remove the time, friction and effort of being a professional property investor, while leveraging cost efficiencies through the transaction to deliver cost savings that can be reinvested back into our homes.
To Buy with Dot investors choose their property, complete anti-money laundering (AML) and know your client (KYC) forms, pay a 30% deposit and it’s theirs, inclusive of mortgage financing, in minutes. The instant mortgage carries an interest rate of 4.99% with expected yields of around 4-6%. Investors are predicted to eventually remortgage at lower rates.
Whilst our first product is a point of sale mortgage for investment properties, we believe there is no reason that our system can’t be applied to all types of mortgages in the future i.e. if I want an instant mortgage to buy my own home online.
Dot is a tech platform that moves a property through its entire lifecycle. We manage the customer journey, not just the mortgage, but all the other pain-points you encounter during the property transaction: sourcing, analysis, legal/conveyancing, insurance, tax and compliance, interior design, resident onboarding and full property management.
We also work with the Big Four accountancy firm EY to ensure container tax compliance and reporting is completed to a high standard, charging landlords £500-£1,000 a year for the service.
For Dot residents we want to transform the standard of rental accommodation through design and customer service, and offer a flexible rental solution for global tenants. We will offer short-, mid- to longer-term tenancy options at every Dot home, with access to amenities from established brands such as Eve Sleep mattresses and Nespresso coffee pods.
Dot has partnered with lettings software Goodlord for resident onboarding, and will look for other solutions to integrate to enhance the company’s offering.
Results | The Dot team has raised $3m in seed funding so far, allowing the startup to acquire and manage four properties in Manchester, with a 12-unit block in Salford and six units in Liverpool Waters due to be completed soon. The plan is to expand to other cities later this year including Leeds, Birmingham, Bristol, and Durham.