CASE STUDY: 2 BED BUY-TO-LET, North East
We often share before and afters of our property renovations, as they are WOW moments that (we think) people really engage with and enjoy. The transformation of a derelict property into a shiny, new, ready-to-rent family home is always going to please the 'Gram. However in this post I want to shine the light on the Underdog of our portfolio, a faithful little property we don't have to give much to, but it gives a whole lotta love back.
The pictures above are as we bought the property (pretty nice, right?) and a couple of weeks later after we got the keys a lovely family moved in. Easy.
Now don't get me wrong, 99% of the time we buy properties that make you want to de-louse after you leave (caveat: when we are buying with view to rent as a single-let). The reason for this is because we can buy them below market value, add the value ourselves and pull some of our initial money out on re-finance.
So this deal was slightly unusual for us - but the reason it worked was because we worked with a motivated vendor.
The vendor inherited this property, renovated it but had a change of heart by the end of the process and just wanted rid. So far, so good.
In went our offer at numbers that worked for us, and before we knew it it was accepted. Good market comparables suggested the property was worth £73k, we progressed at £55k. Happy days. And a good reminder to always offer.
We can't pull our money out of this through refinance any time soon as we haven't added any value through refurbishment, but look at the numbers below, would you do this kind of deal??
Purchase price: £55,000 (£18,000 discount on real market value)
Rent: £400 pcm
Money left in deal (deposit, stamp, legals): £17,351
ROI: 16.3%
25% discount? Yes please!
...
We're not going to build our portfolio on deals like this but likewise when opportunities to get great discounts on high-yielding properties come up, a good deal is a good deal, even if it's different to how we normally operate!
