Case Studies

Here are some examples of capital outlay and corresponding returns achieved by following our model of property investment in great yielding areas of the country. We all know that there are no guarantees and things can go wrong. You should always seek independent financial and legal advice before making such an investment. The examples here are to demonstrate that a different approach can bring some promising results.

Case One

This 6-bed student HMO (House in Multiple Occupation) in Huddersfield was on the market for £140k. Working with a joint investor, it was secured for £118k. With a spacious interior and magnificent high ceilings, the potential was evident straight away - albeit significant refurbishment was required. The 6-bed space was extended to an 8-bed property by converting the derelict cellar, which had it's own windows and external access, into 2 bedrooms and a shared bathroom.

This is how the figures look:

Purchase Price £118,000
Fees and costs £20,852 (including sourcing, legal, SDLT and bridging fees)
Renovation cost £65,500 (approx.)
Project management £4,000
Total £204,352

With the renovations complete, the property revalued at £220,000.

Fully occupied this generates an income of £720 per week (8 rooms @ £90 each)

720 x 48 weeks (to allow for voids) = £34,560 per year GROSS income

As the investor wished to build a property portfolio the next step was to go for an 75% commercial mortgage on a bricks and mortar valuation, leaving 25% equity in the property.

Taking into account the running costs of the property, plus mortgage repayments, this provides a monthly income in the region of £1,200 NET. The income is shared on an equal basis.

Case Two

This large 5-bed Victorian property is near Liverpool. The property was in a very poor state and was bought at auction for £100K. The objective: to convert it into a high end 7-bed HMO, aimed at professionals. 16 weeks were set aside for the builders to complete works.
This was another joint investment. On completion of the renovation, it was refinanced with a commercial mortgage providing the optimum valuation enabling reinvestment in the further property. The private investor will have put in around £160-170,000. After taking account of running costs and the mortgage repayments, both of us should receive around £500-550 NET per month each. With the mortgage in place most, if not all, of the original sum will be available to reinvest.

This is how the figures look:

Purchase Price £100,000
Fees and costs £14,690 (including sourcing, legal, SDLT, and bridging fees)
Renovation cost £64,641
Revaluation: £235,000
Annual Gross Income: £35,700
Net Income per month: £1,177
50% investor share: £588.50

Amount of equity left in the property (after 70% LTV commercial mortgage): £11,700