Maximising your Return – Step 3
“How Do I Make the Best Return On Investment?”
One of the first rules of business is to know your breakeven point. In property, this can happen on your first deal…as long as you know what you are doing! We are always amazed at how few people really know their numbers when it comes to property. At Why Property Works, we teach you what to know about how to run each property as a proper business. You will know exactly what each property will bring in for you before you spend a penny on it. This massively reduces your level of risk and enables you to invest with your eyes wide open.
“If appropriate, you’ll have the rare opportunity to work with one of the UK’s top fully qualified and professionally run sourcing and refurbishment teams”
If you decide to work with us, you can expect only the very best level of service. We believe in doing things properly. Doing a half-hearted job can end up with half-hearted results and a whole heap of headaches along the way. How many times have you heard of property ‘horror stories’ of damp, disrepair, tenants from hell and worse..?
“With our approach to property acquisition and refurbishment, you minimise the risk, maximise the return and build your portfolio in a safe and sustainable way”
Whatever your starting point, we work with you to come up with the solutions needed to start or continue your property endeavours. And remember…we will only work with you if we know we can help.
See below for an example of our work…
The Purchase
This client was able to release equity from another property to raise the capital needed to buy this project.
The property was purchased well below market value as it needed a complete refurbishment. It was a repossession and hadn’t been touched for quite some time.
The Vision
The vision for this property was to convert it from a 3 bedroom to a 4 bedroom property, which would enhance its value as well as making it more desirable to let. The refurbishment programme included ripping everything out (we mean literally!) and starting again.
The Refurbishment
There was a massive amount of work to be done and the transformation is always exciting to see. All exterior walls and ground floor have had Kingspan thermal insulation to improve the energy efficiency and overall EPC (Energy Performance Certificate) rating. The property has been completely re-wired and the entire plumbing system renewed, including full Gas Central Heating. The walls were plastered ready for the decorating to really finish it off.
The End Result
What an amazing transformation! We think you’ll agree, the house is unrecognizable from the original pictures. The addition of a 4th bedroom works very well with the kitchen and bathroom giving the ‘wow’ factor, especially for a rental property. All our properties are refurbished to the same standard, with particular attention to detail and finish given to a property if it is to be ‘flipped’ (i.e. sold straight back on to the open market).
The Numbers!
| Purchase Price: | £32,500 | + |
| Refurbishment Costs: | £30,000 | + |
| All fees to Source, Purchase, Project Manage and Refinance | £8,600 | = |
| Therefore Total Money Into the Deal: | £71,200 | |
| End Value for Remortgage Purposes: | £95,000 | x 75% |
| Remortgaged at 75% LTV (Loan to Value) | £71,250 | – |
| Minus the Money Into the Deal: | £71,200 | = |
| Money Left in the Deal: | -£50! | |
| Rent PCM (Per Calendar Month): | £560 | – |
| Mortgage payments at 5.5% per month: | £327 | – |
| Monthly Operating Expenses and Management: | £112 | = |
| Total Excess Cashflow per month: | £121 | |
| Total Equity Created in the Deal: | £23,800 | |
| Total Cash Flow Created Per Annum: | £1,452 | |
| Return on Investment: | Infinite! | |
How Many of These Would You Like?!
