This was my first property deal and it wasn’t done within a limited company as the others were. There is many a tale to tell about this property, but here are the financial details.
Property details
The property is in the Prestwich, Greater Manchester area. It is a 2-bedroom apartment within a 6-apartment block.
Capital
On market for £73,000
Paid: £73,000 (before I learned you can negotiate).
Solicitor fees – £1200
Broker fees – £300
Stamp duty – £0 not applicable
Deposit – £18,250
Refurb Costs – £10,000
Total money down – £29,750
Cashflow (monthly)
Rent – £725.00
Mortgage – £363.23 (repayment at £3.65%)
Letting agent fees – 8% plus VAT – £69.60
Building Management fees – £85
Insurances – £0 (covered in management fees
Ground rent – £2.08
Pre-tax profits – £205.09
Return on Capital Employed ROCE = 8.3% (£205.09 x 12 / £29,750 x 100)
Yield =11.9% (£725 x 12 / £73,000 x 100)
Conclusions
This has been a great investment, after 12 years, the value of the property is now worth £147,000 and the mortgage value is £47,000 and 13 years remaining. I’ve therefore £100,000 in equity and the LTV is now approximately 32%.
I have the option of remortgaging in less than a year and if I revert to 75% LTV, I could release £63,250 of equity. I could then use this to purchase another two properties.
Alternatively, I could just let the mortgage run and be mortgage free in less than 13 years. I’m in no rush to make any decision, as it cashflows £200 per month.