Here is my third property deal breakdown.
Property deal breakdown
The property is a terraced house in the Bury area of Greater Manchester. The house was built around the 1880’s.
It was originally on market for £150,000 and the vendor later reduced it to £130,000. I then stepped in at this price, as the numbers stacked up now.
Upfront costs
Stamp duty – £3,900
Solicitor’s fees – £1,841
Upfront mortgage fees – £399
Homebuyer’s survey – £495
Deposit – £32,500
Refurbishment costs – £8,625
Total upfront costs – £47,760
Monthly cashflow
Rental Income – £900
Mortgage – £409
Management fees – £86
Ground Rent – £2 (Paid annually)
Gas safety check – £8 (Paid annually)
Landlords’ insurance – £35 (Paid annually)
Pre-tax profits – £359
Return on Capital Employed – 9.0%
(£359 x 12 = £4,308 – divided by £47,760 x 100)
Yield – 8.3%
(£900 x 12 = £10,800 – divided by £130,000 x100)
Conclusions
Overall, I am pleased with this property deal. Although the refurbishment costs were higher than anticipated, as I had to get a new boiler, I anticipate a payback within one year.