The project took place in record turnaround time – four weeks from date of purchase to the tenant moving into the house.
Overview of the CJ21 Properties project
The property is in Boothtown, a suburb of Halifax, an area with a strong rental demand due to proximity to good primary and secondary schools. The deal was conducted off-market and the investors first made their offer on the property over a year prior to purchase. The investors agreed to fit in with the owner’s timeline regarding the sale. A completion date was agreed and postponed twice in the eight months leading up to completion and eventually a firm date was settled on for the end of June 2019.
The purchase was financed through a short-term bridging loan from Shawbrook Bank, to be converted to a BTL mortgage once the work was completed and the property tenanted.
The investors carried out light refurbishment work, including installing a Damp Proof Course (DPC) on the ground floor, a new boiler, insulation in the loft bedroom area and a complete redecoration top to bottom with new carpets. From time of purchase, the investors were able to carry out the works and get a tenant in place within four weeks.
Costs and Return on Investment
Purchase price: £58,500
Sourcing fee: £3,000
Stamp duty: £1,755
Legal fees: £900
Finance costs: £1,200
Cost of works: £6,485
Total Costs: £71,840
Value after refurb: £80,000
Rental per calendar month: £495
(Rental per annum: £5,940)
Gross yield: 8.26%
Mortgage @ 75%: £60,000
Cash left in: £11,840
Mortgage payment per month: £175
Return on Capital Invested: 32.5%