regular client of ours came to me last August with a property he had found at an auction in Derby. The conversion to 5 flats from a Victorian town house had been done badly, and the client could see loads of potential with this project with it being in such poor condition (as you can see!)
He bought this property for £198,000 at auction, with the regular 28 days to complete. Everything was going well until the valuation came in at £130,000, so far lower than anticipated, so we had to change lenders…with a week to go! We love a challenge at Baya and have never missed an auction deadline (touch wood), so true to our word we changed lender and completed on the final day! With a new desktop valuation, we were able to lend the client about £130,000 on a rolled-up bridge.
The client carried out extensive works to the property, creating an additional sixth flat in the basement (with planning permission) and a dormer extension to one of the flats, increasing its size from under 30m2 to a mortgageable size. The property was stripped back to brick with a high-end finish to attract professional tenants. The total refurbishment cost came in at a total of £120,000. Inevitably, this renovation went over budget and timescale however, they completed at the and April and we had a new valuation completed.
The valuation came in at £450,000, exactly as the client estimated and he was over the moon! We were able to refinance at 75% LTV, giving the client an additional £200,000 after his bridge was paid off. This has meant that he is going into his next project having taken all his money out of this one.
As a long-term investment, the rental for the flats comes to a total of £3,150 pcm and the mortgage is roughly £1300 a month so even with deducting 15% for voids and maintenance there is still over £1300 profit to be made each month. This goes to show that with the right due diligence, power team and access to the right lenders there are great deals to be done – even in this market!
