How Much This £115k Investment Property Makes Per Month 🏠

in 2021 we bought this property for £115,000 and it generates over £25,000 per year in rent in this video we are going to take a closer look at the numbers on this deal how much this property cost us how much it makes us and everything that we did to get the property from looking like this to like this and if you're new here I'm Leah and I'm AK and this is our Channel where we talk about property investing business and working together as a couple if you're watching this and you want to create passive income for yourself and maybe your family and if you are prepared to do all the hard work up front then click that subscribe button for more on starting or elevating your property Journey so let's get into the [Music] video now we'll first talk about finding the deal now people assume the best deals are off market and whilst this can definitely be true this was actually a right move find that's right there was no direct contact with the vendor no friend of a friend it was simply listed with an agent and AK saw it whilst he was scrolling I think on his lunch break and we immediately called up and booked ourselves a viewing for that very same day and we then placed an offer around 30 minutes or so after viewing the property it's worth mentioning here that the year before we had purchased another property just one street away from this one that we're talking about so we knew the numbers and what we would need to purchase this for in order for it to return what we wanted so because we were repeating essentially the same project we knew the tenant type and that there was high demand based on the other properties that we had nearby so let's talk about the asking price of the property they wanted 115,000 and our offer was £15,000 now you might be thinking that we maybe missed a trick here but the reason we didn't try to negotiate down was because there was a lot of people sniffing around it at the time and so speed was definitely our priority we knew that the numbers would work if we were to purchase this at 115,000 and we didn't really want to get into into a bidding wall we just wanted to offer what the family wanted to get the deal done speedily and the agent had told us that it was a probate property which was quite clear anyway from walking around it and if this is something that you're unfamiliar with then we'll link up a video in the cards above all about what probate property is we were also told that the house had previously been sold to another buyer but the deal had fallen through for us as investors that's kind of code word for speed is preferred because the family have now been like messed around so we just wanted to offer them the asking price and know that hopefully with the seller being motivated they would accept their next best offer due to being let down by the previous buyer and usually if you can genuinely vouch for Speed then you'll likely get an offer accepted fairly quickly so as mentioned previously we knew from the previous two projects which we completed in the area that the numbers worked if we were able to purchase at £15,000 what we mean is if we were able to purchase the property at 115,000 refurbish it at around about £60,000 and refinance it with a new mortgage and a predicted valuation of £160,000 that the rental numbers would still positively cash flow here is what we did to the property now as you enter the property we turned the very first reception room into a bedroom with an on Suite now all of these types of properties that we've been renovating are all very similar so once we understood the layout of the first one we then translated that into the second the third and so on as you go through into the second reception room we changed that into a communal space for the house the kitchen stayed in the same location and at the back of the kitchen becomes the off suite for one of the rooms upstairs upstairs we then have two double bedrooms both with on Suites and at the back of the house is a single bedroom that has exclusive use of the off Suite bathroom downstairs just past the kitchen the new entrance to the property becomes the entrance via the kitchen which is accessed through a shared Alleyway down the side of the house so how much did this all cost including this HMO refiguration let's take a closer look at the numbers we'll start off with the purchase price so as you know we offered 115 our offer was accepted we bridged 86,000 of it and we paid the rest using our own savings and money so if you aren't familiar with bridging loans then drop us a comment below as we'd really like to do a video all about that type of Finance because we use it a lot in our investment strategies but it is quite Niche and we aren't sure how many of you would want to see a video on it so please do let us know so as we said we purchased this property for 115,00 ,000 now the refurbishment costs including all the legals and the stamp Duty and all those bits came to a total of £ 62,3 73 now we purchased this as Leah said on a bridge and the bridge was 86250 just a small cave up this cash flow calculator doesn't go into absolute minute detail but it gives you an overview of pretty much what we're looking at here now the refinance on this particular property actually did come in at £160,000 that was the new value of the property so 75% loan to value was £120,000 so we had a new mortgage on this property for £120,000 now at the time the interest rate was £ 3.44% which meant that the monthly mortgage was £344 and that was an interest only mortgage the rent for this property was 2,120 that is as of today we have a 10% Management on there and the monthly operating expenses come to around about £530 a month now this will vary depending on the season because in the winter obviously the electricity and the gas is a lot higher than the summertime but this just gives you a bit of an overview as to what it currently looks like the cash flow then becomes £1,000 or just over £1,000 a month making the return on the investment 22% so just a note on finance as I was saying earlier we bridged our way into this deal and we used our own funds but then when it came to doing the refurbishments we actually needed to raise money from private investors in order to have all of the money needed to complete this deal if if this is something that you might be interested in in becoming an investor with us then please do reach out using the links Below in our description and we can talk to you a little bit more about that now here is a quote from our contractor which breaks down the cost of every part of the refurbishment this is something that a lot of you guys have asked for in previous videos so I just wanted to place this up on screen now because it is worth bearing in mind that the cost of Labor and materials have gone up since we did this project in 2021 but it's really helpful if you're new to property investing and you've got no idea what things cost now there were some unexpected costs which came up these were around about £4,000 on damp proofing once the builders did the strip out there was some Rising damp on the ground floor and we hadn't spotted this before purchasing the property because of course it was covered up it's also worth bearing in mind that we didn't get a survey done which is actually not something that we would recommend you can watch some of the videos of the refurbishment process on our video which will link up in the cards above now to be honest even with the survey we would have just paid an extra $450 ,000 to find out that we had damp which we had already discovered anyway and then treated it so we' spoken about this in our mistakes we've made as investors which will also be linked up and you can watch that video after this one so then we got the property refinanced which AK showed you earlier in his spreadsheet and it did come out at £60,000 we pulled 75% of the equity out of the property we paid off the bridging loan which was around £86,000 and this all happened in the space of about 6 months because the bridging loan only lasts for 12 months and then you it's a short-term lending so you've got to do the works get your remortgage and get that paid off so once all the fees were deducted solicitors were paid and debts were paid we were left with £33,000 864 which I'll show you here on this completion statement that is what landed into our account after the refinance was done and after that it was a case of moving on to the new mortgage and getting the property rented out now obviously that money that Leah is talking about that lands in our account can then be used in any potential projects in the future and be reinvested in those so in 2021 the rent was actually a little bit less than this but as AK showed you earlier the total figure of the rent right now in 2024 is 2,120 per month and it's broken up like this one of the rooms rents for 550 next one 545 next one 520 and the smallest room at 505 per month so that's £ 25,44 per year gross rent and as always with HMO properties bear in mind that this is an all bills included property so we pay for things like Cal tax the utilities such as gas and electric and internet as well and that's just something to bear in mind when you are looking at your costs as well so we hope you've enjoyed this video uh thank you so much for watching all the way through to the end if you are interested in elevating or starting your property Journey then do click on the link below which will take you to our website www.pr couple. co.uk where we'll be sharing lots of free resources and helpful tips and if you haven't already please remember to like And subscribe and we will see you in the next one take care [Music] byebye

Channel: Property Couple

Views: 6,995

Keywords: uk property, uk real estate, uk property investor, how to start investing in property, buy to let, HMO, hmo conversion, property investing, UK real estate, wealth building, property investment tips, real estate entrepreneurship, financial success, property portfolio growth, financial freedom, UK property market, property investment strategies, entrepreneurial journey, real estate partnerships, business and life balance, personal finance UK, property

Id: xYdpmXqqQH4

Length: 9min 27sec (567 seconds)

Published: Sun Feb 11 2024