[Case Study]
Creation of a second bedroom and full modernisation of the flat resulted in achieving over 150% ROI after refinancing.
Centrally located in a residential area in the heart of Portsmouth. Easily accessible to all of the delights that Portsea Island offers but without as much hustle and bustle that areas closer to the seafront have. You can also get much more property and space for your money in North End.
We were on the lookout for a property that follows the BRR strategy (Buy, Refurbish and Refinance). Meaning the property needs to be bought below market value and usually looks a bit tired. Have potential to add value through the refurbishment or creation of additional space. Then remortgaged allowing your investment to be pulled out. The property value would have risen due to the refurbishment.
The property
When we discovered this flat on Rightmove we immediately saw the opportunity to convert the large kitchen into a second double bedroom. By reconfiguring the layout and moving the kitchen into the lounge we created a modern, open plan kitchen and living space within the property.
Our offer was accepted in November 2018. The main delay during the purchasing process was the vendors taking time to find a suitable property to move into. This caused significant delays but we knew that the numbers were going to work for our strategy. By keeping in regular contact with our solicitor and the estate agent allowed us to pursue other properties whilst we waited.
A lesson learnt during this project was to have a good solicitor. Ours is second to none and informed us of what had been resolved rather than bringing us problems. There were challenges in communicating with the freeholder during Covid.
Finally the purchase completed in late July 2020. It had taken much longer than anyone anticipated.
Getting the property refurbished quickly was key. Covid measures were chopping and changing but we are fortunate that our builders, electrician and gas engineer form the cornerstones within REALM’s setup. Without their communication, forward planning and work ethic this small but sophisticated property could have taken much longer to complete.
The refurb was complete before the end of September 2020 and we were ready to refinance.
Outcomes
Refinancing can always be nerve racking, but we always try to underestimate what the property is worth. With this investment project we undervalued by £10,000.
This is one of our best deals to date! Though the whole project took a long time, the numbers speak for themselves. It was worth the wait.
Leaving just £3,512 of our initial investment in the deal after refinancing. Achieving over 150% ROI (return on investment). Private Investors happily received on average an 8% return on their money, paid monthly.
