[Case Study]
Full refurbishment and resolution of a lease issue saw 29% net ROI
Perfectly positioned a few streets away from Southsea Common and the beautiful stretch of Portsmouth’s Southsea beach. This two bedroom flat was a real find in a desirable area.
On first appearance the flat needed some TLC but also came with a very short lease of 62 years. We were told that there was an issue in getting it extended. Following extensive scrutiny of the legal documents, digging around for information and thankfully having a very good relationship with our solicitor we discovered that the issue was in fact dealing with a share of the freehold which was much cheaper to do. With the knowledge and guidance from our solicitor we were confident that the property was a good option to us.
The property went to auction in February 2020 and when the hammer fell we secured it for £121,000 , some 30% below market value.
Originally the plan was to purchase the flat, carry out a full refurbishment and put the property back on the market within a 6 month timeframe. However due to COVID and the unknown restrictions that were being spoken about regarding home purchasing at the time, we decided to implement plan B.
Plan B strategy
Having extensive experience of the rental market and already renting properties in the Southsea area. We were confident that the calculations we had made prior to purchase. Allowing for the refinance and rental of this property as a suitable exit strategy for us and our investors.
In less than 2 months the flat was fully refurbished and the lease extended. It was then later revalued at £180k by the new mortgage surveyor. As a result this has left less than 22% of our original investment in the property. Allowing us to pay back investors and take the additional funds onto our next project. Within 3 months from our start we had this fully tenanted by two young professionals. It is bringing in a gross return of £875 PCM.
