Erdington, Birmingham, B23
VALUE OF WORK
£13,500
PURCHASE DATE
MAY 2024
TIMELINE
7 WEEKS
Before
Non-Habitable 2-Bedroom Property
This two-bedroom property struggled on the market, with no lender willing to finance it for first-time buyers. Partial renovation work had been started, but it was clear the previous owner lacked the expertise to bring out this property’s potential as a quality buy-to-let (BTL) or flip investment. Initially sourced for one of our mentee clients who ultimately chose to withdraw the property was offered to us directly by the estate agents, who trusted our ability to complete the acquisition swiftly.
When we viewed the property with our client, we identified the issues contributing to its market difficulties: patchy renovation work, unused materials left around, and a missing bathroom, which precluded securing a traditional mortgage. Upon our client’s decision to step back, we proceeded with the purchase ourselves for two main reasons: (1) to demonstrate that this property represented a solid BTL investment opportunity, and (2) to showcase the speed with which we could transform it.
We financed this acquisition through bridge financing at a competitive rate of 0.89% over a six-month term, fully confident in our ability to unlock this property’s potential.
No Bathroom
Poor Kitchen
Leaking bedroom patched ceiling
Dated and dark living areas
After
Project Outcome
We successfully completed the refurbishment within seven weeks, adding a new shower room, kitchen, carpets, and some light TLC. This project demonstrated that many properties have untapped potential experience and knowledge make all the difference. We tenanted the property at £1,100 pcm and secured a buy-to-let mortgage at 5.59% within five months, saving on a month of interest payments.
However, there were challenges. During refinancing, our lender’s initial valuation aligned with our estimate of £180,000. Yet, within 24 hours, they revised it down to £150,000. Leveraging our market expertise, we appealed and achieved a revised valuation of £165,000. Given the bridge finance timeline, we accepted this valuation, though nearby sales suggested the property’s value should not be under £175,000.
Exiting the bridge finance, we retained £24,000 in capital. With a total investment of £55,000 for the purchase and £13,500 for the refurbishment, some capital remained in the deal. However, we prioritize cash flow over sales, with a goal of strong rental income. The new mortgage is £598 per month, while the property yields £1,110 in rental income, securing a respectable ROI.