So its 2016…can you believe it!?! I don’t know about you but I’m raring to go this year. I had a lovely long break over the Christmas and New Year period which I think most of us need to take each year. Switch everything off, tell everyone you’re offline and make the most of the rare ‘quality’ family time with no distractions. It was difficult at first but I got the hang of it as soon as I tasted my first mulled wine!

2016 is going to be a good year. My investments are falling into place, I’m giving investors a fantastic return on their money and I’m excited to grow the business and do more and more. I wanted to tell you a little bit about one of the projects I’m currently working on in Yorkshire so that you can see the kinds of returns you can get in the north if you’re investing for cashflow as a priority over capital appreciation.

I completed on a 6 bed student HMO (House in Multiple Occupation) in Huddersfield just before Christmas. It was on the market for £140k and I secured it, along with an investor, for £118k. A good deal I think you’ll agree! When I first saw it I loved it as it’s MASSIVE. Huge high ceilings with windows about 6ft square, but, it needs a lot of work! Although it’s currently a 6 bed we spotted the opportunity to make it into an 8 bed as it has a derelict cellar (with windows and external access) ripe for conversion into 2 bedrooms and a shared bathroom. Needless to say that will make a difference to the cashflow of the property and therefore the return on investment. So how do the figures look…..?

Purchase Price £118,000
Fees and costs £10,000 (including £3,500 sourcing fee)
Renovation cost £40,000 approx.
Project management £4,000
Total £172,000

Revaluation £215,000
Mortgage @80% £172,000

So, that means that once we’ve done all of the renovations, the property will be worth approximately £215,000. If we then get an 80% commercial mortgage just on a bricks and mortar valuation then we can pull out every single penny invested, leaving no capital tied up in the property. We will then own the property with 20% equity effectively for free! But how much income will the property give us each month?

8 rooms @ £90 each per week = £720 per week
720 x 48 weeks (to allow for voids) = £34,560 per year gross income

We estimate that taking into account the running costs of the property and the mortgage repayments then we should get a monthly income in the region of £1,600 NET PER MONTH. You don’t need many of those in order to replace your income do you? And the beauty of it is that we have the capital back out so that we can go and do it all over again! Happy days!

I would love to share with you more on how I do this and so if you do want to know more then please don’t hesitate to contact me. You can email me on rebecca@rebeccasmithpropertyservices.co.uk and I will generally respond within 24hrs. Please do get in touch!