UK Buy to Let Property Investments Available
Property: 2 Bedroom Upper Flat in North Shields, NE29 7
Was on the market at £69,950
Now reduced to £64,950
Target purchase price £63,950 or better
Estimated rental value £103.14 per week £446.94 per month £5,363.28 per year (LHA two bed rate)
Estimated cost of works £3,250
Estimated value after works £75,000+
The Property and Area
This is a purpose built two bedroom, first floor flat which has been rented out for a number of years. It is now vacant and need some TLC.
The flat is well proportioned with a good sized functional kitchen. Other similar flats in the area have small kitchens and/or bathrooms, but this one is well laid out.
It’s in a nice tree-lined street, in a good residential area a few minutes drive from North Shields centre and easy access to Newcastle
In this area the standard property is purpose built flats, in two story buildings – they look like semi detached houses but each pair or terrace actually comprises self contained, purpose built flats. In this area they are mainly a mix of 2 and 3 bedroom flats, and semi-detached houses.
In need of some upgrading and improvement but other wise a very nice flat.
I own 2 similar flats in a nearby street literally with a couple of minutes walk and have had no problem in keeping them rented. This is a very good area with a good mix of owner occupiers and renters.
Value and evidence
The highest price achieved for a flat in this street before the peak was £102,500 (probably for a 3 bed) on 14th Sept 2007.
Land Registry records show recent sales in the street as:
4th September 2013 Leasehold £77,500
29th November 2013 Leasehold £77,500
Current asking prices in the same street are:
2 bed first floor flat under offer – asking price £79,950
3 bed first floor flat – asking price £79,950
2 bed ground floor flat – asking price £89,950
3 bed first floor flat – asking price £89,950
3 bed first floor flat – asking price £99,950 (Includes garage)
Required repairs and improvements
The property has been rented for a number of years and needs some TLC.
The work required is mainly cosmetic:
A new bath
Grouting around the bath
Tidying up built-in wardrobes and drawers
Redecorating through out
Total estimated cost £3, 250
When completed the property should revalue at £75,000 +
This is a lovely flat in a great rental area.
One of the big pluses for this flat is that it’s in an area which will also benefit from capital growth as the market recovers, as has already been evidenced by sales over the last 12 months.
Values are still below peak values and there is plenty of headroom for further future growth.
I have no hesitation in recommending this a s a ‘buy’ for anyone who wants some income and potential for capital growth.
This is perfect for some one who can buy now for cash and then remortgage to a standard BTL mortgage in 6 months time.
In the figures that follow I’ve assumed a 75% LTV. However, currently the mortgage Works will lend 80% to an experienced landlord (some one who has owned property for 6 months)
I’ve also assumed an interest only mortgage at 5% but terms offered will vary from lender to lender – it might be possible to get a better rate than 5%
You will need to make your own inquiries but here are some draft estimated/provisional figures:
Purchase price say £63,950
Plus legal fees say £ 780
Total costs £67,980
Revaluation after 6 months £75,000
BTL mortgage at 75% £56,250
Own money left in £11,730*
Increase in Equity in the property £75,000 – £67,980 = £7.020
*Doesn’t include costs of mortgage application
In addition there will be my finder’s fee of £3,000
Estimated rental value £5,363 per annum
Less management say 10% plus VAT £643
Less CP12 (gas test) £ 125
Insurance say £325
75% or £75,000 at 5% £2812.5
Total annual costs £3,905.5
Possible net cash flow £1,457.5
There will be one-off costs of letting fees, and EPC on letting
What to do next
If you would like to proceed with this property please let me know ASAP, I anticipate it will be snapped up very quickly because of the price and location.
I will then provide details so you can arrange to send £1,000 as a ‘reservation fee’, being on account for my finders fee – the balance of the finders fee will be payable upon completion of the purchase.
If the sale does not proceed because the vendor pulls –out, or for reasons beyond the control of the purchaser, the £1,000 will be fully refundable.
I will then put you in touch direct with a recommended local solicitor. I suggest you use a local solicitor as the Title of flats are in the NE post code area are usually arranged as what is know as Tyneside Flats. Without getting into legal nitty-gritty this is the standard way legal titles are arranged in the Tyneside area and are very straight forward to deal with if the solicitor has local knowledge. We tend to find out of area solicitors take time to fully understand the nuances and this can add unnecessary delay and possible costs.
Peter Jones B.Sc FRICS
mob tel 07970 900036