Over the next 4 weeks we are going to be providing content aimed towards our Buy To Let investors in a 4-part series of posts.  Each post will focus on a different area of Glasgow (South, East, North, West) and provide examples of investment properties which we believe would make good Buy To Let investments. We will also break down estimated costs and figures involved in the purchase and estimated returns via examples of comparable properties in our rental portfolio.
In this post we will look at 2 very different properties in the Southside of Glasgow.  A one-bedroom tenement flat in Holmhead Place, Cathcart which requires a light refurbishment and a three-bedroom cottage style flat on Kingsacre Road, Rutherglen that needs a more extensive refurbishment.

Property 1- Holmhead Place, Cathcart

http://www.rightmove.co.uk/property-for-sale/property-48697266.html

This property is on the market at offers over £55,000 and Home Report of £58,000.  It has been on the market since early June so at this point we would assume that the maximum figure we would need to pay would be £58,000 for the property ie Home Report Value.  Being on the market for 3 months there may be an opportunity to negotiate a purchase figure closer to the offers over price, but for this calculation we will assume the higher figure of £58,000.

Market Comparable

Earlier this month we listed a similar sized one bedroom on the same street at £475 (http://www.rightmove.co.uk/property-to-rent/property-68586854.html), it didn’t have gas central heating and was on the less favourable ground floor position, hence the increased estimated rental figure of £500 for this example property.

Investment
Purchase Price £58,000 (£14,500 deposit required, £43,500 loan)
Solicitors Fees £1000
Mortgage Advice £200
Stamp Duty (3%) £1740
Light Estimated Refurbishment £3000
Total £63,940
Total Capital Invested £20,440

Monthly Income
Rent £500
*Mortgage £145
Factors and insurance £50
Letting agent costs £50
Profit £255

*Assuming an interest mortgage of £43,500 based on £58,000 purchase price (75% Loan to Value) and repayments over 25 years at 4%.

** Useful Tool for this calculation http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results

Your annual yield would be your yearly rental income divided by the total purchase and refurbishment costs-
(12x£500)/£63,940 = 9.4%

Your return on investment (ROI) would be your yearly profit divided by the initial capital invested-
(12x£255)/£20,440 = 15%

 

Property 2- Kingsacre Road, Rutherglen

http://www.rightmove.co.uk/property-for-sale/property-50524944.html

Kingsacre Road is on the market for offers over £63,950 with a Home Report of £67,000.  It does require a more extensive refurbishment and there is mention of high damp meter readings on the front wall with an estimated cost of £3000 to repair.  The bathroom and kitchen look to be in OK condition but the ceilings in the bedrooms, hall and living room have polystyrene coverings which are now deemed to be a fire risk, so there would be costs incurred in removing them and replacing.  A total estimated refurbishment cost of £10,000 would be likely.  Positives to this purchase would be that it has a shared driveway for parking and well maintained front and back gardens with private garden shed to the right of back garden.

Market Comparable

We manage the same layout of property on the next street down (Kingsbridge Drive) and achieved £575 for the rent over 12 months ago.  At time of listing the property was very popular and we would expect it to achieve at least this figure in the current market.
Investment

Purchase Price £67,000 (£16,750 deposit required, £50,250 loan)
Solicitors Fees £1000
Mortgage Advice £200
Stamp Duty (3%) £2010
Full Refurbishment £10,000
Total £80,210
Total Capital Invested £29,960

*Assuming an interest mortgage of £50,250 based on £67,000 purchase price (75% Loan to Value) and repayments over 25 years at 4%.

** Useful Tool for this calculation http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results

Monthly Income
Rent £575
*Mortgage £167
Factors and insurance £30 (no factors fees as private house)
Letting agent costs £57.50
Profit £320.50

Your annual yield would be your yearly rental income divided by the total purchase and refurbishment costs-
(12x£575)/£80,210 = 8.6%

Your return on investment (ROI) would be your yearly profit divided by the initial capital invested-
(12x£320.5)/£29,960 = 9.6%

 

Any Investment or Landlord Questions

If any potential investors out there have any questions regarding anything they have read in this post or would like advice regarding BTL invesment or property management within Glasgow don’t hesitate to contact us mark@primitivedesigns.co.uk or call 0141 255 2828.