Project

Argyle Street, Reading, RG1, UK

  • Sale agreed in Dec 2021. Chain of 4
  • GBP440k. Internal area 1561 sq ft.
  • Applied for 75% LTV mortgage. 0.75 X 440k = 330k
  • Completed Jul 2022.
  • Purchase price: 440k
  • Tax: + 23k
  • Legals, Surveys +4k
  • Light touch up +8k
  • Mortgage -330k
  • Capital invested 145k

Stage 1: Rent out as it is for first year.

  • Rented out at 1750 per month. X 12 = 21k pa
  • Lettings fee = 2,100
  • Net income = 21k – 2.1k = 18,900
  • Mortgage interest 4.5% = 0.045 X 330k = 14,850.
  • Net profit = 4,050
  • Return on investment = 4,050 / 145k = 2.79%
  • Expected capital gains = 5% X 440k = 22k pa.
  • Return on invested capital (rental + capital gains) = (22k + 4,050) / 145k = 17.97%

Stage 2: Apply planning permission to split into 3 flats. Ground floor 3 beds 2 baths (valuation GBP290k). First floor 2 beds 2 baths (220k). Second floor 1 bed 1 bath (160k). After year 1.

  • Total Gross Development Value = 670k.
  • Additional refurb cost = 150k.
  • Total Gross Dev Cost = 475k + 150k = 625k

Remortgage at 670k = 75% X 670k = 502.5k.

  • Money left in after split = 625k – 502.5k = 122.5k.
  • Rental for 1 bed 1 bath = 800 pm
  • Rental for 2 beds 2 baths = 1150 pm
  • Rental for 3 beds 2 baths = 1900 pm
  • Total rent = 3850 pm X 12 = 46,200 pa.
  • Lettings fee 12% = 5,544
  • Net profit = 40,656.

Mortgage at 5% = 0.05 X 502.5k = 25,125 pa.

  • Net profit after mortgage = 15,531 pa
  • Return on investment = 15,531 / 122.5k = 12.68%.
  • 5% capital appreciation = 0.05 X 670k = 33.5k
  • Return on invested capital = (33,500 + 15,531) / 122.5k = 40%.

Gallery