It has been a long time since Property 1 was purchased and Let. I’ve been looking at a property for a few months now, for sale at £140K, I was going to wait until the price came down, but it hasn’t moved.
So I went to view the property, and as it has been on the market for 5 months, I put in an offer of £125K. This is the price I wanted to pay, and I didn’t really want to go any higher.
So after the seller trying to negotiate, and me not budging it went quiet.
1 month later I received a call from the Estate Agent saying that if my offer was still available they would take it.
Here are the photos from Rightmove, the property would not need any work on it to be let.
It took a lot longer than I hoped to get a tenant for the property. This was a big surprise as it is a great property. After being advertised for £700 on Rightmove as recommended by the letting agent, 2 reductions later it finally let for £650 pcm.
One potential problem is that there is not a school close by, so I will be looking out for that in my next purchase.
I also managed to negotiate a reduced management fee – from 12%+VAT to 9%+VAT, as I had an aim to only give away a total after VAT of 10%.
Here are the full stats.
| Price | £125K |
|---|---|
| Mortgage | £93.75K @ 3.59% = £280 per month |
| Deposit | £31,250 |
| Rent | £650 per month |
| Management | 10% = £65 |
| Insurance | £13 per month |
| Cashflow | 650 – 65 (management) – 280 (mortgage) – £13 (insurance) = + £292 per month |
| Return on Cash | 3504/31250 = 11.21% |
This is not a bad ROCI, much better than my money would get in the bank for example in a 1% Cash ISA. My Return on Cash calculations also do not take in to account any capital appreciation. If this were to be included, it would be closer to 20%.
| Type | Deposit | Rent | ROI | Cashflow | |
|---|---|---|---|---|---|
| Property 1 | 2 bed semi | £26.25K | £595 | 13.6% | + £298 |
| Property 2 | 3 bed detached | £31.25K | £650 | 11.21% | + £292 |
| Total | + £590 pcm |
Property Seeds 