I am going to share with you a case study of one of the residential developments we carried out earlier this year. Noma Investments purchased this 3 bedroom mid terrace ex local authority house in the popular commuter town of Inverkeithing in November 2016. We purchased the property for £70,000.
The property was dated and it had a couple of structural issues which we believed had a lot to do with a poorly installed conservatory on the back.
This makes a good case study as there were a few ways we were going to add value to this property. One was to remove the conservatory and repair the structural issues, then submit a building warrant to remove a wall between the kitchen and the utility room to make a modern kitchen diner. Then we were going to carry out a full renovation on the property to bring it up to our usual high standard.
We first had our team remove the conservatory and strip the house back to bare brick. We had our architect submit a building warrant for the required upgrades. A few weeks later we had a structural engineer visit the site to confirm the wall we were removing in the building warrant were non-load baring. He also checked the other issues and agreed with our solution which was to remove the wall dividing bedrooms 2 and 3 and replace it tying it to the external wall.
Once these issues were resolved we were good to carry out the renovation. We had our plumber and heating engineer carry out all the first fix work. The electrician was in updating some of the wiring to current regulations, running in cables for LED downlight’s throughout and changing the mains board. The whole house was plastered to give a smooth finish on all the walls and ceilings. Our joinery guys were then in for a week fitting the kitchen, new doors, skirting’s and facing’s throughout and laying 12mm laminate floor in the main walk ways (hall, kitchen and living room). The tiler was then in to tile the splashback’s and the bathroom, allowing the plumber back in to fit the bathroom suite, kitchen sink and heating system. Finally, internally the painter were in to finish off the house. During which time both sides of the house were being rough casted and the landscaping guys were in clearing both front and back gardens, installing new fences, turf the back garden and chipping the front to have access for 2 cars to be parked off the street.
The property was marketed by our preferred estate agent in the Dunfermline area Maloco. The excellent service we get from the team at Maloco’s had the property go to a closing date within 10 days and we achieved over the home report valuation. We were slightly over the £15,000 renovation budget and the project took 9 weeks instead of the estimated 6 weeks, this was mainly due to the downtime over the festive period. Below is a breakdown of the costs of this case study;
Purchase price: £70,000
Fee’s (legal, stamp duty, lending): £8,688
Renovation Cost: £16,420
Total Investment: £39,108
New Home Report Valuation: £115,000
Selling costs: £1,400
Sale Price Achieved: £122,000
This equals a 65% return on cash invested. Let’s compare these returns to cash in the bank or typical stock investments at 6% return.
£39,108 in the bank would give you a £195 return over the year.
£39,108 invested in stock fund giving a 6% return over the year would make you £2,346.
This is why we find that property is the number one investment vehicle.
Please bear in mind due to mortgage lenders current ‘6 month rule’ we must have this property for 6 months but the renovation only took 9 weeks. With that same £40,000 investment we can do this type of project twice in the one year. This is why we can afford to give away attractive returns to investors who want to make more from cash or equity they have.
Are you sitting with money in the bank that is getting you a poor return? Do you have equity in your home you can utilise to get involved in property investing?
If you would like to know more on this or any other projects we are working on or how you can get involved please Contact us.