Following a recent estate agent appraisal, here is some of the financial achievements so far for our very first investment. Purchase price £273,000 – First valuation shows a recommended market value of £450,000 (please note that in the same period the London property market declined by 0.5%!!) making approx. 250% return on our initial cash investment. As per the rental yield instead and according to a well-known letting specialist in London, our property should achieve £650,00 per week (£2,827 pcm) – We are currently achieving a little more since we a renting the property as a luxury house-share with four single AST contracts to young professionals. In order to maximise our income, we are offering a fully managed property – which we manage ourselves – and an all-inclusive rental scheme which includes all bills with no hidden or extra costs. This pushes our monthly income to a fantastic £3,200 pcm.
Our mortgage monthly repayment is £1,100 with a variable 2,6% interest rate – Our net revenue after all bills (as offered in the all inclusive tenancy agreement) is £1,700 per month pure profit, which gives us plenty of cash to invest in our next project.
So, as far as you keep in mind the numbers game and you make you your monthly repayment is far lower than your monthly revenue, then you have a business.
You also need to factor in several things that can impact your investment:
- Picking the right property below market value to ensure capital grow. If you are planning to re-mortgage your property to raise capital for your next investment, then make sure you buy where you can add value with some renovation work.
- Choosing the right postcode for rental yield and analysing worse and best case scenarios. Make sure your worse case scenario allows you to break even with your monthly repayment.