We exchanged on a property in fashionable Cornwall Gdns for a ground floor, share of freehold flat, consisting of 710 sq. ft. The price paid was £900,000 which equates to £1,267 per sq. ft., on the surface this looks expensive, however on closer inspection the prices going in this location are around £1,750 per sq. ft. conservatively.
Furthermore the last part of this address indicates it may be facing a garden which in this case it is. The property itself is an ill constructed one bedroom flat, with a plaster board placed in the middle of the bay windows to turn it into a one bedroom. At 710 sq. ft. it is actually a large one bedroom flat, I have seen two bedrooms at 500 sq. ft.
The ceiling height on the flat is very impressive, this is one thing you cannot appreciate without a visit. The square footage is only two dimensional and to get a fair understanding perhaps the cubic footage should be given, in other words the volume of the flat. This would then take into account the height of the property and give a fairer indication.
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From first glance it was obvious the wall had to be taken out and the flat turned back into a studio, this way you would have one room to incorporate the large bay windows. Due to the ceiling height you can now put in another floor in the same room. This gives you a mezzanine level. This will also increase the square footage of livable space in the property.
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It is possible to add in another 250 sq. ft. at least, thereby increasing the end value potentially by £437,500. This way it works in our favour, the square footage is based on two dimensions.
Unfortunately our strategy has been mostly a hit and run one; we don’t like to get our hands dirty. Hence after saying all of this, we went for the kill. Instant gratification as opposed to delayed gratification.
We have been working on this deal for three months due to the owner being abroad, and the time taken for the lawyer to get the authorisation. I wasn’t worried as the price was only increasing during this period. As soon as we exchanged the property was put back on the market in a discreet way to attract a developer. There was enough margin there to attract someone to come and purchase. The price quoted was £1.2m, within a few days we had two offers at £1m, however we said this won’t cut the deal, we need at least £1.05m. A Friday is a good day to go back and say this as then the deal would start itching the prospective buyer over the whole weekend. So come Monday we had a revised offer of £1.05m which we are proceeding with.
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Given the limited time to do the deal we said this deal is only valid for one week, otherwise the deal is off. This deal – should it proceed – will net our investors a return of around £120k from an investment of £90k within about six weeks. There is more similar stock coming our way soon.
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On Tuesday we are hoping to complete on two resell deals and exchange on two deals. The completions are for a couple of deals in Hampstead, where one was purchased for £850k and resold for £1m and the other was purchased for £700k and resold for £910k. On the first we made £150k from £85k and on the second £210k from £70k.
These came with risks, they rarely come on the plate. The end result perhaps looks very attractive and lucrative, but both had issues and required close work with the lawyers to ensure the onward sale happened smoothly.
Whilst we were in the process of selling the £850k deal the freeholder decided to nail a notice up on the front door from her lawyer announcing she had forfeited the lease due to a number of issues. This then put us under obligation to inform the oncoming purchaser as well as putting our purchase under possible jeopardy. We managed to iron the creases out from the deal and get it through. I was actually glad to get rid of this one as the freeholder seemed to have a lot of time on her hands, and also lived in the same block, it smelt like trouble ahead.
With the other one we are looking to do a resale, this time after completion. It’s a pub in Kensington which we purchased for £1.25m, got planning for and is currently being resold – hopefully for £2m. We had some interest from other parties at slightly higher prices, but this is irrelevant as they couldn’t put their money down and do the deal. There was a lot of unnecessary talk and no walk going on. One of the buyer links had four people in it, and it was apparent they didn’t really have a clue about the issues involved in the purchase, from the VAT to the stamp duty, yet they posed themselves as agents.
Another party didn’t turn up at the premises twice! It’s amazing how many people waffle and fall down on the basics.
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One of the questions we get asked is how is it we manage to attract a strong deal flow? The answer is simple, we do the deal and we do what we say – most of the time anyway. This builds confidence and trust and attracts further deals . In this regard you must be careful not to bite off more than you can chew as this will start to give you negative publicity.
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Humans by nature are generally lazy people, we choose the path of least resistance, we like to avoid pain. Agents are no different they want the deal done without any issues, and as quickly as possible. They have to face the wrath of the seller should any buyer they introduce fail to perform, they could also risk losing the instruction altogether, in a large organisation this would then attract undue attention from the management above.
The fourth deal we are looking to close is a large one we have been working on for several months, we have a number of investors involved in this deal as well as our fund. We will make an announcement with the details when it has been closed.
The Real Deal
Middlesex, UB5
Purchase Price: £280k
- A semi detached freehold house with three bedrooms and two reception rooms in Northolt
- Freehold
- Only 1% stamp duty
- Around 900 sq. ft. area
- We expect the value of the property to be around £350k
- Ideal BTL investment
Call us now to secure this deal!
Suresh Vagjiani
Sow & Reap
A Property Investment Company
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! Tips of the Week
In buy and sell cases where you intend to do works after planning consent, you don’t actually have to get your hands dirty. You can just get the planning permission and resell the property as it is with the planning and make good profits in a short span of time.
There is a way to make money from property even if you don’t have cash on hand. This is by remortgaging your existing property portfolio and investing in the growing London property market and you profit from the difference.
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