30th July 2016
A contract has just come in this morning, on a property agreed a week ago. The price has jumped up by 5%, since we agreed the deal. The reason for this is that there are two other people who are ready to jump on this deal at £1m. That’s what the agent told me, anyhow. I wouldn’t be surprised though considering the nature of this deal.
An extra £50k, though it’s hurtful doesn’t kill the deal; the pounds per sq. ft. has increased by £50, which means we’re buying in at £1,218 per sq. ft.
The nearest comparable we’re comparing against is at £1,768 per sq. ft., so this is a £550 difference in price, which equates to a 30% discount.
Ok, this is post Brexit, I hear you say. Yes, it is post Brexit, but this still does not account for this level of discount given the location which is in the primest shopping district of Central London.
Furthermore this deal is being purchased not as a flip but a long term hold. The reason being is due to the excellent location we are confident of short letting this property. This means instead of the usual 3-4% yield on this deal we are looking at a yield of 8-9%.
This means whether the prices go up or down, holding the deal makes sense as you have a strong monthly cash flow. On the assumption of the short let model and assuming a deposit of £400k, and a reasonable mortgage interest rate (and associated mortgage terms), you would be looking at a net income of around £55k per annum.
I have only seen numbers like this pre credit crunch, when the government had vast amounts of money to spend on housing benefit. Unfortunately for investors they capped this, and yields were reduced for such properties, bringing them closer to private rental yields. Central London is more known for capital growth rather than high yields, and this is what makes this opportunity a rare deal. The contracts are with us. If you are interested in this deal call our office now.
BUY TO LET OPPORTUNITY
Bayswater, London, W2
Purchase Price: £485k
- A lovely one bedroom flat within a period conversion
- Long lease
- Close to Hyde Park and Kensington Gardens
- Excellent buy and hold opportunity
Call us now to reserve!