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Sweetening the deal

15th October 2016

We have just exchanged on a two bedroom flat in the prime neighbourhood of St John’s Wood.

The client in this case purchased blind, hopefully he’ll be pleased when he finally sees the property, which is due to complete in a couple of weeks.

We are working on another deal, which we will be closing soon, in Camden.  This has a purchase price of £560k.  It is a three bedroom property in Camden, which is prime student area, surrounded by universities.  The price of the property equates to £650 per sq. ft.  This is not very much, given less desirable areas go for these amounts.

As the area attracts students, this flat is prime for room lets.  This property should attract a rental of £800 to £1,000 per week.  This gives a potential yield, on the conservative end, at 8%.

With this kind of yield, if there is any dip in the market it is not that relevant, as it is producing money on a monthly basis.

Whether the market goes up or down, if you’re generating money on a monthly basis it doesn’t matter too much.

The Borough of Camden, where the property is located is going through massive regeneration.  Hundreds of millions are being pumped into this location.  So the numbers and prospects look very good for this property.  However, there is always the concern regarding what prices will do, what if they go even lower?

Well, you are coming in at £100k cheaper than the market price, and having a £100k cushion helps.  During the worst financial crisis of the decade in 2008, London property prices only dipped 15% and this was only for a period of two years.

If we apply this same drop to the property, you will only get back to the price you paid.  Given central London property history, this is probably the worst case scenario.

Even considering this eventuality, you will be earning circa £15k per annum.  All this assuming a deposit of £170k, 30%.

On another end of the scale, we have been offered a site totally off market for circa 40 flats in Harrow.

The GDV for this development is expected to be around £15m.

It would be particularly suitable for a builder who wants to keep their workforce busy.

Call us now for details of this very exciting opportunity.

Suresh Vagjiani

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