Sweetening the deal

16th April 2019

We secured a couple of probates in Harrow last week, predictably they went over the weekend.

One was a freehold house.  Developed properties on the road have sold for more than £650K, so this was a good deal at only £425K.  The location is very rentable as well, as it is only 3 minutes from the station.  Proximity to a station and infrastructure ensures good rental demand.  This allows you the freedom to choose your tenant, rather than the other way around.

A property like this, in this location, will always rent for a good amount of money, say £2K per month.  However, in order to really milk this property and enhance the yield, one should look at converting this property into an HMO.  Especially because it will be completely renovated, therefore one is able to design similar sized rooms and have some uniformity through the building.

This is something we are putting into motion for another client, who owns a freehold house in Wembley; where the current rental is at £1,800 pm.   In truth, I was surprised the property attracted this much rental given the condition it was in.  We had not one but two offers for rental for the property as it was.  The reason why they took the property in that condition is because for them it was a business, and they were not the end tenants.  They touched up the property, and sublet it for a profit.  They told me they cannot not get enough properties to satisfy the local demand.

The aim with this property is to do a rear extension of 6 metres before the deadline expires on the 30th May.  Then open up the loft, on both sides.  Planning permission is in, though there is no immediate urgency in terms of time.  Following this, the property will be rejigged to provide 7 rooms, well designed and in proportion, with good communal facilities.  The rent roll will increase substantially.  The aim is to attract a rental of £750 per room, per month.  This will give a rent roll of £5,250 pm or 63,000 per annum.  An increase of £41,400.  There will of course be expenses to be taken into consideration.  Let us assume an extra £10K.  This means an extra £30K is expected to be generated for our client.

The work should cost no more than £150K.  An estimated return of 33% per annum consecutively is a no brainer.  For this property, in this location, it is clearly the way to go.

The same principle can be applied to the house in Harrow.  It is a probate deal, and in terrible condition, as many probate deals are; however, this property is hazardous to even enter.  There are missing floor boards, fungus and damp.  This means you have a blank canvas to work from, and therefore are able to create something which is fit for purpose.

To do this within an existing property structure, you would be restricted by the existing shape and fabric of the property.  This property’s closeness to the station will mean tenants can be in Euston in as little as 27mins.

This means instead of only attracting the local crowd, you are also able to attract professionals who work in the city.

Suresh Vagjiani

Suresh Vagjiani
Suresh Vagjiani
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