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Two birds, one stone

11th August 2018

Finally, we exchanged on a small deal in South East London.  The property is a three bedroom semi, about 30 seconds away from the new Crossrail, which means it will take only 11 mins to reach Canary Wharf and 25 mins to reach Bond Street.  This is the main selling point.

It’s not the property which is of importance, but the location.  Often, when clients tell me they wish to buy a property for investment, and perhaps for their children to live in the future, I always advise them to keep the two separate, as the objectives are different.

Investment should be done with an objective.  When it comes to investments the aim is to make as much money possible, in the shortest amount of time.  When it comes to living in the property, it is a lifestyle choice and emotional choice, not necessarily one based on cost.

However, in this rare occasion, after listening to our client, I must admit it made a lot of sense.  His two children work, one is based in Canary Wharf and the other in the West End.  Therefore, this location actually seemed ideal, as well as being in probably the hottest hotspot in London.

The property is dated and requires some modernisation.  It will be lived in initially, and then turned into a Buy to Let in the future, when the occupants have flown the nest.

Residential mortgage rates are cheaper than BTL rates.  The money made on this investment will be purely on the capital growth, whilst his children are living there.  The rent achievable will increase in time, but it will be the strong rise of the underlying asset which will make a good amount of money.

The property was purchased for £365K, and my prediction is that within three years it will easily be worth £450K.  This is an uplift of nearly £100K.  If we look at this from a return on investment point of view, you would be looking to double your money in three years.

There needs to be some restraint put on the decoration of the property, as ultimately it will be a BTL property after a few years.  Therefore, to go overboard with the décor according to one’s taste and whims is perhaps not the best idea.

The work needs to be done in a moderate way.  An option we will be exploring for our client, is getting permission on this property for a rear extension and a loft conversion.  Once this is done, we would look to convert the whole property into a 5/6 bedroom HMO.  Being so close to the station, we believe the demand for low priced accommodation will be high, both from the West End and Canary Wharf.

Currently, we have also confirmed another small deal in this vicinity, for only £255K.  It’s a two bed flat requiring some minor modernisation.  Get in touch soon, if you would like to secure this property.

Suresh Vagjiani

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