A commercial unit on a small parade of shops, with a large one-bedroom apartment upstairs. It was in a terrible state. The downstairs was empty and the upstairs had a horrible tenant in there, who had trashed the place and then left it full of rubbish, with clothes everywhere.
It had been sitting on the market for about three months and an agent I had a good relationship with came to me and said, “Look, this guy has got the courts coming in, trying to take the property back. He needs to sell in 30 days.” So we met, I put an offer in at £230k thinking we would negotiate and he took the offer straight away. I was quite surprised.
Converted upstairs flat into two-bed by reducing the size of the kitchen and using part of the bedroom to make another bedroom (and add approx £15k of equity).
Converted the downstairs to commercial.
We rented out a nice seven-year lease and the unit was refurbed at the tenant’s cost. We then split the total of the property into two units. I think we took out £155k on the mortgage on the flat. That’s 75% of the value so we were left with about £96,000 – £97,000 in the deal. At current valuation, the two are worth £390k. So there’s a profit in there of around £138k.
The next stage is to move to the ownership of the commercial unit to my own pension. This will allow me to release tax-efficient money out to use on other deals.
Asking price: £310,000
Purchase price: £230,000 (26% discount)
Legals and refurb cost: £21,500
Monthly rental income: £1,825
Monthly costs: £425
Monthly profit: £1,400 per month
Profit if we had sold it: £138,500