Today’s buy to let opportunity from The Edinburgh Property Blog needs refurbishment.
The property is a one-bed flat in Wardlaw Place in Gorgie ..... it’s a traditional Edinburgh stone tenement fairly near the centre of the city.
It has a lounge with a kitchen off it, a double bedroom and a bathroom. It is in need of a complete refurbishment (new kitchen, presumably a new bathroom (there is no picture of the shower room), re-decoration and carpets) so it is not a purchase for the inexperienced or faint-hearted landlord.
Looking at the numbers. The asking price for this property, which is on the market with Your Move, is offers over £90,000 so let’s say it goes for £110,000 as it is priced to sell. It is difficult to assess the cost of the refurbishment without seeing it so let’s assume it costs £25,000. That gets you to a ‘cost’ of £135,000. The flat should let for around £625 pcm once it is refurbishedwith a bit cosmetic work (say £5,000) or £725 (with a complete refurbishment) which get you to a yield of around 5.6% .... not bad for a traditional stone tenement flat in near the centre of the city.
A wee bit of advice – you need to be very disciplined when buying properties that need refurbished otherwise you end up overpaying and it becomes a bad investment. I often find that people underestimate the refurbishment costs. My suggestion with properties that require refurbishment is to prepare a detailed and honest assessment of the cost of the refurbishment and then add a contingency, as often costs are greater than expected, to get to a ‘sensible refurbishment cost’. Then I would determine the ‘total cost’ you are prepared to spend based on the expected rent level and the yield you are looking for. I would then deduct the ‘sensible refurbishment cost’ from the ‘total cost’ to arrive at the maximum I am prepared to pay for the property itself and base my offer for the property on this figure. Apologies if this sounds very simplistic but I have heard of too many people who have had bad experiences with properties needing refurbishment!
We hope you find our posts useful. If you would like some advice with your potential investment, please call me on 0131 603 4570 or email me on email@example.com.