This case study details the acquisition, development, refinancing strategy, rental income, yield, and forced appreciation achieved through our latest development at Stanmore Road.
1. Acquisition
- Purchase Price: The property was bought at auction for £207,000.
- Included Costs: This figure incorporates legal fees and auction expenses, ensuring that all acquisition-related costs were accounted for upfront.
2. Development Investment
- Development Spend: We invested £113,952 on development work.
- Purpose: The capital was deployed to refurbish and enhance the property, making it attractive to tenants and increasing its market value.
3. Refinancing Strategy
- New Valuation & Refinancing: Following development, the property was refinanced at a valuation of £375,000 with an 80% loan-to-value (LTV) ratio.
- Capital Drawback: This refinancing allowed us to draw back £300,000, effectively returning a significant portion of our initial outlay.
- Net Investment: After the refinance, the remaining investment in the deal is £20,952.
4. Rental Income & Yield
- Minimum Annual Rent: The property has a minimum rent of £36,000 per annum.
- Yield: This rental income equates to an annual yield of £18,000, which translates to an impressive return on investment (ROI) of 86% when compared to the net investment of £20,952.
5. Forced Appreciation
- Capital Growth: In addition to the rental income, we have successfully forced an appreciation of the property by £54,048 through our strategic improvements and market repositioning.
6. Conclusion<
The Stanmore Road development demonstrates a robust property investment strategy with multiple value-adding components:
- Efficient Acquisition & Development: Securing the property at auction for £207,000 and investing £113,952 in development optimised the asset’s performance.
- Effective Capital Recycling: The refinance at £375,000 with an 80% LTV allowed us to extract £300,000, leaving only a modest net investment of £20,952.
- Attractive Rental Yield & ROI: With a minimum rental income of £36,000 per annum, the deal delivers an annual yield of £18,000, resulting in an 86% ROI.
- Enhanced Market Value: The forced appreciation of £54,048 further underscores the success of the development strategy.
This case study underlines how a combination of strategic acquisition, targeted development, and astute refinancing can transform a property into a high-yield asset while unlocking significant capital appreciation.
