56-58 Ebury Rd, Nottingham
- Block of 6 x 2 Bedroom Flats
- Refurbish to Hold Project
- Purchase Price £302k with GDV of £495k
- £51.3k pa gross rental income / 10.36% Yield.
56-58 Ebury Rd was a dilapidated block of 6 flats which had not been occupied for 5 years. It had previously gone to auction and had not sold due to the condition. A year later Mike tracked down the owner using companies house and arranged an off market deal using a bridging loan. The price was set at £302.5k, which was a fair price given the condition. Due to the large size of the flats, they could easily be turned into two bedroom flats with some studding, thus increasing the capital value and rental values substantially with a reasonable build cost.
Because the building was on two titles it meant one side of the building could developed, tenanted and refinanced and the same funds then put to work on the other side of the building, effectively halving the capital requirements for the work. Works commenced in October 2019 on 58 Ebury Rd which was completed and tenanted in March 2020 with a spend of £70k and a GDV of £245k. 56 Ebury was then completed in September 2020 with a spend of £68k and a GDV of £250k. The overall spend was £456k and it was valued at £495k, meaning Mike created £39k of equity.
Because the flats were now 2 bedroom flats they were now commanding some serious rent, £675-750 each and the building brings in a very impressive £51.3k pa. After all costs including finance, voids and maintenance costs, the block brings in an impressive £29k pa net profit. Even the area is a relatively nice area for a rental property and Mike intends to hold the asset for many years to come.
DOWNLOADS:
Project Brochure – 58 Ebury (PDF, 3.2MB) 58 Ebury Brochure
58 Ebury Floorplans (PDF, 500kb) 58 Ebury Floorplan (Note: 56 was a mirror image)
Numbers
Money Invested
– Purchase Price: £302.5k (Cross collateral bridging finance across 56/58 & un-financed unit)
-Build Costs No. 58 Ebury: £70k
-Build Costs No. 56 Ebury: £68k
-Bridging Interest Costs £12.5k
-SDLT: £3k (Note this was using commercial rates due to it being 6 flats on 1 transaction)
Total: £456k invested.
GDV – Gross Development Value
– 58 Ebury – £245k (March 2020)
– 56 Ebury – £250k (Sept 2020)
Total: £495k GDV (£39k profit)
Income
– 4 x 2 bed flats @ £695pcm
– 2 x 2 bed flats @ £750pcm
Annual rent £51.3k
Outgoings
– Mortgages x 2 : – £17k
– Voids, Other, & Maintenance @ 10% – £5k
Outgoings: -£22k
Annual Profit: £29.3k gross after all expenses
Metrics
– £84.7k total left in the deal adjusting for the £39k equity/profit created (75% LTV mortgage)
– ROI on £87.4k capital left in deal: 33.1%
– Payback time: Approx 3 years.
– Gross Yield 10.36%
– Net Yield after finance and running costs: 6.23%
