Unit 7 Ash Court, Smethwick
- Mike made £38k just by buying it!
- 1,920 sq ft Light Industrial Unit
- 9% net yield (£13.5k pa) on a £152k purchase price.
- A totally passive FRI Lease investment.
Mike made £38k instant equity by buying this Light Industrial Unit. Well located near the M5 Junction 1 in Smethwick, Birmingham, Ash Court went to auction in Allsop’s (Nov 2020) commercial auction. After some detailed due diligence Mike bought the unit post auction for £152k cash and it has since been valued at an impressive £190k! This is a very rare discount in the small Light Industrial market, a secure and safe asset class which is seeing excellent capital and rental growth.
The unit produces an excellent 13.5k net profit and is let to Best & Lloyd Ltd, a luxury lighting company. This is net profit as it is on FRI lease and is approx. 9pc yield on the purchase price. This is comparable to a net yield for a HMO once all operating expenses are accounted for. Best of all the management time/costs are almost 0 other than sending out a quarterly invoice! A truly passive investment.
The Unit remains unleveraged as it provides Mike with a unit to offer to private lenders as 1st Charge Security. It is also the ultimate hedge against LTV Covenants in other mortgage contracts his company holds and means MS Block Holdings is geared at a sensible overall 60pc LTV. Having this equity unleveraged is an advanced form of holding large cash reserves on his balance sheet and means Mike is in a strong position to weather any economic storm.