Case Study - Buy to Let Investor in Glasgow
I wanted to write a blog using a case study of an actual buy to let investor client we have recently helped in Glasgow. I keep banging on about our acquisition service so that being the case, I thought it would be helpful to show some real figures and time frames!
I met with this client initially in late September 2016 when we began with an informal discussion regarding his objectives and budget. In this case the key points were:
- Top budget £70 - 75k ( to include costs, any upgrading requirements, conveyancing , ADS)
- Glasgow location
- Ideally looking for good rental yield ( over 7%)
- Areas/flat that would rent unfurnished ideally
He (like most other acquisition clients) is not based in Glasgow and does not have the time to look for a property or view. He instructed us to find him a property which fitted the brief and we started the process in October.
We focused on 1 or 2 beds within 4 miles of the city offering a yield of over 7% after factoring fees (including all costs associated) and offered the client 8 different options, 6 on market and 2 off market. The properties were a range of 1 beds in Shawlands, Dennistoun to modern and ex local authority flats near the new Queen Elizabeth Hospital in Glasgow 's Southside. All good investments with rental yields of 7% AFTER factors costs.
After viewing a few properties and a lot of video calls with the client, in mid October we had an offer accepted on an ex local authority 2 bed flat in Drumoyne G51 ( near new hospital) in perfect condition at £70k ( see pics). So on top of this purchase price we have had to include the 3% additional dwelling supplement ( £2100) and estimated £750 conveyancing. We had estimated £500 for regulatory works which was about right. So total investment has been around £74k.
The sale was agreed mid October but it didn't complete for a variety of reasons until mid February, when we collected the keys for the new owner and checked over the property. We got the property on the market for rent shortly after that and within a month we have moved a new tenant in at a rent of £525pcm.
It has worked really well for this client who has chosen a property which has rented quickly (rent coming in within 4/5 weeks of completion) at a good rent £525pm, low factor fees (£33 pm) - so his yield is around 8%.
This is an actual client and his money is now working well for him, producing a good monthly income and fingers crossed, solid capital appreciation with a constant tenant pool. Its vital you know your market when you invest in buy to let property, a cheap buy isn't necessarily a good buy, I often get investors telling me their main focus is to buy below market value but if no one wants to live in the property, or buy it for that matter, its still not a good buy even if ts £10-15k under home report! I'd love your comments!
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