15 Dec 45% BMV Recycling your cash – BTL
Ford street is a good example of a property bought right which created £70K equity and provides me with over £350 / month cashflow as a single let.
Its important when buying to keep or buying to flip that you price the project correctly. Vitaly one must remember to include buy to sell costs including the holding costs for 6 months if using finance. The finance cost is typically 10-15% of the project and is often left out by amateurs when calculating the profits within a deal.
The way we price a deal is by starting with the A1 price of the property at the end of the project. (For argument sake £200K)
We triple check the end values with 5 local estate agents in the area and by using sold comparables and other online resources such as home track, right move comparisons, zoopla and mouse price. (plus our local knowledge) Finally we search the local area for properties at our A1 sales price and see realistically if we feel the property compares favourably at that price with others on the market. If selling we also want the average time to sell to be within 8 weeks ideally. Then from the A1 price we subtract the buying and selling costs (including finance ) we subtract refurb costs and then subtract a suitable profit margin. (we work with a minimum of £20K profit)
So the offer price on a typical property of A1 valuation at £200K might be in the region of £140Kto £150K depending on whether it needs a £10K or £20K refurb.
This project was exceptional with at close on 50% BMV Ford street (acquired through leafleting)