New Year, new strategy!

Following on the heels of our commercial conversion project in Edinburgh, we secured our first project for the year at about 20% discount off the home report (HR), after our initial offer – 12% below valuation, was rejected several weeks earlier. The property had being on the market for a while, and the vendor, looking to move on, became more open to considering a lower offer which enabled us secure the deal. And this was where things got really interesting. 

We’ve always been of the view that, if you find a good deal, you will find the funding for it. But with our funds tied up in a different deal, we had no available cash of our own for the 25% deposit, and were faced with the option of sourcing out the property for a fee, or walking away from the deal. Neither of these options were really agreeable to us, so we decided to explore further.

We contacted our preferred bridging company and had a conversation about them financing the deal 100%, covering the 25% deposit in exchange for a second charge on equity we’d built up in a different property. They agreed to this (the power of building healthy relationships with strategic business partners) and we were able to complete the purchase in the first week of January 2024! And the additional borrowing not only covered the deposit, but paid for all the legal fees, ADS (Additional Dwelling Supplement) etc, leaving us with just under £800 extra cash when we picked up the keys

Our target was to have the property back in the market within 4 weeks in order to limit the financing costs and also get the property cash flowing as quickly as possible. This meant having a pretty tight schedule and organising the refurb sequence – first and second fix electrics, plumbing, kitchen installation, doors and other joinery work, new flooring, painting and decorating, in a well structured manner and doing things in parallel wherever possible.

Sure enough, by mid-February, the property was ready. We commenced the refinance process and secured a long term mortgage that covered the full amount borrowed (with some extra change) leaving only the cash spent on the refurb – about £13k, in the deal. We also got a tenant for the flat and both stages of the project cycle were completed by the third week in March.

Quick summary – purchased the property with no cash down in January, and completed the project cycle (including refurb, refinance and rent) within 3 months. 

At 40% ROI, it wasn’t a bad project to start the year.