West London HMO re-think

Sometimes in property investment you need to be ready to adapt and change your plans due to unforeseen circumstances. This property was originally intended for a £60k conversion into a 6 bedroom HMO. When we started the planning application we discovered it is situated in a conservation area and getting planning for any additional extension was virtually impossible.

Property original plan:

  • Purchase Price: £550,000

  • Refurb: £18,000

  • Re-valuation: £590,000

  • Fees: £5,500

  • Total cash in: £573,500

  • Rent: £2,300 / £27,600

  • Net Yield: 4.8%

The buyer was informed about the planning limitations prior to completion, but decided to continue with the purchase as a standard BTL. The buyers main priority was to have an asset in London where long term capital growth is expected, whilst achieving an acceptable yield.

The property was purchased for £550,000, with a refurb of £10k and has been let out for £2,400 per month which gives it a gross yield of 5.1%. By London standards this is actually rather good. The cash the investor has saved by not having the £60k 6 bed HMO conversion, can now be used toward another investment.

Lesson learned - always have a plan B up your sleeve!

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