Budgeting For Refurbishment Property Projects
One downfall that I have seen over and over again is that UK property investors do not budget enough for their refurbishment property projects. We have recently completed 6 property refurbishments and each one went over budget. After rip out we have found all kind of lovely issues. Going back we learned this and have allocated 20% to whatever our ( Written) builder quotes are . In our Warrington Buy to Let Flip we had to replace the kitchen flooring and this weeks project we had to significantly repair some flooring in one of the reception rooms in which we are making a bedroom.
In order to stay out of problems make sure you have the financial resources when refurbishing your property project and even more importantly after refurbishment they yield enough. The majority of our properties go on for Social housing with guaranteed rents. We get approx 8580 on a 3 bed HMO yearly cash NET to us…On a 4 bed that number jumps up to 11,400 and on a 5 bed it is 14,400 Net to us.
Net to us means…no management…no voids…margin able maintenance ( all covered up to 5,000 per year or 2,000 per incident).
Another way to be prudent is that we keep some of the properties and sell some of them. This lowers borrowing costs and risks. When we sell the properties we look to sell them at a net 8%+ return for the investor. Combing returns like this…potential price appreciation…no management…no voids…In our opinion this is the best way to participate in the UK property Market…
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