Investing in property case study: £100k investment, £1178 per month!

Mr & Mrs H had just over £100,000.00 to invest and wanted to purchase a ‘Buy to let’ property. They made contact with our office in Kettering and after a brief telephone conversation we agreed the best thing for them to do was attend a meeting with myself.


We had a brief chat prior to the beginning our meeting about rented property and Mr & Mrs H informed me that they were in fact Landlords/owners of commercial units, however like most commercial property at the moment they were struggling to let them out, and as a semi retired couple wanted a secondary income.

We sat down and began working our way through the work book, and started to develop their property plan.

The first question I asked them was to take a look at what they thought were potential ‘Rental’ properties on line, and which ones did they think were suitable? , what style and where would they buy it?…. They were looking at flats that were around 10-20 years old.

We then moved on to why they had chosen to look at ‘Buy to Let’.    ‘It was to top up the income from buying a property with their cash’ was their answer. They had looked at a couple of vacant properties, both flats, and were thinking of buying one of these. To them they appeared a bargain but were not quite sure about the rental value it would achieve and had been told one price by the Estate Agent and another by another letting agent – so were feeling a little confused.

We then moved on to my next question. We already knew they were looking for some income, but how important was that now versus the future? How much were they relying on their income today and what was to happen in retirement?  We looked at lower priced properties that would maybe produce a better yield and areas within the chosen investment area.

The different price brackets, rentals they would achieve, yield produced and how these types of property could potentially be used to receive a higher income. i.e the HMO or LHA strategy.

Other things to consider her were cash available, DIY – were they hands on? were they high or low risk investors, and how actively involved did they want to be on both the purchase and the letting/management of the property?  Here we ascertained they were low risk, not good with DIY (neither did they want to be), and were not risk takers. This is where they began to rethink the type of property they were looking for.

We then looked at spreading their risk, should they put all of their eggs in one basket?  We discussed the sorts of issues other investors had come across and used these as examples, if you buy one property, should the house suddenly become part of a flood plain or the neighbours from hell move in next-door- worst case scenario it becomes in the way of planners and developers and a CPO is attached the property would suddenly lose in value!….. So should you buy more than one? If the answer to this be yes then they should still be aware of spreading that risk, areas and styles of property should be sauced to eliminate any potential dangers to the Investors portfolio.

Examples were used on returns from investing 100k in to one ‘Buy to let’ unit versus 4 with mortgages, 4 x the rent, 4 x the capital growth, not to forget if one is empty the other 3 would be covering cost’s – Mr & Mrs H were quite shocked at what a difference this made on the return on the money they had to invest, especially as this was a long term plan. This way they would spread their risk.

We looked at ways to beat the market, areas that are not great returns – should you invest just outside of it? Repossessions that are a little nasty and smelly that others will not touch – look beyond this if it’s not a structural issue. Finance – should they be considering a ‘Buy to Let’ mortgage and then choosing the right solicitor. Not forgetting of course the letting Agent that would be looking after the letting and management of the property!!

At the end of the meeting my clients had completely changed their thoughts on how to invest their money, they are now owners and Landlords of 4 investment properties. Their first thought was to look in to the ‘HMO’ option but decided for now to invest in single residential let’s to get used to these and then review their options.

Mr & Mrs H and I embarked on a great journey complete with a ‘hand held’ buy to let service.  Together we viewed several properties and bought no flats!! In fact we purchased 4 properties of a mixture in size, style and age.

Just over a 100k in their building society was returning them £1,980.00 PA approx, their gross return is now almost 12% and they have a cash flow of £1178.00 a month less lettings fee’s! (£172.00 a month) giving approximate cash flow of £1006.00 net per month…………… Needless to say they are hooked and are hoping to build the portfolio very soon!

At Osprey Lettings, our Investment Specialists are available to offer free, unbiased advice on all aspects of property investing. We invite you to make an appointment to discuss your requirements.

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