Burnley - 10 Year Lease Option - £65k profit after 10 years

[DylanJones]

Hello im not selling a deal or house this is one I have found on the internet. I am only 18 years old but very interested in property investment. I have found this deal on gumtree which is through an agency. In my spare time I love looking at places up for rent,sale, and learning about leases,r2r roi etc. I want to make sure I am on the right line for my calculations. I dont care about getting the deal because I am a broke 18 year old so I dont care about someone taking this deal just want to know if my figures are on track if not what have I dont wrong
Burnley - 10 Year Lease Option

Oxford Road, Burnley, BB11 3TA

Purchase Price In 10 Years Time = £42,000

Finders Fee = £4,000

Monthly Payment To Landlord = £124 pcm

2 bedroom terraced property which is in need of full refurbishment.

This property has been sat empty for nearly a year.

We have contractors that think they could do this for circa £12,000.


Upfront cost
£4,000 - finders fee
£1488 - Rent per year (124PCM)
£12000 - Refurb cost
Total upfront cost £17,488


Avarage house sale £45k
Avarage house value £65k
Average house rent 80-90pw (Didnt find ones in exact area but within 0.5miles)

1 Year rent
£4000-£4700

10 years of rent
£40k-£47k

Profit after 10 years:
£25k

Buy house for 42k after 10 years
Last 12 months in Oxford road burnley bb11 value up by 3.78% = 2.3k
House value in 10 years? 80k

 

[FWL]

Hi Dylan,

Welcome to the forum - good to see you are planning ahead and doing your research now.

A few comments from me:-

Burnley - 10 Year Lease Option -
Oxford Road, Burnley, BB11 3TA

IS THIS THE COST OF BUYING THE FREEHOLD AFTER 10 YEARS?
Purchase Price In 10 Years Time = £42,000

ARE YOU PAYING THIS UPFRONT
Finders Fee = £4,000

BASICALLY YOU ARE DOING A RENT TO RENT TRANSACTION?
Monthly Payment To Landlord = £124 pcm

BECAREFUL THERE ARE NO HIDDEN ISSUES WITH A PROPERTY LEFT EMPTY FOR A YEAR
YOU WOULD STILL BE LEFT WITH THE LEASE EVEN IF YOU COULDNT RENT IT OUT
2 bedroom terraced property which is in need of full refurbishment.
This property has been sat empty for nearly a year.
We have contractors that think they could do this for circa £12,000.

Upfront cost
£4,000 - finders fee
£1488 - Rent per year (124PCM)
£12000 - Refurb cost
Total upfront cost £17,488

THAT IS A HUGE DIFFERENCE BETWEEN AVERAGE SALE PRICE AND VALUE - NOT SURE THIS IS CORRECT
ALSO, ARE YOU COMPARING THE VALUE OF THE SAME TYPE FO PROPERTY YOU ARE LOOKING AT IN THE SAME AREA
Avarage house sale £45k
Avarage house value £65k

ON THIS FIGURE YOU CAN RENT OUT FOR £368 A MONTH (£85 a week) BUT IT WILL COST £124 A MONTH TO THE LANDLORD. GROSS RENTAL PROFIT OF £244 A MONTH £2928 A YEAR BUT THERE WILL BE RUNNING COSTS TO COME OFF THIS
Average house rent 80-90pw (Didnt find ones in exact area but within 0.5miles)

1 Year rent
£4000-£4700

10 years of rent
£40k-£47k

YOU DONT APPEAR TO HAVE ACCOUNTED FOR ANY PROPERTY RUNNING COSTS, TAXES AND PERIODS WHERE THERE MIGHT BE NO TENANTS
Profit after 10 years:
£25k

HOW WOULD YOU FUND THE PURCHASE?
Buy house for 42k after 10 years

ARE THESE LIKE FOR LIKE PROPERTIES, 2 BEDROOMS, ETC
Last 12 months in Oxford road burnley bb11 value up by 3.78% = 2.3k

PURE SPECULATION AT THIS MOMENT
House value in 10 years? 80k

These comments are not a criticism of your plans and ideas, just a prompt to consider the wider situaiton.

 

[DylanJones]

Hi Dylan,

Welcome to the forum - good to see you are planning ahead and doing your research now.

A few comments from me:-

Burnley - 10 Year Lease Option -
Oxford Road, Burnley, BB11 3TA

IS THIS THE COST OF BUYING THE FREEHOLD AFTER 10 YEARS?
Purchase Price In 10 Years Time = £42,000

ARE YOU PAYING THIS UPFRONT
Finders Fee = £4,000

BASICALLY YOU ARE DOING A RENT TO RENT TRANSACTION?
Monthly Payment To Landlord = £124 pcm

BECAREFUL THERE ARE NO HIDDEN ISSUES WITH A PROPERTY LEFT EMPTY FOR A YEAR
YOU WOULD STILL BE LEFT WITH THE LEASE EVEN IF YOU COULDNT RENT IT OUT
2 bedroom terraced property which is in need of full refurbishment.
This property has been sat empty for nearly a year.
We have contractors that think they could do this for circa £12,000.

Upfront cost
£4,000 - finders fee
£1488 - Rent per year (124PCM)
£12000 - Refurb cost
Total upfront cost £17,488

THAT IS A HUGE DIFFERENCE BETWEEN AVERAGE SALE PRICE AND VALUE - NOT SURE THIS IS CORRECT
ALSO, ARE YOU COMPARING THE VALUE OF THE SAME TYPE FO PROPERTY YOU ARE LOOKING AT IN THE SAME AREA
Avarage house sale £45k
Avarage house value £65k

ON THIS FIGURE YOU CAN RENT OUT FOR £368 A MONTH (£85 a week) BUT IT WILL COST £124 A MONTH TO THE LANDLORD. GROSS RENTAL PROFIT OF £244 A MONTH £2928 A YEAR BUT THERE WILL BE RUNNING COSTS TO COME OFF THIS
Average house rent 80-90pw (Didnt find ones in exact area but within 0.5miles)

1 Year rent
£4000-£4700

10 years of rent
£40k-£47k

YOU DONT APPEAR TO HAVE ACCOUNTED FOR ANY PROPERTY RUNNING COSTS, TAXES AND PERIODS WHERE THERE MIGHT BE NO TENANTS
Profit after 10 years:
£25k

HOW WOULD YOU FUND THE PURCHASE?
Buy house for 42k after 10 years

ARE THESE LIKE FOR LIKE PROPERTIES, 2 BEDROOMS, ETC
Last 12 months in Oxford road burnley bb11 value up by 3.78% = 2.3k

PURE SPECULATION AT THIS MOMENT
House value in 10 years? 80k

These comments are not a criticism of your plans and ideas, just a prompt to consider the wider situaiton.

G

 

[Longterminvestor]

This is where I think forums come into their own - allowing people to ask and discuss various aspects of property investment. I think they should be called "information exchanges" not forum. Priceless when used correctly.

Have you considered mentor schemes?

 

[realdeals]

Hi @DylanJones

FWL has highlighted a number of important factors which would be useful to know so that we can try and assist you in your research.