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Critique my deal please!


James S

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Hi all,

 

Just looking for other investors opinions on a potential deal I've been looking at - 

 

2 bed terrace in Kingstone, Barnsley 

 

Asking price - £75,000, expect to get it for £70,000 - numbers based on £75k though

Rent - +£450 (tenant in situ)

Interest only mortgage at 3% on £56250 -£140

Management at 7.5%+ VAT -£35

Buildings Insurance -£12

 

Total NET - £263 PCM

 

Money in - £22,300.

 

I would appreciate your thoughts.

 

Thanks,

 

James

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Potentially a good deal, depending on what you want to achieve. So some questions, not to answer here (unless you want to), but for you to make sure you understand.

Do you know the area? Is it nice, good rental demand etc or the sort of place where houses are boarded up and feels like it's just going to get worse? If you're local then great, but if you've never been to the area and are just attracted by the yield, have you researched?

I don't know Barnsley, but the rent sounds like housing benefit level, which matches the house price. Nothing wrong with that (I've got 3 in a similar vein), but understand what that can mean - usually no deposits which can mean a lot of tenant turnover and work when they've left. The wrong area can also lead to voids, as you struggle to find someone who wants/needs to live there.

If it is housing benefit, rent will grow very slowly which means so will house prices - if it's mainly landlords and rents are rising, there's no pressure on demand.

Beyond the specific property, have you checked section 24 impact? Rent should cover any mortgage stress tests, so won't be an issue.

Does it meet your strategy and goals? £250+ a month is nice, but your not going to be able retire on it, so where does this fall within the bigger picture and does it fit?

Definitely not trying to put you off - if this was in one of my areas, I'd probably be going for it as it fits what I'm doing

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