Property Overview

• Location: Manchester, UK

• Property Type: 1-Bedroom Flat

• Purchase Price: £175,000
  
  

Estimated Refurbishment Costs

Based on industry averages, the refurbishment costs for a 1-bedroom flat can vary depending on the extent of the renovation:

• Minor Renovation: Approximately £14,200

• Full Renovation: Between £29,675 and £42,248
  
  

For this case study, we'll consider a full renovation with an estimated cost of £35,000.

Financial Breakdown

1. Acquisition Costs:

   • Purchase Price: £175,000

   • Stamp Duty: £1,000 (assuming first-time buyer rate)

   • Legal and Miscellaneous Fees: £1,500

   • Total Acquisition Costs: £177,500
     
     

2. Refurbishment Costs:

   • Renovation Expenses: £35,000

   • Total Investment (Acquisition + Refurbishment): £212,500
     
     

3. Post-Refurbishment Valuation (After Repair Value - ARV):

   • Estimated ARV: £250,000
     
     

4. Selling Costs:

   • Estate Agent Fees (1.5% of ARV): £3,750

   • Legal Fees: £1,500

   • Total Selling Costs: £5,250
     
     

5. Profit Calculation:

   • Gross Profit: ARV (£250,000) - Total Investment (£212,500) = £37,500

   • Net Profit: Gross Profit (£37,500) - Selling Costs (£5,250) = £32,250
     
     

6. Return on Investment (ROI):

   • ROI: (Net Profit / Total Investment) × 100 = (£32,250 / £212,500) × 100 ≈ 15.2%
     
     

Investment Insights

• Market Selection: Manchester's property market offers diverse opportunities for investors, with areas undergoing regeneration presenting potential for capital appreciation.

• Property Selection: Identifying properties that require refurbishment can lead to significant value increases post-renovation.

• Financial Planning: Accurate budgeting for acquisition, refurbishment, and selling expenses is crucial to ensure a profitable outcome.

• Risk Management: Conducting thorough due diligence, including market analysis and property inspections, mitigates potential risks associated with the investment.