sacrificed office space in order to make a lounge for
the tenants, that has free Wi-Fi, we also built a conference
room that the tenants and local business can hire. Basically
we made the building as comfortable as we could for
the tenants and since we will be working from there,
it had to be impressive and make a statement as to the
type of company Castledene is.
refurb cost came in at £170,000, which was about
£8,000 over budget, as we had a few unexpected
surprises and the planning dept changing their minds
on a few things mid build didn’t help, but overall,
and for the finish of the building I was very pleased.
Now I must admit building a business centre is a little
new to me so finding business start ups and expanding
business’s was a little daunting. We had a lot
of publicity from the local council, were in all the
local press, radio stations etc so that helped immensely.
also contacted a Carl Hopkins who had appeared on the
“Secret Millionaire”. Carl spent a few weeks
in Easington back in April 2009 and has kept in touch
with the four causes that he donated money too. I found
him to be very approachable and a genuinely nice guy
who cared for the area. The press loved the fact he
was coming back, and also how it had changed so we had
some great exposure from that. Three of our current
tenants came as a result of this marketing, who previously
had not known about the project.
As this is not your typical remortgage I went down the
commercial route. Now as in my last article on HMO,
the rent has a major impact as to the valuation of a
this instance when fully let the Business centre will
produce annual rental income of £65,000 when considering
my annual mortgage on the property currently stands
at £7,200 it wouldn’t be that bad if I left
my money in. Obviously I want to release some money
i spent on the project and hopefully a bit more to finance
talking to a few commercial lenders as to their LTV,
fees, Interest rates etc I decided to go with my bank.
Its very important to way up all options as a project
of this size could go dramatically wrong if you pick
the wrong lender.
Initial purchase price - £110,000
costs - £170,000
rent - £65,000
Valuation - £650,000
10% for costs - £585,000
LTV - £380,000
(minus 5k costs) - £95,000
(Repayment over 20 years) – £3,400
rental income £5,400
chose 65% loan to Value (even though 70% was available)
for two reasons. Firstly I was offered a much better
rate. Secondly I didn’t want to gear the property
up to its maximum, I wanted to leave some real equity
in the building. I can hear all the property investors
saying “Have you gone mad?” “Leverage
is the key to property investing” “Gearing
is the way forward”.
my answer to that is that’s what got a lot of
investors into this mess in the first place. Gearing
up their properties to the max and living the millionaires
lifestyle, not only is it very bad business sense its
irresponsible and gave rational and sensible property
investors a bad name.
cant complain, i’ve made a decent profit in under
a year and positive cash flows £2,000 per month
I want to be able to sleep at night when the interest
rate rises (even though I got a 5 year fixed rate).