On this pageBuy-to-let investment in Crawley with a £140,000 bridge loan A prime BTL investment opportunity with close proximity to London Crawley - an ideal location for prospective property investors Financial requirements for investment opportunity Navigating the property investment project and financing challenges Gain valuable financial insights regarding bridging loans for buy-to-let properties
Two brothers sought short-term property finance to purchase and refurbish a residential property in Crawley through bridge finance. The pair were looking to quickly purchase and refurbish a rental property, turning it around in 3-months, as part of their long-term goal of building a passive income stream.
The pair had identified a £300,000 terraced house in Crawley, a popular suburb of West Sussex that holds appeal due to its 28-mile proximity to London Gatwick.
The two-bedroom residence features a ground-floor layout with a living room adjacent to a kitchen/breakfast room. Upstairs, there are two bedrooms and a family bathroom. The second bedroom provides views of the garden and was earmarked as a potential home office space. The decent-sized garden was to the rear of the property. The overall size of the property allows for a number of prospective renters.
The property had an estimated value of £300,000, and with cash by way of an inheritance of £225,000 towards the property purchase, fees, SDLT tax and refurbishment, the total/gross bridge finance requirement was £140,000; this equated to a loan-to-value (LTV) ratio of 46%.
Crawley stands out as an enticing destination for prospective property investors, where the property market is buoyant and features numerous sought-after residential neighbourhoods in and around the town. These include Southgate, Maidenbower, Three Bridges, Tilgate, Pound Hill, and Furnace Green.
Strategic transportation links: Its excellent transportation infrastructure accentuates Crawley's strategic location. With direct rail services to London Victoria available within a 40-minute commute, Crawley becomes an ideal choice for commuters seeking more economical housing options outside the city. This accessibility enhances the town's attractiveness for both residents and potential investors.
Potential for capital appreciation: From August 2022-2023, Crawley has experienced a notable increase in the average sale price of properties from £314,839 to £325,030, an increase of 3.2%. This places the area in the 10th position among the 64 local authorities in the South East in terms of property prices.
Economic significance: Crawley's inclusion in the Gatwick Diamond, a region housing around 45,000 businesses, significantly contributes to the high demand for rental properties in the area. The economic vibrancy of this diamond-shaped zone underscores Crawley's position as not only a residential hub but also an economic centre, providing a diverse range of opportunities for property investors.
Rental yield expectations: The investor duo had identified Crawley for its promising rental yield prospects. Based on an average rent of £1,500 per month for a 2-bedroom house, the typical rental yield in Crawley is estimated to be around 6%, providing a tangible financial incentive for those considering property investment in the area.
Budget-conscious renters: Recognising Crawley's reputation as a more budget-friendly option compared to neighbouring towns and villages, the investor duo strategically identified this characteristic as desirable for potential renters. Goodlord's assessment further solidified Crawley's status as one of the most affordable towns within an hour's commute of London.
For the first-time investors, Crawley stood out as an attractive and lucrative first BTL investment, with strategic transportation links, continued demand and promising rental yield expectations.
For the brothers to facilitate this investment successfully whilst covering initial purchase costs along with minor refurbishments - bridge finance amounting to £140k was required.
The investors budgeted £40,000 for the property refurbishment. This would facilitate upgrading the living space and focusing on a high-spec kitchen suitable for a likely London-buyer, whilst ensuring that both bedrooms and the bathroom were refurbished to a high standard.
The primary challenge they faced as first-time property investors was raising the finance. What the clients lacked in experience, they made up for in really knowing their numbers. They proved their credibility to lenders by outlining a thoroughly detailed plan. Whilst one of the borrowers had less than perfect credit, and the bridging loan needed to be completed quickly, the low LTV meant two lenders would happily take the loan and offered agreements in principle the same day.
Following the completion of refurbishments on schedule - they were able to successfully refinance via a traditional BTL mortgage, which was their intended exit strategy.
The brothers aim to complete more projects such as this in the next few years to generate enough passive income to travel around the world.
Using the services of a specialised bridging loan broker with expertise in first-time property investment can prove to be advantageous. Good brokers frequently secure more favourable rates by negotiating directly through presenting the application.