First-time property investors in Cheltenham use bridging finance

Finance: £145,000 | Location: Cheltenham, Gloucestershire

A young couple seeking their first investment into the property market in Cheltenham aimed to purchase a mid-terrace property with the intention of refurbishing it before selling it on for a profit.

Mid-terrace property in Cheltenham

An ideal first-time property investment opportunity

The couple intended to refurbish the property quickly to increase the value and sell it on. The vacant two-bedroom property is situated within walking distance of the town centre, making it desirable for potential buyers. 

Due to the short-term nature of the project, a bridge loan was deemed the most appropriate financing solution, with the loan repaid upon completion of the property sale. 

The property had an estimated value of £225,000, and with £92,000 cash by way of inheritance and savings towards the property purchase, fees, and SDLT tax, the total finance requirement was £145k - equating to a loan-to-value (LTV) ratio of 64%.

Increasing investment in the Cheltenham area

Cheltenham stands out as a good location for property investment; HM Land Registry data reveals that the current average house price in Cheltenham is approximately £342,421, compared to the UK average, which stands at £292,882. 

Property price: Due to Cheltenham's robust economy, desirability as a residential location, and limited property supply, housing prices in the area exceed the national average for England. Property prices have increased by 22% in Cheltenham in the last five years alone. 

Transport links: Cheltenham benefits from excellent road connectivity, situated directly on the M5, providing convenient access to the West Midlands and the southwest of England. There are also direct rail services, with a quick 12-minute journey to Gloucester, under two hours to London, and connections to Birmingham.

Educational institutions: Cheltenham provides diverse educational opportunities for families, ranging from primary schools to the University of Gloucestershire. The town also has no fewer than 12 'Outstanding' Ofsted-rated schools and independent institutions such as St Edward's School and Cheltenham College. 

Local events & attractions: Festivals like the Gold Cup greatly benefit local businesses and homeowners in Cheltenham. Renting out extra space during festivals offers a way to earn income while maintaining flexibility. Properties near the town centre with parking and ample living space, often fetch a premium.

Securing a bridging loan to fund the project

To successfully proceed with their investment venture, the couple required bridging finance of £145,000, which would be used towards purchasing the property and the subsequent refurbishments. 

The mid-terrace property had a modernised kitchen, dining area, gas heating, a basement and on-street parking. The property required: 

  • New bathroom, replacing the shower with a bath
  • New flooring, painting and redecorating in both bedrooms
  • Replastering and painting in the downstairs living area

With a budget of £20,000 for the refurbishments, they estimated the new value to be around £260,000 post-refurbishment.

Establishing an additional income through yearly investment

The main objective for the couple is to flip two properties a year, with the aim of constructing an additional income stream. 

Every successful investment not only boosts investor confidence but generates investable equity for upcoming projects, empowering clients to undertake larger and more lucrative opportunities in the future.

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