With a decade-long history of successful property flipping investment success, a seasoned investor sought to capitalise on a prime buy-to-let opportunity in Cornwall, targeting the purchase and redevelopment of a 1940s prefab bungalow.
The property in Cornwall was a 1940s prefab bungalow with potential for demolition and rebuild. The investor envisioned creating a property aligned with the local market preferences, increasing the overall property value.
The property had an estimated value of £235,000, and with £225,000 allocated towards the planning permission process, demolition, rebuild costs, fees, and SDLT tax, the total finance requirement was £135k - equating to a loan-to-value (LTV) ratio of 63%.
Upon completion of the new build, the property's estimated value would be around £420,000. The investor would look to move onto a BTL mortgage once essential building work is completed.
Cornwall, known for its landscapes and growing property market, is the chosen location for this investment. Factors such as the appeal to holidaymakers, a strong local community, and the potential for increased property values make Cornwall an attractive market for the investor's portfolio expansion.
Return on investment (ROI): The popularity of Cornwall as the UK's favourite vacation spot has been a key factor in the consistently upward trend of property values. According to the UK House Price Index, prices increased by 30% to September 2023, reaching £316,210.
Investment opportunities: Cornwall offers a variety of accommodation options, including Airbnb property investments, holiday lets, and traditional buy-to-let, meeting the needs of tourists and residents. With a growing tourism industry driving demand for short-term rentals, it's an attractive destination for property investors looking for profitable returns in rentals.
Property types: Distinctive historical or architectural features enhance the popularity of holiday lets. In Cornwall, glamping in shepherd's huts or yurts is highly competitive. Considering these unique aspects, well-appointed, modern, and tastefully furnished holiday homes appeal to a diverse range of visitors year-round and maximise the potential yields of a build-to-let.
Transport links: Cornwall has well-connected airports in Plymouth (1hr 30) and Newquay (30 mins), providing access to destinations worldwide. Cornwall is ideal for buyers and renters commuting to work or those looking for a holiday letting opportunity.
Successful investment involves analysing local market trends, understanding tenant or buyer preferences, and adapting properties accordingly. Given Cornwall's location, a modernised property can appeal to both short-term vacationers and long-term residents.
The long-term investor had a clear exit strategy in place and could repay the property development loan once they had acquired a buy-to-let (BTL) mortgage. This move aligns with the investor's portfolio management, leveraging the increased property value of the redevelopment to secure a long-term mortgage solution.
The success of this investment hinges on navigating planning processes effectively, executing a successful redevelopment or renovation, and leveraging the increased property value for a strategic exit onto a buy-to-let mortgage.