Cornwall portfolio expansion: a prefab demolition and redevelopment project

Finance: £135,000 | Location: Cornwall

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.

Prefab bungalow in Cornwall

Transforming a 1940s prefab bungalow into a lucrative investment

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 - a hotspot for property investment

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.

A profitable investment shown in an effective exit

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.

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