Cornwall portfolio expansion: a prefab demolition and redevelopment project
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.
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.
