Adding a room – a simple means of increasing value

How we increased our return from £110 per week to £137 per week by a simple alteration to one of our properties

Our strategy is high yield. We are all about cashflow and high returns.

We do not get involved in development where planning will be needed and where you may have to wait a considerable time for the property to be ready

That is great if you are a developer and looking to sell your properties and make a one-off profit. But if you are looking for rental returns the longer the property unlet the more you are losing so you want to refurbish and let as quickly as reasonably possible.

Not all improvements add value to the bottom line namely the rent that you get from the property. Many novice Landlords will spend a lot of money on improvements that Tenants simply do not value so effectively the Landlord has wasted their money. Creating a lovely garden would be an example of that

But there are works that do pay dividends. One is to create a bathroom where there is only a shower room. Another is to add a bedroom. A third is to create a better kitchen area.

Recently we bought a large 3 bed flat above a shop. We realised we could easily create a 4th bedroom by converting an area that was being used as a workspace/ second living room on the top floor. This simple alteration meant that the LHA rate for the property went from £110 pw to £137 pw or £5,720 to £7,124 per year an increase of £1,404. As this flat had only cost £30,000 that was a significant increase on the yield of 4%. i.e. from 19% to 23%

And the real bonus is that in this area (as in many areas) there is a significant lack of 4 bed housing so that there would be strong demand to rent this property. Much stronger than for a 3-bed property where there is more choice available.

When you are a professional property investor these are the opportunities you should look out for.

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