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Case study - Cardiff Buy-To-Let

Cathays Terrace was purchased in February 2019. It’s a garden flat within a converted large Victorian building, walking distance to Cardiff city center, situated in the lively area of Cathays which is popular among students and young professionals. It was originally listed for £150,000 which was in line with other flats in the area but after a bit of back and forth we managed to secure the property for £132,000, mainly due to the work that needed doing to bring the property back up to spec.

Although the property was listed as a two bed in reality you would be doing well to squeeze a single bed in the second bedroom so it was easy to overlook the potential use of the overall space and just see the flat as a pokey 1 bed. Combined with the work that needed doing to modernise the property throughout meant the property had sat on the market for a while with no offers, undoubtedly as the work and lack of a usable second bedroom were a deterrent to potential buyers.

Before …

The work…

We saw an opportunity to maximise the internal space by reconfiguring the floorplan and giving the property an open plan feel. We removed several internal stud walls to create a larger kitchen/ diner at the rear of the property which leads on to the garden, leaving the two large rooms at the front for substantial double bedrooms. By removing the stud walls we were also able to utilise the wasted hall space and create a much larger brighter and more open plan layout that no longer feels claustrophobic, while at the same time offering two above average sized bedrooms, filled with plenty of natural light.

While the rip out was underway we found fairly substantial damp which had been concealed by boarding over the walls with more plasterboard. We also found the ceiling joists were rotten where they sat in the external wall. This resulted in having to replace joists, repoint the internal brickwork, tank the internal walls and then re board and plaster. We also added vents to allow the walls to breath and fixed the gutting outside which was causing water to run down the wall and into a crack in the render, causing damp to ingress. The extra cost for all this was around £2000 which we had not anticipated because although we knew there was damp the severity was not evident before ripping the walls down. This shows the importance of always having a contingency within every refurb as you simply do not know what you will uncover once you start the rip out. Fortunately we had a contingency budget in place and as it’s a leasehold property the replacement joists were a shared cost between all flat owners as was the external work.

The works involved:

- Stripping all wallpaper,

- Removing stud walls

- Partial rewire,

- Partial re-plaster,

- Landscaped garden

- Re-pointing brickwork and waterproofing walls

- New kitchen and a bathroom refresh

- Painting throughout

- New carpets and furniture

After ...

While the refurb in this case did not add a massive uplift in the capital value it enabled us to let the property as a spacious 2 bed, rather than a small 1 bed, meaning it appeals to couples as well as a pair of students. This had a big impact on the rent we managed to achieve which was £100 per calendar month more than local agents said we would achieve. An extra £100 per month equates to a much higher ROI and also pitches the property at a higher level in the market. Although it would be perfectly possible to purchase 2 bedroom flats in other areas of Cardiff for cheaper we focus on acquiring properties that meet our ROI requirements but importantly that also have the opportunity for good capital growth in the future. This typically leads us to areas of higher rental demand, typically closer to city centres with period properties which often fetch a higher price, but are more aesthetically pleasing and often desirable for future owners or tenants. The aim for us is to hold for the long term so we chose these properties based on strong local fundamentals such as transport, business’s and amenities but also less tangible aspects such as curb appeal and desirable postcodes. Knowledge of your local market is essential as having a locals knowledge will tell you which streets are desirable to live on and which are to be avoided. They may be a matter of meters apart however in the long term one will be easier to rent or sell than the other.

This flat has now been let to the same original tenants for over 12 months. While we have had to deal with the odd maintenance request, such as replacing the induction hob when the tenants dropped a jar on it, the property has had very little input from us at all proving BTL’s are one of the most passive forms of property investment out there… providing the refurb is done to a good standard and you reference your tenants correctly to avoid any unwanted surprised once they move into the property.

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