10 minute read
CASE STUDY: Truss-enomics 1-bed refurb
It’s 15 years since Sabreena Davis invested in her first buyto-let. Now after embarking on a successful career as an architectural designer and having two children, she has gotten back in the game – with a little nudge from her partner and no help whatsoever from former Prime Minister Liz Truss!
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OTH: So… thanks for talking to us on your lunch break from the day job. Tell us a bit about yourself and your property investing journey so far?
So, basically about, I’d say about 15 years ago or so, I brought like a really small three-bed terrace house for buy-to-let purposes in Basford with the view to buying more. But obviously, work happened and life happened, had my children and needed to focus on the nine to five. So fast forward, how many years later it is now, and my partner now, who is also an investor - he sort of got a bit fed up with me saying ‘I wanna do this’ and watch stuff on YouTube and say ‘This
strategy would work or that strategy would work.’ He just got really fed up of hearing me and he just was like, right, Sabreena, here you go, here’s some money. He’s a bit of an entrepreneur himself. He’s got a couple of properties himself, he’s got a quite a big portfolio - 11 properties in his portfolio - so he’s got a bit there and he is also a car trader as well. From there I went to a few networking events, I went to the Ste Hamilton one met so many like-minded people and just got motivated to start! I then wrote a plan and started. Went on a few viewings and bought the flat in Wollaton, which had been sold three times but fell through each time.
Before
After
OTH: Excellent. What do you do for a day job?
I’m an architectural designer. I’ve got about 20 years’ experience in construction doing that.
OTH: A very useful day job for an aspiring property investor for sure, but was there still a mindset shift you think you needed to undergo?
As said, going to quite a lot of these networking events and also watching a lot of people on YouTube. And when I say YouTube, it’s not just the bigger YouTube [property influencers], it’s also the smaller YouTubers, the people who are starting out or wanting to start out. So, it’s a case of using all the project management and the decision-making and the problem-solving stuff that you get from your day job and sort of applying that to your own thing as well. Because obviously in my day job, all those things are always tied up in red tape.
Also, as I said, my partner has experience in property and he’s always doing projects at work and things like that and doing building work and he know he’s got a really good relationship with the builder that we use, so I’ve always known the teams and the tradesmen that could use to do that, but it was trying to get the processes in place from work and merging the two together.
Before
After
OTH: So, tell us about this property, why was it a good prospect to get you started again?
What I did was I sort of sat down and I’ve got a five-year plan in place and that’s broken down into the next 12 months, my shortterm goals, my medium term goals, which would be three years from now. So, I’ve broken all those down and then from that I’ve devised - looking around the area - what I want from a property. I’ve got my three key criteria, my property profile so to speak, so I’ve looked at that and then this property fits into two of those criteria.
OTH: Interesting, what criteria did you arrive at?
Basically, for one, it’s something that I can add value to - a property that really needed a nice refurbishment. And two, it worked out as a good ROI, at least £300 profit per calendar month. So it ticks pretty much two out of the three of my criteria.
It’s a one-bedroom flat in a good area for Nottingham and it’ll be easy to let and low maintenance. It’s low bills, energy-wise is very
cheap. I thought it’s going to be very attractive to continually let on a long-term basis moving forward. So that was a major part to play as well.
OTH: Okay. It meets two out of three of your criteria. So, what was the third and why doesn’t it meet it?
The other criteria that I have moving forward is if there’s the possibility of splitting the property. So either if you have the possibility to create two flats or there’s a residential and a commercial bit, but you can convert then to a residential as well, so you can get two forms of income from it.
OTH: Gotcha. So how did you finance the deal?
I went to a mortgage broker, I use Castlegate Financial, the team are really good there. My partner gifted me the deposit and we’ve gone for a bridge to let purely because it was not livable when we brought it so mortgage lenders wouldn’t do a buy-to-let on it.
OTH: Were there any challenges during the conveyancing process?
The main thing for me was the type of lending that I went on and also because I was purchasing within a company basis as wellthose things slowed the conveyancing process down a bit. And obviously because it’s a two-stage, it’s the bridge-to-let, to me it’s almost like two mortgages rolled into one. The hard bit was to get the completion on the bridge, the bridge loan, first of all, which everyone always says it’s quick and it’s the easy bit, but to me it seemed like a long process. It was just trying to [push it] through with the solicitors. With it be my first one since the last one that I’d done [15 years ago], I remember that one being a lot easier and a lot smoother to go through. However, because I was purchasing through a company as well, there was other things like you’ve got to get your director’s loan drafted up for the deposit. It was just trying to get those legalities sort of signed and done. I’m coming from, even though I’m in the industry, that’s from a drawing and a creative background - I’m not a legal head. I don’t understand all of that. It was a big learning curve trying to understand what I needed to do and which forms needed to be filled in.
OTH: Was the timing effected by any external factors too? Yeah, it was towards the back end of last year, basically. We actually got really good rates [on the bridge-to-let]. So then while it was going through the actual completion phase for the first part of the bridge-to-let, it got delayed and we basically went through completion while the whole Liz Truss minibudget thing happened and then all the rates skyrocketed. That added to the time pressures as well. It was just really frantic to get it and push it and get the project done so that we could then go onto the buy-to-let product and release the funds and take advantage of those really, really good rates.
OTH: So, what did you do to ensure that you got it done in that timeframe?
We had a set programme, a set sort of scope of works of what we needed to do but because the completion date shifted, some of the tradesmen then got booked up. Luckily, because we worked with the tradesmen [Sabreena’s partner] Jason has always worked with we’ve got quite a good relationship with them, we could rejig stuff so that it fitted within the dates and programme that we needed. It was quite stressful. It was problem-solving on a daily basis, trying to work around everyone and get people to still come in. I was really pestering every morning, being a bit of a pain.
OTH: Talk us through the refurb…
The flat needed a full refurb. The person who owned it before was an elderly man who unfortunately passed away. He was a heavy smoker, so everything was not even yellow, it was orange and covered in sticky nicotine build up and residue. The windows were orange, anything white was orange, the carpets were embedded with smoke and dirt. The kitchen and lounge were particularly bad. Plus, the fittings and decor hadn’t been changed since the 80’s!
So, we started with the strip out so we could see what we were working with. Then we got the heating redone and channeled into the wall as the old pipework needed to be ripped out, plus we needed to get a new boiler installed. The flat needed a full rewire, new kitchen and bathroom suite, new doors. Of course, it needed a new carpet, spot repairing of the walls, repainting and we laid new matching wet spaces vinyl in the kitchen and bathroom. The works!
OTH: Any challenges or unexpected roadblocks?
Tradesmen getting booked up due to delays from completion (mentioned earlier) meaning that we had to create workarounds and do things unconventionally to get the project done – such as the floors – our plumber (who is able to other trade work too) laid the floor earlier than planned. Also, the doors - I ordered the wrong sizes in a hurry!
OTH: What key learning points have you taken from your experience with this project?
Keep on at the solicitors, literally get on them on a daily basis to push that through and not be so naive to think that you’ve called them one day and they’re going to get on and do it. Just basically be the loudest person shouting at them that day to get things done…
I do feel like the solicitors I used, I think, it worked out that they seemed to have the end of the day slot for dealing with my case because it seemed like at half past five they’d be like, oh, ‘Can you fill this form out?’ And being half past five and I couldn’t phone them to say ‘Can you explain exactly what I need to put where?’ because it was all legal jargon to me.
Main thing for me was it was small project to learn from – I learned a lot about problem-solving, which I will take to the next project. Overall, I’m happy with it as it is a great re-start and addition to the portfolio – feel it would be easy to rent.
OTH: That’s great and best of luck with the next one. Where can people follow you on that journey?
My handle on YouTube is @sapphirepropertyinvestments. I’ve also got the Instagram @sapphire_designs_ as well and the same on TikTok as well.
THE NUMBERS
Purchase price £80K
Fees and Legal £5,000 (inc. stamp duty)
Renovation estimate £8,000
Renovation actual £10,000 ROI 7.2%
Estimated ARV £95,000
Actual ARV £110,000
Net Cashflow £300 pcm
ROI 7.2%
