Imagine we find a property listed for £150,000. After some negotiation, we manage to secure the property for £145,000. Not long ago, in September 2017, the property was valued at £200,000, showing its potential for future appreciation.
Before renting it out, the property needs some work—full redecoration, new carpets, light maintenance, and preparation for letting.
After factoring in refurbishment costs and all other expenses associated with purchasing and letting the property (including legal fees and the first year’s building and contents insurance), the total investment comes to £160,000. This “investment package” covers everything, ensuring that the property is ready for tenants.
The Crowdfunding Process
Once registered on the Crowdfolio platform, investors can access a detailed report that breaks down all project costs. After reviewing the investment opportunity, investors decide whether they want to participate in increments of £1,000.
For simplicity, let’s assume 160 investors contribute £1,000 each, raising the full £160,000 required to fund the project.
Rental Income and Returns
After refurbishment, the property is let for £1,000 per month. Each of the 160 investors earns £8.50 per month from the rental income. After deducting a 15% management fee, this works out to £102 annually for every £1,000 invested.
If an investor had put in £5,000, their share of the monthly rent would be £42.50, offering a relatively passive income stream.
This rental income equates to a 6.8% annual net yield on each £1,000 investment.
Capital Growth Potential
Once the refurbishment is completed, the property is independently valued at £160,000, equal to the total investment.
Looking ahead, a realistic capital growth rate of 3.5% per year over a 10-year period could increase the property’s value to £225,000. This would boost the value of each £1,000 investment to £1,406 by the end of the 10 years.
In addition to receiving rental income over the years, investors would also benefit from this capital appreciation, resulting in a total gross return (rental income plus capital growth) of 10.3% annually.
Why This Investment Could Work for You
By investing in this property, investors stand to benefit from two key revenue streams: regular rental income and long-term capital growth. The combination of Manchester’s strong rental demand, property value appreciation, and our fully managed investment approach makes this an attractive proposition for both new and seasoned property investors.
At Crowdfolio, we simplify property investment by handling the sourcing, refurbishment, and management of the property, ensuring a smooth process for investors. With our detailed reporting and expert oversight, investors have all the information they need to make informed decisions and watch their investments grow.
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