Have you ever heard of synergy? Well its where the sum is greater than its parts. This applys to property as well. We have many clients making money by buying property that consists of 2 or more individual dwellings, e.g. flats, but held on one legal freehold title.

For example the previous owner may well have bought the property and converted it from a 5 bed terrace house to 3 self contained 1 bed flats. As a single freehold property, the market value may not be as great as the combined value of 3 individual flats if they could be sold individually on the market.

Real Life Example:
Purchase price of single freehold containing 3 flats: £300000
Individual value of each flat if came to the market with its own lease: £135000

You will need a solicitor to create the titles for you, but for a bit of legal work and creating of a management company, this client made over £100000 gross profit.

Finance

The property first needs to be purchased as one freehold, and although not every lender will consider properties arranged this way, we do have lenders that will consider up to 10 flats on one freehold title. Lending is available up to 85% and also to limited companies.

When the property has been purchased, long leases will need to be arranged for each individual flat by the solicitor and simultaneously new mortgages will need to be arranged for each individual flat but can be arranged at 85% (or possibly even 90%) of their new increased value-releasing your instant capital growth!
 
CLICK HERE to contact my broker to get finance on such properties.

Ajay.

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Posted on: 26th Feb 2008