Case Study: Buy-to-Let in Durham with Owen Small

During this case study, Owen Small tells us about his buy-to-let project in Durham…

Tell us about the project…

This property was found through a sourcing agent, it was a vacant and tired looking 2-bedroom end of terrace with front and back gardens.

The property was a repossession with a 14-day exchange period, but I was able to purchase with cash and had my solicitor act quickly up to the point of exchange. The property was purchased 100% using angel finance, and I had negotiated with my angel to pay the lump-sum interest payment at refinance, and this arrangement suited them. Win-Win!

The scope of works was internally stripping the property back to brick, migrate the bathroom from the 1st floor to the old utility room/outhouse on the ground floor by blocking up the two backdoors. Add in an additional WC on the 1st floor with studwork partitions and convert the old bathroom into a 3rd bedroom.

The property had a full electrical re-wire and plastering, with a new kitchen, bathroom, complete decoration, and flooring throughout. A new combi boiler was also installed. The external works consisted of clearing the gardens, cutting grass and hedges to make the property more presentable.

Did you have any challenges?

Firstly I am based in Manchester and the property is near Durham, so I was already investing at a distance. I employed a part-time project manager to oversee the main works of the project and provide me with weekly update calls and photos/videos.

I appointed a reputable builder on the project, after agreeing on a start date, paid him a commencement fee to ensure he starts on site promptly and to purchase initial materials. The labourers started on the project stripping out the property. 2 days into the project commencing; I receive a call from the part-time project manager telling me the builder has stopped work on site and he is now in hospital because he has had stroke.

Due to the builder being in hospital, he was not able to manage or pay the labourers on site, so they stopped working and pulled their tools off site also.

Luckily, I was still in contact with the sourcing agent, and they mentioned they has a good builder they had been working with on past projects, and they may be able to visit and quote for my project also. This is exactly what happened, and within a couple of weeks they were able to take over the project, as the labourers had only stripped half the property at that stage.

However, due to the awkward start on the project and potentially stretching themselves too thinly over other project commitments, the second builder took a little longer than was planned to complete and it was sometimes a struggle to keep trades on site, but overall they did a good job of finishing the project to a high standard.

Fortunately my property was purchased with 100% angel finance with interest to be paid at the refinance stage. I didn’t have any high monthly repayments such as a bridging loan, where the builder issues and delay to the programme may have caused a detrimental impact on my finances.

How did Fielding Financial’s training help you?

The network has been invaluable!!! When I came against these issues, I was able to speak to others who had more experience and had been through similar challenges. They gave me so many options and ways to deal with this unique scenario.

My Top Tips and Learnings

I have learnt that on any future project, I will always check that there is more than one builder or manager able to take over the project if the other is not there. As my first builder worked on his own and employed trades, when he was not able to work, there was nobody else to manage the teams of workers on site, so the project stopped.

Having a detailed and prescriptive scope of works for the second builder to quote. This helped me massively when swapping builders as I was able to detail exactly what I needed to be done. I have construction knowledge and I used that to detail out the works I wanted doing.

The Results…

What’s Next?

“Now I have a few BTLs up and running. This year I am progressing with an HMO strategy. I want to increase my income and jump up the pyramid. Watch this space!”

Keep updated with Owen’s projects by following @lightboxproperties on Instagram!