Investment Analysis: Coombe Road, CR0
Executive Summary: A strategic auction-based acquisition of a 2-bedroom property in Croydon. With a competitive entry price, this deal offers significant immediate cash flow potential. Using the provided buyer profile (First-time buyer) and financing constraints, we have modelled a high-return scenario, provided the auction purchase price is tightly controlled.
Rental Yield & Financials
The Gross Yield of 8.2% is exceptionally strong for the Croydon area, largely driven by the efficient purchase price of £250,000. By achieving a rental income of £1,700pcm, we secure a robust ROCE of 22.4%, making this a highly efficient use of the £65,300 total capital employed.
Cash Flow Projection
After servicing the mortgage (£175/mo at 1% interest rate, as per input parameters), agency management fees, and a maintenance reserve, the property yields a healthy positive monthly cash flow of £1,221. *Note: The 1.0% interest rate utilized is a highly preferential rate; standard market BTL rates would reduce this surplus.*
Capital Growth Potential
Growth Score: 6/10. Croydon is a well-established commuter hub with significant ongoing regeneration (Westfield development impact, excellent transport links to London Bridge). While capital growth has plateaued in some London boroughs, the property's potential for minor cosmetic upgrades will force immediate appreciation, aligning it closer to the £350,000-£400,000 range of similar 2-bed stock in the area.
Mortgage Terms
- LTV: 84% (Loan amount: £210,000)
- Interest Rate: 1.0% (Input Parameter)
- Monthly Payment: £175 (Interest-only)
- Stress Test: Pass (Rental income comfortably covers the interest-only payment).
Upfront & Ongoing Costs
Upfront Costs
Property Purchase Price£250,000
Down Payment (Fixed Input)£40,000
Buyer Premium (Auction Fee ~3.6%)£9,000
Bank Fee (3% of Loan)£6,300
Light Refurbishment£10,000
Total Capital Employed£65,300
Ongoing Monthly Costs
Mortgage Repayment£175
Management (12%)£204
Maintenance Reserve£100
Total Monthly Outgoings£479
Tenant Demand
Tenant demand in CR0 is high. Being 0.3 miles from South Croydon station, this property is prime real estate for commuters working in Central London. The "Open Plan" kitchen setup is highly desirable for young professionals. Void risk is minimal, estimated at < 1 month per year.
Location Fundamentals (Score: 8/10)
Excellent connectivity. South Croydon (0.3 miles) and East Croydon (0.7 miles) offer rapid access to London Victoria/London Bridge. Access to local amenities and the Croydon town centre is high, with low risk of Article 4 restrictions on this type of unit.
Exit Strategy
Primary: Buy-to-let hold for yield.
Secondary: Refinance after 2 years.
HMO Potential: Low, given the 2-bed footprint, but the separate garage is a value-add that can be rented separately or sold as a parking spot to local residents.
Property Condition & Refurbishment
The property is in good visual order. Refurbishment here is Cosmetic/Staging only. The "Lower Ground Floor" aspect requires ensuring ventilation and natural light are maximized through smart interior design.
- Add-Bedroom Potential: Nil. Space is optimized as a 2-bed.
- Refurb Type: Light Refresh.
Risk & Compliance
Risk Score: 40/100
Explanation: The primary risk is the "Auction" nature of the sale, which requires rapid due diligence. Leasehold/Share of Freehold status must be verified by a solicitor before bidding. As a "Lower Ground Floor" unit, damp proofing checks are mandatory.
Negotiation Points
• Auction Purchase (Ask for 'Buy it Now' price) - 100% Conf
• Confirm Service Charge - 90% Conf
• Check for damp issues (Common in lower ground units) - 80% Conf
• Leverage 'Cash Buyer' status if possible - 80% Conf
Refurb Shopping List
1. Feature Lighting - £200
2. Staging Furniture (Living) - £1,500
3. High-Quality Blinds - £400
4. Premium Paint (Farrow & Ball style) - £300
5. New Switches/Sockets (Brushed steel) - £200
6. Hallway Mirror (Large) - £150
7. Bathroom Accessories - £150
8. Kitchen Cabinet Pulls - £100
9. Feature Rugs - £200
10. Bedroom Linens (High thread) - £250
11. Artwork - £300
12. Indoor Plants - £150
13. Smart Thermostat - £200
14. New Internal Door Handles - £150
15. Exterior Planters - £100
Labour Tasks
1. Full Property Deep Clean - £300
2. Professional Painting (Whole House) - £2,000
3. Re-grouting Tiles (Bathroom) - £300
4. Fix minor plumbing leaks - £250
5. Electrical Safety Cert (EICR) - £150
6. Gas Safety Cert (CP12) - £100
7. PAT Testing - £100
8. Furniture Assembly - £400
9. Carpet Cleaning (Deep) - £150
10. Hanging Mirrors/Art - £150
11. Window Cleaning - £100
12. Garden/Patio Tidy - £200
13. Lock changes - £150
14. Radiator Bleeding/Check - £100
15. Snagging Fixes - £500
Refurb Timeline
Total Duration: 4 Weeks
Week 1: Surveys & Cleaning || 1 week
Week 2: Painting & Electrical || 1 week
Week 3: Fitting & Snagging || 1 week
Week 4: Staging & Photos || 1 week
Final Investment Recommendation
Detailed Recommendation: This Coombe Road property presents a high-yield BTL opportunity. The entry price is the key lever; at £250,000, the returns are mathematically superior to most market comparables. As a first-time buyer, utilizing the £65,300 total capital employed alongside the proposed 1% interest rate structure creates a highly cash-positive asset with a 22.4% ROCE. The property is currently in a "ready-to-go" condition, which drastically reduces the typical risks associated with property renovations. Immediate focus should be on legal due diligence—specifically regarding the share of freehold status and any potential future liabilities related to the building structure (being a lower-ground unit). We recommend placing a "Buy It Now" bid if the price remains near £250,000, as the rental yield exceeds 8%, which is rare for such a well-connected London-adjacent location. Proceed with the refurbishment timeline of 4 weeks to hit the market quickly.
Short Recommendation: Purchase recommended. The yields are excellent and the property is essentially turnkey. Focus on legal due diligence to clear the title and proceed with a 4-week cosmetic refresh to attract high-quality professional tenants.
BTL · Property Analysis