Property Portfolio and Finances

Liverpool John Moores

Valuation Theory and
Investment
Residential and Commercial Property in
Liverpool
392106

12

Investment Appraisal of Liverpool

Page 1

Executive Summary
After a full analysis of 10 properties in and around Liverpool only 5 provide a
profit, four of which are worthy in an investment portfolio. The required mortgage to
receive this profit is a 20 year fixed rate mortgage at an interest rate of 3.49% for 2
years and 4.5% thereafter.
Breaking down the properties worthwhile are 4, 8, 9 and 10. Whilst the first
property are residential providing £35846 profit after 20 years the last three are office
providing £235000 profit. Even with risks factored in using the sensitivity test the
profit is still enough to be worthwhile of an investment. Changing different factors
such as the discount rate, the mortgage rate or the rental rate all cause a reduction
however the reduction is not enough to produce a negative cash flow.


Page 2

Contents

1.

Introduction

4

2.

Investment

4

2.1

Investment Vehicles

4

2.2

Ratio of Residential and Commercial Assets

5

2.3

Chosen Properties

6

3.

Legality

16

4.

Real Estate Financing

17

5.

Current Market

18

5.1

Inflation

19

5.2

Swot Analysis of Liverpool

21

6.

Cash Flow

22

7.

Viability

32

7.1

Property Loss/Profit

33

8.

Sensitivity Analysis

34

9.

Conclusion

35

References

36

Appendix A
Appendix B

37
47


Page 3

1. Introduction
With the current climate in turmoil the demand for property is low when
compared to that of 2007; because of this the capital value of property has
reduced by 16.76% (Zoopla 2012). With reduced values it has never been a
better time to buy property. Whether it is commercial or residential the capital
value will most likely be back to that of 2007 in 20 years’ time. This report will
outline basic knowledge of investment to enable any reader to understand the
terminology used in the report. Mortgages will be explained along with the right
mortgage type for this situation and an investment appraisal to demonstrate the
profitability of property from a selection of 10 properties with their associated rate
of returns and payback periods if applicable.

2. Investment
With the use of an investment vehicle a return on capital can be achieved. It does
require sacrifices on current spending but it will ensure future gains if proper
research has been carried out. The source of the capital can range from a sale of an
asset to borrowing from financial institutions.
With all equity there is usually some sort of debt, i.e. mortgages. The amount of
debt to the equity can be expressed in a ratio which is commonly known as Gearing.
A highly geared ratio shows a large amount of borrowed capital. A Low ratio should
be aimed for as the vulnerability to an economic downturn will be effectively a lot less.
With the initial deposit for the properties being 40% the gearing ratio of this portfolio
will be 60%.

2.1 Investment vehicles
There are multiple ways to earn a gain on a capital, the broad name for these
methods are investment vehicles, each with its own advantages. Every bank will
offer tax free savings account called ISA’s. All are slightly different but the same
rules apply. There will be a set interest rate which you will earn either monthly or
yearly. They have a set limit which is tax free, anything over this will be taxed. For
2012/2013 the limit is set at £11,280. The advantages to ISA’s are that there are no
risks attached, however the rate of interest you receive will not have the same
monetary value when first opened and the rewards are not as good when compared
to other investment vehicles.
Another investment vehicle is shares. More risky but can be more rewarding at
the end. Once a company is on the stock market a set amount of shares are open to
the market. The value of the shares can increase or decrease depending on internal
and external factors. The amount of shares owned is also equal to the percentage of
ownership in that company and so any profits will be received by the shareholder in

Page 4

the form of dividends. The shares can also be sold for a profit if sold in an upturn,
however all transactions are liable for tax and transaction costs. The obvious
disadvantage of stocks is that the shareholders can receive a loss as well as a profit,
but the rewards are more than an average ISA.
Moving on to tangible investments, property is a great way to see monetary gain.
Property can be split into three main categories:

Real estate for holding
Sole purpose will be owner occupation for a duration, the mortgage will be
paid over the time of occupation.



Real estate for selling
The sole purpose will be a future development within the property to add
value which can be released once sold



Real estate for letting
The sole purpose will be buy-to-let, a very common procedure for property
in the U.K. The tenant will pay the mortgage repayments every month.

These three categories can be applied to all types of property whether it is residential,
commercial or industrial. Property is usually a long term investment which can
sometimes be difficult to release the savings because of various factors such as the
current demand, lengthy sale periods or long property chains. Property is also
associated with high transaction costs and stamp duty.

2.2 Ratio of Residential and Commercial Assets
It may be tempting to just buy multiple properties of one type but in doing so
the risk in a property portfolio will drastically increase. In the goal of reducing risk
it would be wise to diversify the portfolio with different types of property. A mixture
of residential and commercial would be best suited. With the average age of new
buyers being 35 as shown in a recent reported (J.Hall 2012) the residential rental
market has been growing since 2007. The residential rental market will
continually grow until mortgages are more accessible, because of this it would be
advised to have over half the properties in residential. Over the10 properties
required, 7 residential and 3 commercial would be the most efficient whilst still
minimising any associated risk.


Page 5

2.3 Chosen Properties
Property 1 – Residential

Will achieve a rental income of around £850 (Appendix B 1)


Page 6

Property 2 - Residential



Page 7




Page 8



Page 9




Page 10




Page 11




Page 12

Property 8 - Office

Will achieve a rental income of around £34,745 P.a (Appendix B 8)


Page 13

Property 9 - Office



Page 14

Property 10 - Office

All ten properties have been valued using the comparative method (Appendix B
1-10), all evidence used will be provided in website links (Appendix C 1-10).


Page 15

3. Legality
Ownership of property and the land it lies on is not always as simple as it sounds,
before 1862 title deeds was the proof required to occupy the property and land. After
1862 the Land registry act was brought in. This new system required all land to be
registered showing true ownership, since 1862 the system has improved but it does
still have its flaws. Some properties are still not registered making sale of a property
extremely difficult. The title of the property needs to be investigated at least 15 years
back. Unregistered land is also liable for adverse possession in which the current
occupier will lose the right to that property and land. All 10 properties need to be
investigated to check for registration with the HM Land registry.
A major part of property can be planning permission, and change of use or
developments need to apply for the right to do so, this can be very costly and time
consuming. Fortunately the chosen 10 properties are all ready to rent out to tenants
and require no extra work. Any future plans must be adequately planned however.
Once the properties are ready to let there are some statutory acts and tenancy
agreements that protect both the landlord and tenant which need to be considered.
Firstly when looking for tenants, no discrimination of any type is acceptable.
Since as early as 1975 discrimination has been unacceptable especially within
landlord and tenant relations. Three main acts have been continually updated to
ensure good relations which are statutory. For both residential and commercial
property the three statutorily acts that must be adhered to are:

Sex Discrimination Act 1975
This act makes it illegal for landlords to discriminate against a tenant
because of gender.



Disability Discrimination Act 1995
This act makes it illegal for landlords to discriminate against a tenant
because of a disability.



Racal Relations Act 1976
This act makes it illegal for landlords to discriminate against a tenant on
racial grounds.

All three acts have been updated and now reside in the Equality Act 2010 but the
same principles apply.
Finally, both residential and commercial work on two different systems of tenancy
agreement. With residential leases there are two main types, assured and assured
shorthold. Both are very similar but with one vital difference. Assured you cannot
regain possession of the property from the tenant unless granted by the courts
however assured shorthold you can regain possession if adequate notice is given 2

Page 16

months before the end of the lease, this type of lease is normally 6 months in
duration. As the required property portfolio will be held for 20 years it would be
advised to use an assured tenancy to ensure the longevity of the tenant.
As a Landlord to residential tenants certain responsibilities must be upheld as
part of any tenancy agreement. The responsibilities will include:

Gas Safety
All gas appliances must be installed and maintained by a gas safe
registered engineer



Electrical Safety
The electrical system (including wiring, sockets and lighting) and all
electrical appliances must be at a safe level.



Fire Safety
All fire regulations must be followed including adequate fire escapes, fire
resistant furnishings and fire alarms place around the property.



Repairs
The landlord will be responsible for repairs that include the structure and
exterior, bathroom appliances and fittings, heating and hot water, gas
appliances, pipes flues and ventilation and electrical wiring.

Commercial tenancies work slightly different; working on the Landlord and tenant
Act 1954 the tenant will always have the right to occupy the building. This act was
set to protect the tenant and his business more efficiently however with certain
grounds (section 30 1 a-g of the landlord and tenant act 1954) the court can issue an
order to terminate the tenancy agreement. With a 20 year plan this will not be a
problem unless the tenant causes any problems with covenants or rent payments.
The landlord responsibilities are very different when compared to that of
residential tenancy agreements. All repairs and responsibilities will be stipulated
within the lease.
For both residential and commercial, negations will take place between the
landlord and tenant before the tenancy is signed.

4. Real Estate Financing
Acquiring property without any associated debts is not always an option for
investors, usually because there is too much risk to the investor or the capital is not
available. Finance for property can however be found in a range of different places

Page 17

but the most common route used is through Banks. Banks offer different mortgages
types, interest rates and Loan terms.
Choosing a mortgage type will greatly depend on the situation. Repayment and
interest only are the two main type’s available. Repayment incorporates interest and
the borrowed capital into the annual repayments; this allows the client peace of mind
that the full mortgage will be repaid at the end of the loan term. Interest only allows
the client to only pay the interest on the loan; however repayment of the capital will
be the client’s responsibility. Any interest on the borrowed finance can be also split
into two main types. Fixed and tracker. Fixed interest is a set percentage for the
whole duration of the loan term whilst tracker changes in line with the Bank of
England. To enable the client to be able to pay back the full amount borrowed
including interest the total loan term can be changed, ranging from 15 years to 30+
years although 25 years is the average for most households.
It would be advised that the best method of finance in this situation would be a
repayment mortgage set on a fixed rate with a loan term of 20 years. Using a
repayment mortgage rather than interest only allows any annual net profits to regain
the personal capital used for the deposit. With the current economic situation the
interest rate on a tracker mortgage will be low however in 7 or more years the bank
of England will increased the interest rate as it will be more than likely that the
economic turmoil will once again return to normal. For a long term plan over 10 years
a fixed rate mortgage will be the best choice for a 20 year plan.
With these choices an estimate of cash outflows and inflows will also be more
accurate during the full 20 years presenting any profits reliably.
As advised, the most applicable mortgage available is from NatWest
(www.Natwest.co.uk), offering 3.49% for 2 years as an introductory rate and then 4.5%
thereafter. A mortgage breakdown (Appendix A, Figure 1- 10) on the ten properties
including annual payments, fees and stamp duty will be included in the report.

5. Current Market Conditions
Currently banks are asking for at least 40% of the value of the property, in doing
so has made buying a property much harder for the average person. With the
accessibility for finance limited, the price of property all over the U.K. has decreased
from that of 2007(Figure 1).


Page 18

Percentage Change of Average Prices
30.00%
25.00%
20.00%
15.00%

Avg Price

10.00%
5.00%
0.00%
2007

2008

2009

2010

2011

Sep-12

Jun-12

(Fig.1 Figures from Zoopla, 2012)
Buying property at this point in time will in itself produce a profit in 20 years’ time
if sold but with a rental income the profit will increase. The rental market however is
in a different state, with the average age for a new buyer being over 30 only 1 on 4
currently own their own property, this has had a beneficial impact on the rental
market as it has continually grown and as the BBC stated it is predicated to grow an
extra 4% in 2013 (BBC 2012).
6

4

Consumer Price Indices and
Retail Price Index

3
2
1

CPI

0

RPI

-1
2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

-2
2001

During the 20 year loan term it is
likely that the rent receivable will
fluctuate due to inflation, with rent
reviews within the lease benefits
could be achieved if the rent were
to rise. Looking at the consumer
price indices and the retail price
index (Figure 2) there has been a
constant increase since before

5

2000

5.1 Inflation

2000, although there were will be upturns and downturns the inflation rate will stay
constant following the trend for the next few years. Applying this trend to a forecast
graph (Figure 3) and using figures from the British chambers
(www.britishchambers.org.uk) the inflation carries on increasing till after 2013 where
it starts to level out, possible due to the economic situation stabilising.

Page 19

15

Economic Forecast

10

GDP

5

Household
Consumpti
on
General
Governme
nt
Investment

0

-5

-10

-15
2008

2009

2010

2011

2012

2013

2014

(Figure 3)
From Looking at the graphs a predicated rent change graph has been produce which
can be used to apply to rental income during the cash flow process. The general
estimates have been derived from current inflation rates, expected rises in rental
prices and an assumption that mortgages will be more accessible in 2020 reducing
the growth of the rental market.

Predicted Rent Change
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%

Predicted Percentage Rent Change


Page 20

5.2 Swot Analysis of Liverpool
Strengths
Weakness
 Five universities in the city
 Large portions of Liverpool
centre producing a large
outskirts left derelict due to a
need for rented housing.
failed government scheme.
 New developments finished
 Possible void periods reducing
expanding the retail district of
income.
Liverpool.
 People want to live close to
the city centre so tenants for
residential properties will
never be low.
 Most of the properties are
new build which come with
their own finesse.
Opportunities
Threats
 Planned developments on the
 The tuition fee increase may
water front increasing the
reduce the need for student
outlook of properties nearby.
housing.
 Possible subsides into the sector
 New government scheme may
and the area of Liverpool.
change rental growth on
residential or commercial
 Grade B office space within
properties.
Liverpool is always need for
developing companies.
 During 2018 a new system for
energy efficiency will be
introduced. Will be problematic
for the residential sector.


Page 21

6. Cash Flow
Property 1
Property 1
Mortgage Deposit
Mortgage Repayments
Mortgage Repayments after 2 years
Rent P.a(2013)
Discount Rate
Finance Rate

£78,000
£8,475.06
£9,200.34
£10,200.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£78,000
1
-£8,475
2
-£8,475
3
-£9,200
4
-£9,200
5
-£9,200
6
-£9,200
7
-£9,200
8
-£9,200
9
-£9,200
10
-£9,200
11
-£9,200
12
-£9,200
13
-£9,200
14
-£9,200
15
-£9,200
16
-£9,200
17
-£9,200
18
-£9,200
19
-£9,200
20
-£9,200

Discount
Factor 4.5%
£10,200
£10,455
£10,506
£10,557
£10,608
£10,710
£10,659
£10,608
£10,608
£10,598
£10,588
£10,598
£10,608
£10,618
£10,628
£10,608
£10,588
£10,577
£10,588
£10,577

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Discounted at Inflow Discounted
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£78,000
-£78,000
-78,000
-£8,110
£9,761
£1,725
£1,651
-76349
0
-£7,761
£9,574
£1,980
£1,813
-74536
2.5
-£8,062
£9,206
£1,306
£1,144
-73392
3
-£7,715
£8,853
£1,357
£1,138
-72254
3.5
-£7,383
£8,512
£1,408
£1,130
-71125
4
-£7,065
£8,224
£1,510
£1,159
-69966
5
-£6,761
£7,833
£1,459
£1,072
-68894
4.5
-£6,470
£7,459
£1,408
£990
-67904
4
-£6,191
£7,138
£1,408
£947
-66957
4
-£5,924
£6,824
£1,397
£900
-66057
3.9
-£5,669
£6,524
£1,387
£855
-65202
3.8
-£5,425
£6,249
£1,397
£824
-64378
3.9
-£5,191
£5,986
£1,408
£794
-63584
4
-£4,968
£5,734
£1,418
£766
-62818
4.1
-£4,754
£5,492
£1,428
£738
-62080
4.2
-£4,549
£5,245
£1,408
£696
-61384
4
-£4,353
£5,010
£1,387
£656
-60728
3.8
-£4,166
£4,789
£1,377
£624
-60104
3.7
-£3,987
£4,588
£1,387
£601
-59503
3.8
-£3,815
£4,386
£1,377
£571
-58932
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

0.24446
>20 Years
-£58,932
-8.16%
3%


£137,387.17 Total PV Net Cash
-£196,319.23
-£58,932.06

£19,068

Loss
No
Loss
Loss
Loss

Page 22

Property 2
Property 2
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£51,980
£5,677.85
£6,163.03
£10,200.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£51,980
1
-£5,678
2
-£5,678
3
-£6,163
4
-£6,163
5
-£6,163
6
-£6,163
7
-£6,163
8
-£6,163
9
-£6,163
10
-£6,163
11
-£6,163
12
-£6,163
13
-£6,163
14
-£6,163
15
-£6,163
16
-£6,163
17
-£6,163
18
-£6,163
19
-£6,163
20
-£6,163

Discount
Factor 4.5%
£10,200
£10,455
£10,506
£10,557
£10,608
£10,710
£10,659
£10,608
£10,608
£10,598
£10,588
£10,598
£10,608
£10,618
£10,628
£10,608
£10,588
£10,577
£10,588
£10,577

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£51,980
-£51,980
-51,980
-£5,433
£9,761
£4,522
£4,327
-47653
0
-£5,199
£9,574
£4,777
£4,375
-43278
2.5
-£5,401
£9,206
£4,343
£3,806
-39472
3
-£5,168
£8,853
£4,394
£3,685
-35788
3.5
-£4,946
£8,512
£4,445
£3,567
-32221
4
-£4,733
£8,224
£4,547
£3,492
-28729
5
-£4,529
£7,833
£4,496
£3,304
-25425
4.5
-£4,334
£7,459
£4,445
£3,126
-22300
4
-£4,147
£7,138
£4,445
£2,991
-19309
4
-£3,969
£6,824
£4,435
£2,856
-16453
3.9
-£3,798
£6,524
£4,425
£2,726
-13727
3.8
-£3,634
£6,249
£4,435
£2,615
-11112
3.9
-£3,478
£5,986
£4,445
£2,508
-8603
4
-£3,328
£5,734
£4,455
£2,406
-6198
4.1
-£3,185
£5,492
£4,465
£2,307
-3890
4.2
-£3,047
£5,245
£4,445
£2,198
-1693
4
-£2,916
£5,010
£4,425
£2,094
401
3.8
-£2,791
£4,789
£4,414
£1,999
2400
3.7
-£2,670
£4,588
£4,425
£1,917
4317
3.8
-£2,555
£4,386
£4,414
£1,830
6147
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

1.11827
16.80850048
£6,147
5.83%
4%


-£131,239.72
£6,147.44

£58,127

Profit
Within Time
Profit
Profit
Profit

Page 23

Property 3
Property 3
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£86,000
£9,346.04
£10,145.86
£9,900.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£86,000
1
-£9,346
2
-£9,346
3
-£10,146
4
-£10,146
5
-£10,146
6
-£10,146
7
-£10,146
8
-£10,146
9
-£10,146
10
-£10,146
11
-£10,146
12
-£10,146
13
-£10,146
14
-£10,146
15
-£10,146
16
-£10,146
17
-£10,146
18
-£10,146
19
-£10,146
20
-£10,146

Discount
Factor 4.5%
£9,900
£10,148
£10,197
£10,247
£10,296
£10,395
£10,346
£10,296
£10,296
£10,286
£10,276
£10,286
£10,296
£10,306
£10,316
£10,296
£10,276
£10,266
£10,276
£10,266

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£86,000
-£86,000
-86,000
-£8,944
£9,474
£554
£530
-85470
0
-£8,558
£9,292
£801
£734
-84736
2.5
-£8,891
£8,936
£51
£45
-84691
3
-£8,508
£8,592
£101
£84
-84607
3.5
-£8,142
£8,262
£150
£120
-84486
4
-£7,791
£7,982
£249
£191
-84295
5
-£7,455
£7,602
£200
£147
-84148
4.5
-£7,134
£7,240
£150
£106
-84043
4
-£6,827
£6,928
£150
£101
-83942
4
-£6,533
£6,624
£140
£90
-83851
3.9
-£6,252
£6,332
£130
£80
-83771
3.8
-£5,983
£6,065
£140
£83
-83688
3.9
-£5,725
£5,810
£150
£85
-83604
4
-£5,478
£5,565
£160
£86
-83517
4.1
-£5,243
£5,330
£170
£88
-83429
4.2
-£5,017
£5,091
£150
£74
-83355
4
-£4,801
£4,862
£130
£62
-83293
3.8
-£4,594
£4,649
£120
£55
-83239
3.7
-£4,396
£4,453
£130
£56
-83182
3.8
-£4,207
£4,257
£120
£50
-83133
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

0.05516
>20 Years
-£83,133
-21.80%
3%


-£216,478.91
-£83,132.54

£2,867

Loss
No
Loss
Loss
Loss

Page 24

Property 4
Property 4
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£14,800
£1,640.04
£1,780.39
£5,460.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£14,800
1
-£1,640
2
-£1,640
3
-£1,780
4
-£1,780
5
-£1,780
6
-£1,780
7
-£1,780
8
-£1,780
9
-£1,780
10
-£1,780
11
-£1,780
12
-£1,780
13
-£1,780
14
-£1,780
15
-£1,780
16
-£1,780
17
-£1,780
18
-£1,780
19
-£1,780
20
-£1,780

Discount
Factor 4.5%
£5,460
£5,597
£5,624
£5,651
£5,678
£5,733
£5,706
£5,678
£5,678
£5,673
£5,667
£5,673
£5,678
£5,684
£5,689
£5,678
£5,667
£5,662
£5,667
£5,662

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£14,800
-£14,800
-14,800
-£1,569
£5,225
£3,820
£3,655
-11145
0
-£1,502
£5,125
£3,956
£3,623
-7521
2.5
-£1,560
£4,928
£3,843
£3,368
-4154
3
-£1,493
£4,739
£3,871
£3,246
-908
3.5
-£1,429
£4,557
£3,898
£3,128
2220
4
-£1,367
£4,402
£3,953
£3,035
5255
5
-£1,308
£4,193
£3,925
£2,884
8140
4.5
-£1,252
£3,993
£3,898
£2,741
10881
4
-£1,198
£3,821
£3,898
£2,623
13504
4
-£1,146
£3,653
£3,893
£2,507
16010
3.9
-£1,097
£3,492
£3,887
£2,395
18406
3.8
-£1,050
£3,345
£3,893
£2,295
20701
3.9
-£1,005
£3,204
£3,898
£2,200
22900
4
-£961
£3,069
£3,903
£2,108
25008
4.1
-£920
£2,940
£3,909
£2,020
27028
4.2
-£880
£2,808
£3,898
£1,927
28956
4
-£842
£2,682
£3,887
£1,839
30795
3.8
-£806
£2,564
£3,882
£1,758
32552
3.7
-£771
£2,456
£3,887
£1,684
34237
3.8
-£738
£2,348
£3,882
£1,609
35846
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

3.42204
4.29
£35,846
26.00%
6%


-£37,696.37
£35,846.17

£50,646

Profit
Within Time
Profit
Profit
Profit

Page 25

Property 5
Property 5
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£96,000
£10,418.08
£11,309.64
£11,460.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£96,000
1
-£10,418
2
-£10,418
3
-£11,310
4
-£11,310
5
-£11,310
6
-£11,310
7
-£11,310
8
-£11,310
9
-£11,310
10
-£11,310
11
-£11,310
12
-£11,310
13
-£11,310
14
-£11,310
15
-£11,310
16
-£11,310
17
-£11,310
18
-£11,310
19
-£11,310
20
-£11,310

Discount
Factor 4.5%
£11,460
£11,747
£11,804
£11,861
£11,918
£12,033
£11,976
£11,918
£11,918
£11,907
£11,895
£11,907
£11,918
£11,930
£11,941
£11,918
£11,895
£11,884
£11,895
£11,884

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£96,000
-£96,000
-96,000
-£9,969
£10,967
£1,042
£997
-95003
0
-£9,540
£10,757
£1,328
£1,216
-93786
2.5
-£9,911
£10,344
£494
£433
-93353
3
-£9,484
£9,946
£551
£462
-92891
3.5
-£9,075
£9,564
£609
£489
-92403
4
-£8,685
£9,240
£723
£555
-91847
5
-£8,311
£8,800
£666
£489
-91358
4.5
-£7,953
£8,381
£609
£428
-90930
4
-£7,610
£8,020
£609
£410
-90520
4
-£7,283
£7,667
£597
£385
-90135
3.9
-£6,969
£7,330
£586
£361
-89774
3.8
-£6,669
£7,021
£597
£352
-89422
3.9
-£6,382
£6,725
£609
£344
-89079
4
-£6,107
£6,442
£620
£335
-88744
4.1
-£5,844
£6,170
£632
£326
-88417
4.2
-£5,592
£5,893
£609
£301
-88116
4
-£5,351
£5,629
£586
£277
-87839
3.8
-£5,121
£5,381
£574
£260
-87579
3.7
-£4,900
£5,154
£586
£254
-87325
3.8
-£4,689
£4,928
£574
£238
-87087
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

0.09284
>20 Years
-£87,087
-14.76%
3%


-£241,445.48
-£87,086.96

£8,913

Loss
No
Loss
Loss
Loss

Page 26

Property 6
Property 6
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£75,980
£8,313.97
£8,827.89
£11,460.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£75,980
1
-£8,314
2
-£8,314
3
-£8,828
4
-£8,828
5
-£8,828
6
-£8,828
7
-£8,828
8
-£8,828
9
-£8,828
10
-£8,828
11
-£8,828
12
-£8,828
13
-£8,828
14
-£8,828
15
-£8,828
16
-£8,828
17
-£8,828
18
-£8,828
19
-£8,828
20
-£8,828

Discount
Factor 4.5%
£11,460
£11,747
£11,804
£11,861
£11,918
£12,033
£11,976
£11,918
£11,918
£11,907
£11,895
£11,907
£11,918
£11,930
£11,941
£11,918
£11,895
£11,884
£11,895
£11,884

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£75,980
-£75,980
-£75,980
-75,980
-£7,956
£10,967
£3,146
£3,011
-72969
0
-£7,613
£10,757
£3,433
£3,143
-69826
2.5
-£7,736
£10,344
£2,976
£2,608
-67218
3
-£7,403
£9,946
£3,033
£2,544
-64675
3.5
-£7,084
£9,564
£3,091
£2,480
-62195
4
-£6,779
£9,240
£3,205
£2,461
-59734
5
-£6,487
£8,800
£3,148
£2,313
-57421
4.5
-£6,208
£8,381
£3,091
£2,173
-55247
4
-£5,940
£8,020
£3,091
£2,080
-53168
4
-£5,685
£7,667
£3,079
£1,983
-51185
3.9
-£5,440
£7,330
£3,068
£1,890
-49295
3.8
-£5,205
£7,021
£3,079
£1,816
-47479
3.9
-£4,981
£6,725
£3,091
£1,744
-45735
4
-£4,767
£6,442
£3,102
£1,675
-44060
4.1
-£4,562
£6,170
£3,113
£1,609
-42452
4.2
-£4,365
£5,893
£3,091
£1,528
-40923
4
-£4,177
£5,629
£3,068
£1,452
-39472
3.8
-£3,997
£5,381
£3,056
£1,384
-38088
3.7
-£3,825
£5,154
£3,068
£1,329
-36759
3.8
-£3,660
£4,928
£3,056
£1,267
-35492
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

0.53288
>20 Years
-£35,492
-1.86%
3%

-£189,850.23
-£35,491.71

£40,488

Loss
No
Loss
Loss
Loss


Page 27

Property 7
Property 7
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£39,980
£4,311.69
£4,680.68
£6,300.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£39,980
1
-£4,312
2
-£4,312
3
-£4,681
4
-£4,681
5
-£4,681
6
-£4,681
7
-£4,681
8
-£4,681
9
-£4,681
10
-£4,681
11
-£4,681
12
-£4,681
13
-£4,681
14
-£4,681
15
-£4,681
16
-£4,681
17
-£4,681
18
-£4,681
19
-£4,681
20
-£4,681

Discount
Factor 4.5%
£6,300
£6,458
£6,489
£6,521
£6,552
£6,615
£6,584
£6,552
£6,552
£6,546
£6,539
£6,546
£6,552
£6,558
£6,565
£6,552
£6,539
£6,533
£6,539
£6,533

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£39,980
-£39,980
-39,980
-£4,126
£6,029
£1,988
£1,903
-38077
0
-£3,948
£5,913
£2,146
£1,965
-36112
2.5
-£4,102
£5,686
£1,808
£1,585
-34528
3
-£3,925
£5,468
£1,840
£1,543
-32985
3.5
-£3,756
£5,258
£1,871
£1,502
-31483
4
-£3,594
£5,080
£1,934
£1,485
-29998
5
-£3,439
£4,838
£1,903
£1,398
-28600
4.5
-£3,291
£4,607
£1,871
£1,316
-27284
4
-£3,150
£4,409
£1,871
£1,259
-26025
4
-£3,014
£4,215
£1,865
£1,201
-24824
3.9
-£2,884
£4,030
£1,859
£1,145
-23678
3.8
-£2,760
£3,860
£1,865
£1,100
-22579
3.9
-£2,641
£3,697
£1,871
£1,056
-21523
4
-£2,527
£3,541
£1,878
£1,014
-20509
4.1
-£2,419
£3,392
£1,884
£973
-19535
4.2
-£2,314
£3,240
£1,871
£925
-18610
4
-£2,215
£3,094
£1,859
£880
-17730
3.8
-£2,119
£2,958
£1,852
£839
-16892
3.7
-£2,028
£2,834
£1,859
£805
-16086
3.8
-£1,941
£2,709
£1,852
£768
-15318
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

0.61685
>20 Years
-£15,318
-0.55%
4%

-£100,174.99
-£15,318.21

£24,662

Loss
No
Loss
Loss
Loss


Page 28

Property 8
Property 8
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£130,000
£14,526.96
£15,770.15
£34,745.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£130,000
1
-£14,527
2
-£14,527
3
-£15,770
4
-£15,770
5
-£15,770
6
-£15,770
7
-£15,770
8
-£15,770
9
-£15,770
10
-£15,770
11
-£15,770
12
-£15,770
13
-£15,770
14
-£15,770
15
-£15,770
16
-£15,770
17
-£15,770
18
-£15,770
19
-£15,770
20
-£15,770

Discount
Factor 4.5%
£34,745
£35,614
£35,787
£35,961
£36,135
£36,482
£36,309
£36,135
£36,135
£36,100
£36,065
£36,100
£36,135
£36,170
£36,204
£36,135
£36,065
£36,031
£36,065
£36,031

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£130,000
-£130,000
-130,000
-£13,901
£33,249
£20,218
£19,347
-110653
0
-£13,303
£32,612
£21,087
£19,310
-91343
2.5
-£13,819
£31,360
£20,017
£17,541
-73802
3
-£13,224
£30,156
£20,191
£16,931
-56871
3.5
-£12,655
£28,996
£20,365
£16,342
-40529
4
-£12,110
£28,015
£20,712
£15,905
-24624
5
-£11,588
£26,681
£20,538
£15,092
-9532
4.5
-£11,089
£25,409
£20,365
£14,320
4788
4
-£10,612
£24,315
£20,365
£13,703
18492
4
-£10,155
£23,246
£20,330
£13,091
31583
3.9
-£9,718
£22,223
20,295
£12,506
44088
3.8
-£9,299
£21,287
£20,330
£11,988
56076
3.9
-£8,899
£20,390
£20,365
£11,491
67567
4
-£8,515
£19,531
£20,399
£11,015
78583
4.1
-£8,149
£18,707
£20,434
£10,559
89141
4.2
-£7,798
£17,868
£20,365
£10,070
99211
4
-£7,462
£17,065
£20,295
£9,603
108814
3.8
-£7,141
£16,315
£20,260
£9,174
117988
3.7
-£6,833
£15,627
£20,295
£8,794
126782
3.8
-£6,539
£14,940
£20,260
£8,401
135183
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

2.03987
7.67
£135,183
14.68%
5%

-£332,809.03
£135,182.84

£265,183

Profit
Within Time
Profit
Profit
Profit


Page 29

Property 9
Propert 9
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£130,000
£14,526.96
£15,770.15
£29,430.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£130,000
1
-£14,527
2
-£14,527
3
-£15,770
4
-£15,770
5
-£15,770
6
-£15,770
7
-£15,770
8
-£15,770
9
-£15,770
10
-£15,770
11
-£15,770
12
-£15,770
13
-£15,770
14
-£15,770
15
-£15,770
16
-£15,770
17
-£15,770
18
-£15,770
19
-£15,770
20
-£15,770

Discount
Factor 4.5%
£29,430
£30,166
£30,313
£30,460
£30,607
£30,902
£30,754
£30,607
£30,607
£30,578
£30,548
£30,578
£30,607
£30,637
£30,666
£30,607
£30,548
£30,519
£30,548
£30,519

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£130,000
-£130,000
-130,000
-£13,901
£28,163
£14,903
£14,261
-115739
0
-£13,303
£27,624
£15,639
£14,321
-101418
2.5
-£13,819
£26,563
£14,543
£12,744
-88674
3
-£13,224
£25,543
£14,690
£12,318
-76356
3.5
-£12,655
£24,561
£14,837
£11,906
-64450
4
-£12,110
£23,729
£15,131
£11,619
-52830
5
-£11,588
£22,599
£14,984
£11,011
-41820
4.5
-£11,089
£21,523
£14,837
£10,433
-31386
4
-£10,612
£20,596
£14,837
£9,984
-21402
4
-£10,155
£19,690
£14,808
£9,535
-11867
3.9
-£9,718
£18,824
£14,778
£9,106
-2761
3.8
-£9,299
£18,031
£14,808
£8,732
5970
3.9
-£8,899
£17,271
£14,837
£8,372
14343
4
-£8,515
£16,543
£14,866
£8,027
22370
4.1
-£8,149
£15,846
£14,896
£7,697
30067
4.2
-£7,798
£15,134
£14,837
£7,336
37404
4
-£7,462
£14,455
£14,778
£6,993
44396
3.8
-£7,141
£13,819
£14,749
£6,678
51074
3.7
-£6,833
£13,237
£14,778
£6,403
57478
3.8
-£6,539
£12,654
£14,749
£6,115
63593
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

1.48918
11.32
£63,593
9.65%
4%


-£332,809.03
£63,593.35

£193,593

Profit
Within Time
Profit
Profit
Profit

Page 30

Property 10
Propert 10
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£150,000
£16,748.30
£18,181.66
£25,706.00
4.50%
4.50%

Year Cash Out (£)
Cash In (£)
0
-£150,000
1
-£16,748
2
-£16,748
3
-£15,770
4
-£15,770
5
-£15,770
6
-£15,770
7
-£15,770
8
-£15,770
9
-£15,770
10
-£15,770
11
-£15,770
12
-£15,770
13
-£15,770
14
-£15,770
15
-£15,770
16
-£15,770
17
-£15,770
18
-£15,770
19
-£15,770
20
-£15,770

Discount
Factor 4.5%
£25,706
£30,166
£30,313
£30,460
£30,607
£30,902
£30,754
£30,607
£30,607
£30,578
£30,548
£30,578
£30,607
£30,637
£30,666
£30,607
£30,548
£30,519
£30,548
£30,519

0.95694
0.91573
0.87630
0.83856
0.80245
0.76790
0.73483
0.70319
0.67290
0.64393
0.61620
0.58966
0.56427
0.53997
0.51672
0.49447
0.47318
0.45280
0.43330
0.41464

Outflow
Discounted
Predicited
Cumulative
Inflation
4.5% (£)
at 4.5%(£)
Net Cash Flow
Pv of Net Cash
Cash Flow
(%)
-£150,000
-£150,000
-150,000
-£16,027
£24,599
£8,958
£8,572
-141428
0
-£15,337
£27,624
£13,417
£12,287
-129141
2.5
-£13,819
£26,563
£14,543
£12,744
-116398
3
-£13,224
£25,543
£14,690
£12,318
-104079
3.5
-£12,655
£24,561
£14,837
£11,906
-92173
4
-£12,110
£23,729
£15,131
£11,619
-80554
5
-£11,588
£22,599
£14,984
£11,011
-69543
4.5
-£11,089
£21,523
£14,837
£10,433
-59110
4
-£10,612
£20,596
£14,837
£9,984
-49126
4
-£10,155
£19,690
£14,808
£9,535
-39591
3.9
-£9,718
£18,824
£14,778
£9,106
-30485
3.8
-£9,299
£18,031
£14,808
£8,732
-21753
3.9
-£8,899
£17,271
£14,837
£8,372
-13381
4
-£8,515
£16,543
£14,866
£8,027
-5353
4.1
-£8,149
£15,846
£14,896
£7,697
2344
4.2
-£7,798
£15,134
£14,837
£7,336
9680
4
-£7,462
£14,455
£14,778
£6,993
16673
3.8
-£7,141
£13,819
£14,749
£6,678
23351
3.7
-£6,833
£13,237
£14,778
£6,403
29754
3.8
-£6,539
£12,654
£14,749
£6,115
35870
3.7
Total D Inflow
Total D Outflow
Total

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

1.23913
14.70
£35,870
7.02%
4%

-£356,968.86
£35,869.88

£185,870

Profit
Within Time
Profit
Profit
Profit


Page 31

7. Viability
When looking at the viability of an investment, certain tools can be used to judge
the return on the investment. Some methods used are better than others but the
most widely used:




Profitability Index
Discounted Payback Period
Net Present Value
IRR

Profitability index shows the amount received for every £1 invested, for example
£100 investment with £1000 return would equal 10.00. Every £1 makes £10 return.
Formula =

Net Cash
Investment

Discounted payback period is another appraisal method used. It shows which year a
return will be received after paying back the initial investment.

Net present value is the most common used out of all methods; it shows the net
profit in current day values.


Page 32

The final method used within this report is the Internal Rate of Return. This method
shows the true rate of return from a given investment.

7.1 Property Loss/Profit
From looking around the market the ten properties found seemed viable
before any investment appraisal. After the appraisal however only 5 of the properties
are applicable for a return on the investment.
Properties 1, 3, 5, 6 and 7 all received a loss after the 20 years and are not
advisable. Properties 2, 4, 8, 9 and 10 however all received a profit, some more than
others.
Property 2 will receive £1.11 for every £1 invested with a £6,147 profit after the 20
year period. The payback period is 16.8 years with a rate of return set at 5.83%. This
is 1.37% higher than the set discount factor and so would be a wise investment.
Property 4 will receive 26% rate of return which is extremely profitable. Along with a
£35,846 profit the payback period is 4.29 years.
Property 8 will receive a net present value of £135,138 in 20 years’ time with the
initial deposit paid back in 7.67 years. The rate of return worked out at 14.68 with a
profitability index of 2.03.
Property 9 will receive £1.48 for every £1 invested with a £63,593 profit after the 20
year period. The payback period is 11.32 years with a rate of return set at 9.65%.
This is 5.15% higher than the set discount factor and so would be a wise investment.
Property 10 will receive 7.02% rate of return which is extremely profitable. Along
with a £35,870 profit the payback period is 14.7 years.
At the end of the 20 year period all properties will be fully paid off giving the potential
to reinvest that capital into other potential areas.


Page 33

8. Sensitivity Appraisal
Using Property 4 as a benchmark, the discount rate and mortgage repayments will
change by 1 or 2 percentages to show any weakness for this property.
Property 4
Mortgage Deposit
Mortgage Repayments
Rent P.a(2013)
Discount Rate
Finance Rate

£14,800
£1,640.04
£1,780.39
£5,460.00
4.50%
4.50%

Outflow
Discounted Predicited
Discount
Cumulative Inflation
Factor 4.5% 4.5% (£)
at 4.5%(£)
Net Cash Flow Pv of Net Cash Cash Flow
(%)
Year Cash Out (£)
Cash In (£)
0
-£14,800
-£14,800
-£14,800
-14,800
1
-£1,640
£5,460
0.95694
-£1,569
£5,225
£3,820
£3,655
-11145
0
2
-£1,640
£5,597
0.91573
-£1,502
£5,125
£3,956
£3,623
-7521
2.5
3
-£1,780
£5,624
0.87630
-£1,560
£4,928
£3,843
£3,368
-4154
3
4
-£1,780
£5,651
0.83856
-£1,493
£4,739
£3,871
£3,246
-908
3.5
5
-£1,780
£5,678
0.80245
-£1,429
£4,557
£3,898
£3,128
2220
4
6
-£1,780
£5,733
0.76790
-£1,367
£4,402
£3,953
£3,035
5255
5
7
-£1,780
£5,706
0.73483
-£1,308
£4,193
£3,925
£2,884
8140
4.5
8
-£1,780
£5,678
0.70319
-£1,252
£3,993
£3,898
£2,741
10881
4
9
-£1,780
£5,678
0.67290
-£1,198
£3,821
£3,898
£2,623
13504
4
10
-£1,780
£5,673
0.64393
-£1,146
£3,653
£3,893
£2,507
16010
3.9
11
-£1,780
£5,667
0.61620
-£1,097
£3,492
£3,887
£2,395
18406
3.8
12
-£1,780
£5,673
0.58966
-£1,050
£3,345
£3,893
£2,295
20701
3.9
13
-£1,780
£5,678
0.56427
-£1,005
£3,204
£3,898
£2,200
22900
4
14
-£1,780
£5,684
0.53997
-£961
£3,069
£3,903
£2,108
25008
4.1
15
-£1,780
£5,689
0.51672
-£920
£2,940
£3,909
£2,020
27028
4.2
16
-£1,780
£5,678
0.49447
-£880
£2,808
£3,898
£1,927
28956
4
17
-£1,780
£5,667
0.47318
-£842
£2,682
£3,887
£1,839
30795
3.8
18
-£1,780
£5,662
0.45280
-£806
£2,564
£3,882
£1,758
32552
3.7
19
-£1,780
£5,667
0.43330
-£771
£2,456
£3,887
£1,684
34237
3.8
20
-£1,780
£5,662
0.41464
-£738
£2,348
£3,882
£1,609
35846
3.7
Total D Inflow
Total D Outflow
Total
Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

-£37,696.37
£35,846.17

£50,646

3.42204 Profit
4.29 Within Time
£35,846 Profit
26.00% Profit
6% Profit

The discount rate will be increased by 2% to outline possible risks.
Looking at the differences
between the numbers, the risk
has hardly increased. A loss of
£8,000 however the payback
period is still within 4 years.

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

2.89836 Profit
3.46 Within Time
£28,096 Profit
26.00% Profit
6% Profit
Page 34

The mortgage repayment will be increased by 2% to outline possible risks.
Once again even with a
payment increase there is
still a profit for the property.

Profitibility Index
Discounted Pay Back
Net Present Value
IRR
MIRR

3.39321 Profit
3.67 Within Time
£35,419 Profit
25.77% Profit
6% Profit

9. Conclusion
Property can be a good investment when properly done however due to the
large outlay the risk is more when compared to stocks and gilts. For a property
investment to be successful a full analysis has to be carried out. This report has
included what mortgage type to use, values of the chosen property and an
investment appraisal using techniques such as Profitability Index, Npv and IRR.
There are so many mortgages available, all with different features which
attract a range of clients. Considering a mortgage lasts anywhere up to 25 years an
appropriate type must be found. 20 years at a fixed rate works out best for a
valuation point however a tracker may present some benefits further down the line.
Property already has its risks so for this situation a fixed mortgage at 3.49% would
be advised.
The result of the investment appraisal shows which of the ten properties will
be viable as an investment and which will provide the most profit. Properties 2, 4, 8,
9 and 10 all provide a profit however some provide a profit too low to prove worthy of
the risk. The second property is only providing a profit of £6,147 which when
compared to the initial capital would not prove worthy. Property 4, 8, 9 and 10
however all provide a profit above £25,000 and would be viable for profit. Whilst all
the positive properties are a good choice, property 8 has a payback period of 4.49
years making it a must in the property portfolio.


Page 35

Reference
BBC, Rents to rise faster than house prices in 2013 [Online]
Available from: http://www.bbc.co.uk/news/business-20726001
[Accessed: 8th January, 2012]
British Chambers, Economic Forecast
Available from:
http://www.britishchambers.org.uk/assets/downloads/qef_data/BCC_UK_EconomicF
orecast-June_2012-PDF[1].pdf
Telegraph, Average first time buyer is now 35 [Online]
Avaible from: http://www.telegraph.co.uk/news/uknews/9533491/Average-first-timebuyer-is-now-35-research-finds.html
Zoopla, Current Property Values in Liverpool [Online].
Available from: http://www.zoopla.co.uk/home-values/liverpool/
[Accessed: 13th December, 2012]


Page 36

Appendix A
1.
Property 1 £195,000
Property 60%
Completion Fee
Solicitors Fee + disbursement
Higher Lending Charge
Valuation Fee
Land Registry - Voluntary
Stamp Duty

£117,000
£450
£670
£0
£350
£140
£1,950

Mortgage Required

£120,560

Initial Mortgage Repayment
Mortgage Required
Initial Duration (Years)
Initial Interest Rate

£120,560
20
0.0349

Initial Mortgage Repayment Formula
I + SF = I + I * Loan
(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*120560=

0.985947388
0.035397426
0.070297426
£8,475.06

Initial Mortgage Repayments P.a.

£8,475.06

Outstanding
Amount borrowed
Amount of £1 @ 3.49% for 2 years
Balance
Less Payments

£120,560
1.07101801
£129,122
£8,475.06

Amount of £1 P.a. @ 3.49% for 2 years
Outstanding

2.0349
£111,876.04

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I

(1+0.0349)^2 -1/0.0349

A=(1+i)n

(1+0.045)^18

(1+i)n -1/I

(1+0.045)^18 -1/0.045

Mortgage Repayment
Mortgage
Duration
Interest Rate

£111,876.04
18
0.045

Mortgage Repayments Formula
(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*111876.04=

Mortgage Repayments P.a
Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£9,200.34
£9,200.34

£111,876
2.208478766
£247,076
£9,200.34
26.8550837
£0.00

Page 37

2.
Property 60%
Completion Fee
Solicitor Fee + Disbursement
Valuation Fee
Stamp Duty

£77,970.00
£450.00
£600.00
£0.00
£300.00
£140.00
£1,299.50

Mortgage Required

£80,759.50

Mortgage Required

£80,760
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*80760=

0.985947388
0.035397426
0.070297426
£5,677.18


£5,677.18

Outstanding
Amount borrowed
Balance
Less Payments

£80,760
1.07101801
£86,495
£5,677.18

Outstanding

2.0349
£74,942.38

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I

(1+0.0349)^2 -1/0.0349

A=(1+i)n

(1+0.045)^18

(1+i)n -1/I

(1+0.045)^18 -1/0.045

Mortgage Repayment
Mortgage
Duration
Interest Rate

£74,942.38
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*74942.38=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£6,163.03
£6,163.03

£74,942
2.208478766
£165,509
£6,163.03
26.8550837
£0.00

Page 38

3.
Property 60%
Completion Fee
Valuation Fee
Stamp Duty

£129,000
£450
£750
£0
£400
£200
£2,150

Mortgage Required

£132,950

Mortgage (60%)

£132,950
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*132950=

0.985947388
0.035397426
0.070297426
£9,346.04


£9,346.04

Outstanding
Amount borrowed
Balance
Less Payments

£132,950
1.07101801
£142,392
£9,346.04

Outstanding

2.0349
£123,373.58

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I

(1+0.0349)^2 -1/0.0349

A=(1+i)n

(1+0.045)^18

(1+i)n -1/I

(1+0.045)^18 -1/0.045

Mortgage Repayment
Mortgage
Duration
Interest Rate

£123,373.58
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*123373.58=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£10,145.86
£10,145.86

£123,374
2.208478766
£272,468
£10,145.86
26.8550837
£0.00

Page 39

4.
Property 4 £37,000
Property 60%
Completion Fee
Valuation Fee
Stamp Duty

£22,200
£450
£400
£0
£250
£30
£0

Mortgage Required

£23,330

Mortgage (60%)

£23,330
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*23330=

0.985947388
0.035397426
0.070297426
£1,640.04


£1,640.04

Outstanding
Amount borrowed
Balance
Less Payments

£23,330
1.07101801
£24,987
£1,640.04

Outstanding

2.0349
£21,649.53

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)2 -1/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£21,649.53
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*21649.53=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£1,780.39
£1,780.39

£21,650
2.208478766
£47,813
£1,780.39
26.8550837
£0.00

A=(1+i)n

(1+0.045)^18

(1+i)n -1/I (1+0.045)^18 -1/0.045

Page 40

5.
Property 60%
Completion Fee
Solicitors Fee + Disbursement
Valuation Fee
Stamp Duty

£144,000
£450
£750
£0
£400
£200
£2,400

Mortgage Required

£148,200

Mortgage (60%)

£148,200
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*148200=

0.985947388
0.035397426
0.070297426
£10,418.08


£10,418.08

Outstanding
Amount borrowed
Balance
Less Payments

£148,200
1.07101801
£158,725
£10,418.08

Outstanding

2.0349
£137,525.12

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)^2 - 1/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£137,525.12
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*137525.12=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£11,309.64
£11,309.64

£137,525
2.208478766
£303,721
£11,309.64
26.8550837
£0.00

A=(1+i)n

(1+0.045)18

(1+i)n -1/I (1+0.045)^18 -1/0.045

Page 41

6.
Property 60%
Completetion Fee
Solicters Fee + Disbursement
Valuation Fee
Stamp Duty

£112,170
£450
£670
£0
£350
£140
£1,900

Mortgage Required

£115,680

Inital Mortgage Repayment
Mortgage (60%)
Inital Duration (Years)
Inital Interest Rate

£115,680
20
0.0349

Inital Mortgage Repayment Formula
(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*115680=

Inital Mortgage Repayments P.a.

0.985947388
0.035397426
0.070297426
£8,131.97
£8,131.97

Outstanding
Amount borrowed
Balance
Less Payments

£115,680
1.07101801
£123,895
£8,131.97

Amout of £1 P.a. @ 3.49% for 2 years
Outstanding

2.0349
£107,347.08

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)^2/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£107,347.08
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*107347.08=

Outstanding
Amount borrowed
Balance
Less Payments
Amout of £1 P.a. @ 4.5% for 18 years
Outstanding


1.208478766
0.037236898
0.082236898
£8,827.89
£8,827.89

£107,347
2.208478766
£237,074
£8,827.89
26.8550837
£0.00

A=(1+i)n

(1+0.045)18

(1+i)n -1/I (1+0.045)^18 -1/0.045

Page 42

7.
Property 7 £99,950
Property 60%
Completion Fee
Valuation Fee
Stamp Duty

£59,970
£450
£550
£0
£275
£90
£0

Mortgage Required

£61,335

Mortgage (60%)

£61,335
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*61335=

0.985947388
0.035397426
0.070297426
£4,311.69


£4,311.69

Outstanding
Amount borrowed
Balance
Less Payments

£61,335
1.07101801
£65,691
£4,311.69

Outstanding

2.0349
£56,917.03

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)^2/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£56,917.03
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*56917.03=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£4,680.68
£4,680.68

£56,917
2.208478766
£125,700
£4,680.68
26.8550837
£0.00

A=(1+i)n

(1+0.045)18

(1+i)n -1/I (1+0.045)618 -1/0.045

Page 43

8.
Property 60%
Completion Fee
Valuation Fee
Stamp Duty

£195,000
£450
£800
£0
£450
£200
£9,750

Mortgage Required

£206,650

Mortgage (60%)

£206,650
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.00.035397426=
0.070297426*206650=

0.985947388
0.035397426
0.070297426
£14,526.96


£14,526.96

Outstanding
Amount borrowed
Balance
Less Payments

£206,650
1.07101801
£221,326
£14,526.96

Outstanding

2.0349
£191,764.95

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)^2 -1/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£191,764.95
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*191764.95=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£15,770.15
£15,770.15

£191,765
2.208478766
£423,509
£15,770.15
26.8550837
£0.00

A=(1+i)n

(1+0.045)^18

(1+i)n -1/I (1+0.045)^18/0.045

Page 44

9.
Property 60%
Completion Fee
Valuation Fee
Stamp Duty

£195,000
£450
£800
£0
£450
£200
£9,750

Mortgage Required

£206,650

Mortgage (60%)

£206,650
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*200150=

0.985947388
0.035397426
0.070297426
£14,526.96


£14,526.96

Outstanding
Amount borrowed
Balance
Less Payments

£206,650
1.07101801
£221,326
£14,526.96

Outstanding

2.0349
£191,764.95

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)^2 -1/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£191,764.95
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*185733.15=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£15,770.15
£15,770.15

£191,765
2.208478766
£423,509
£15,770.15
26.8550837
£0.00

A=(1+i)n

(1+0.045)18

(1+i)n -1/I (1+0.045)^18 -1/0.045

Page 45

10.
Property 60%
Completion Fee
Valuation Fee
Stamp Duty

£225,000
£450
£850
£0
£500
£200
£11,250

Mortgage Required

£238,250

Mortgage (60%)

£238,250
20
0.0349

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.0349)^20-1=
0.0349/0.985947388=
0.0349+0.035397426=
0.070297426*230750=

0.985947388
0.035397426
0.070297426
£16,748.36


£16,748.36

Outstanding
Amount borrowed
Balance
Less Payments

£238,250
1.07101801
£255,170
£16,748.36

Outstanding

2.0349
£221,088.80

A=(1+i)n

(1+0.0349)^2

(1+i)n -1/I (1+0.0349)^2 -1/0.0349

Mortgage Repayment
Mortgage
Duration
Interest Rate

£221,088.80
18
0.045

(1+I)^n -1
(1+I)^n-1
I/(1+I)^n -1
I + (I/(1+I)^n -1)
I+I/(1+I)^n-1*Loan

(1+0.045)^18-1=
0.045/1.208478766=
0.045+0.037236898=
0.125575*214129.03=

Outstanding
Amount borrowed
Balance
Less Payments
Outstanding


1.208478766
0.037236898
0.082236898
£18,181.66
£18,181.66

£221,089
2.208478766
£488,270
£18,181.66
26.8550837
£0.00

A=(1+i)n

(1+0.045)18

(1+i)n -1/I (1+0.045)^18 -1/0.045

Page 46

Appendix B
1.
Property 1
Comparable 1

2 Bedrooms

1 Bed

2 Bed

2 Bed

Good Condition

Good Condition

Good Condition

Excellent Condition Good Condition

Good Condition

Good Location

Good Location

Good Location

Good Location

Poor

Good Location

Unfurnished

Price PCM

Subject
x

Comparable 2

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

£650

Adjustments
Bedrooms
Condition
Location
Furnishings

Comparable 3
£850

30.77%
-14.71%
41.18%
-17.65%

£850

£975

Comparable 5
£500

2 Bed

£1,000
2 Bed

1.307692308
0.852941176
1.411764706
0.8235

£650
£850.00

Comparable 4

Price PCM for Subject
Current Price
Price under Bedrooms
Price under B + Condition
Price under B + C + Location
Price under B+ C + L + Furnishings

£500

£1,000

£705.88
£823.50

Price

£850

Price PCM Between £706 and £850

£975
£975.00
£831.62

£850

£832

£706

£824

Say £850


Page 47

2.
Property 2
Subject
x

Comparable 1

3 Bedrooms

1 Bed

3 Bed

2 Bed

Good Condition

Good Condition

Good Condition


Good Condition

Good Location

Poor Location

Good Location

Good Location

Good Location

Good Location

Unfurnished

Price PCM

Comparable 2

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

£495

Adjustments
Bedrooms
Condition
Location
Furnishings

Comparable 3
£850

42%
-20%
45%
-17%

£850

Comparable 5
£750

2 Bed

£995
2 Bed

1.14
0.80
1.45
0.83

£495
£563.91

Comparable 4
£900

Current Price

£750
£854.41

£995

£720.00
£817.67
£825.85

Price

£818


£900

£850

£720

£826

Say £850


Page 48

3.
Property 3
Subject
x

Comparable 1

2 Bedrooms

1 Bed

2 Bed

2 Bed

Good Condition

Good Condition

Good Condition


Good Condition

Good Location

Good Location

Good Location

Good Location

Poor Location

Good Location

Unfurnished

Price PCM

Comparable 2

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

£750

Adjustments
Bedrooms
Condition
Location
Furnishings

Comparable 3
£850

12%
-12%
9%
-17%

£850

Comparable 5
£775

2 Bed

£995
2 Bed

1.12
0.88
1.09
0.83

£750
£838.24

Comparable 4
£950

Current Price

£775

£995

£838.24
£843.38
£825.85

Price

£950

£838

£800

£838

£843

£826

Say £825


Page 49

4.
Property 4
Comparable 1

2 Bedrooms

1 Bed

2 Bed

2 Bed

Good Condition

Good Condition

Good Condition


Good Condition

Good Location

Good Location

Good Location

Good Location

Poor Location

Good Location

Unfurnished

Price PCM

Subject
x

Comparable 2

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

£400

Adjustments
Bedrooms
Condition
Location
Furnishings

Comparable 3
£450

11%
-11%
13%
-22%

£450

£500

Comparable 5
£390

2 Bed

£550
2 Bed

1.11
0.89
1.13
0.83

£400
£444.44

Comparable 4

Current Price

£390

£550

£444.44
£442.00
£456.50

Price

£500

£444

£450

£444

£442

£457

Say £455


Page 50

5.

Property 5
Comparable 1

2 Bedrooms

Price PCM

Subject
x

Comparable 2

1 Bed

£650

Comparable 3
£800

Comparable 4
£950

Comparable 5
£460

2 Bed

2 Bed


Good Condition


Good Condition

Good Location

Good Location

Good Location

Good Location

Poor Location

Good Location

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

Adjustments
Bedrooms
Condition
Location
Furnishings

19%
16%
43%
-24%

£800

2 Bed

1.19
1.16
1.43
0.83

£650
£771.88
£893.75

2 Bed

£995

Current Price

£995

£532.63
£759.00

£926.32

£460

£1,152.11
£956.25

Price

£950

£894

£926

£950

£759

£956

Say £955


Page 51

6.

Property 6
Comparable 1

2 Bedrooms

Price PCM

Subject
x

Comparable 2

1 Bed

£650

Comparable 3
£800

Comparable 4
£950

Comparable 5
£460

2 Bed

2 Bed


Good Condition


Good Condition

Good Location

Good Location

Good Location

Good Location

Poor Location

Good Location

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

Adjustments
Bedrooms
Condition
Location
Furnishings

19%
16%
43%
-24%

£800

2 Bed

1.19
1.16
1.43
0.83

£650
£771.88
£893.75

2 Bed

£995

Current Price

£995

£532.63
£759.00

£926.32

£460

£1,152.11
£956.25

Price

£950

£894

£926

£950

£759

£956

Say £955


Page 52

7.

Property 7
Comparable 1

2 Bedrooms

1 Bed

2 Bed

2 Bed

Good Condition

Good Condition

Good Condition


Good Condition

Good Location

Good Location

Good Location

Good Location

Poor Location

Good Location

Unfurnished

Price PCM

Subject
x

Comparable 2

Unfurnished

Unfurnished

Unfurnished

Unfurnished

Furnished

£425

Adjustments
Bedrooms
Condition
Location
Furnishings

Comparable 3
£525

19%
-10%
14%
-10%

£525

£575

Comparable 5
£450

2 Bed

£575
2 Bed

1.19
0.90
1.14
0.83

£425
£505.95

Comparable 4

Current Price

£450

£575

£520.24
£514.29
£477.25

Price

£575

£506

£525

£520

£514

£477

Say £525


Page 53

8.

Property 8
Subject
x

Comparable 1

Comparable 2
Comparable 3
Comparable 4
£32,030
£45,000
£6,250
£12,430

306

298

404

72

104

Grade B Office

Grade B Office

Grade B Office

Grade B Office

Grade B Office

Good Location

Good Location

Good Location

Good Location

Good Location

Poor Condition

Good Condition

Good Condition

Good Condition

Good Condition

FRI

FRI

FRI

FRI

FRI

£/m2

£107.48

£111.39

£86.81

£119.52

Adjustments
Subject

V

306m2

V

0.00%

0.00%

0.00%

0.00%

Grade B Office

V

0.00%

0.00%

0.00%

0.00%

Good Location

V

0.00%

0.00%

0.00%

0.00%

Poor Condition

V

-5.00%

-5.00%

-5.00%

-5.00%

0.00%
-5.00%
£102.11
£31,245.37

0.00%
-5.00%
£105.82
£32,379.95

0.00%
-5.00%
£82.47
£25,234.38

0.00%
-5.00%
£113.54
£34,744.24
Say £34745

Comparable 1

FRI
V
Total Adjustments
Adjustemed £/m2
Amount P.a for subject
Price £/m2 Between £82.47 and £113.54


Comprabale 2

Comprabale 3

Comprabale 4

Page 54

9.
Property 9
Subject
x

Comparable 1

Comparable 2
Comparable 3
£64,000
£44,480
£12,420

337

750

516

128

Grade C Office

Grade B Office

Grade B Office

Grade B Office

Good Location

Good Location

Good Location

Good Location

Poor Condition

Good Condition

Good Condition

Good Condition

FRI

FRI

FRI

FRI

£/m2

£85.33

£86.20

£97.03

Adjustments
Subject

V

337m2

V

0.00%

0.00%

0.00%

Grade B Office

V

-5.00%

-5.00%

-5.00%

Good Location

V

0.00%

0.00%

0.00%

Poor Condition

V

-5.00%

-5.00%

-5.00%

0.00%
-10.00%
£77
£25,882

0.00%
-10.00%
£78
£26,145

0.00%
-10.00%
£87
£29,430

Comparable 1

FRI
V
Total Adjustments
Adjustemed £/m2
Price £/m2 Between £77 and £87


Comprabale 2

Comprabale 3

Say £29,430

Page 55

10.
Property 10
Subject
x

Comparable 1
£12,250
277

132

Grade c Office

Grade B Office

Good Location

Good Location

Good Condition

Good Condition

FRI

FRI

£/m2

£92.80

Adjustments
Subject

V

227m2

V

0.00%

Grade B Office

V

0.00%

Good Location

V

0.00%

Poor Condition

V

0.00%

FRI
Total Adjustments
Adjustemed £/m2
Price £/m2 £92.80

V

0.00%
0.00%
£92.80
£25,706.44


Comparable 1

£25,706.00
Say £25706

Page 56

Appendix C
1.
Property 1
Comparable 1
http://www.rightmove.co.uk/property-to-rent/property-36702808.html
Comparable 2
Comparable 3
Comparable 4
Comparable 5
2.
Property 2
Comparable 1
Comparable 2
Comparable 3
Comparable 4
http://www.rightmove.co.uk/property-to-rent/property-25214943.html?premiumA=true
Comparable 5
3.
Property 3
Comparable 1
Comparable 2
Comparable 3
Comparable 4
Comparable 5
4.
Property 4
Comparable 1
Comparable 2

Page 57

Comparable 3
Comparable 4
Comparable 5
5.
Property 5 + 6
Comparable 1
Comparable 2
Comparable 3
Comparable 4
Comparable 5
6.
Property 7
Comparable 1
Comparable 2
Comparable 3
Comparable 4
Comparable 5
7.
Property 8
Comparable 1
http://www.rightmove.co.uk/commercial-property-to-let/property-32184547.html
Comparable 2
Comparable 3
http://www.rightmove.co.uk/commercial-property-to-let/property36744850.html?premiumA=true
Comparable 4


Page 58

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