Now that I’m working with it every day, I’ve proven that the opportunity model is working. As a result, I’ve built a shortlist of buy to let properties to discuss.

the buy to let opportunity model is working
Photo by Jason Coudriet on Unsplash

The opportunity model is working

This is a quick update on our progress. We are working through the process as we described it in a previous post. We got a good list of properties from the property websites. These are been through the opportunity model. It has filtered out the ones that don’t meet the yield and ROI criteria. This gave us our first shortlist to discuss.

Having agreed to look for properties in the North East, we had to discuss an acceptable gross yield. We agreed that 10% gross yield is the threshold at which we include remove properties on the shortlist. To keep our calculations simple, we set the renovation figure at a flat £1000. This only applies if a property had a tenant in it already. By only looking for properties with tenants, we drastically reduced our initial list of potential properties in this area.

Without a doubt it has been really easy to gather the numbers that we need. I’ve had them to hand and simply popped them into the form we developed. What’s more, having the gross yield, net yield, and return on investment numbers just appear automatically has been really useful. To explain, we agreed where to set the lower threshold of our opportunity for each of these numbers. Basically, this gave me a clearer picture on how to use this model by allowing me to give each property a simple pass or fail.

Where we’re finding most properties

Overall we seem to be using properties from Zoopla more than other properties at the moment. This could be something to do with the market. This could be something to do with how we are searching. All this could just be a quirk of the criteria that we are using.

It doesn’t really matter what the reason is at this point. As long as we remember that this may not continue. It will be interesting to see if we are still using Zoopla this time next year.

Improving the opportunity model

We need to start thinking about how to add the bank criteria to the opportunity model. Once we’ve made that update, we will put the shortlist through the model again. This will double check that they still make it onto the shortlist.

We also need to update the opportunity model with other information we learned in our buy to let mortgage explorations. The other criteria that impact the viability of property are to do with it’s affordability. That is to say whether or not we can actually afford to buy it. This has no impact on the buy to let worthiness. By which I mean the expected profitability of that particular property.

The opportunity model is working
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