Rugby and Kettering Buy-to-Let Case Studies: Costs and Returns
August 20, 2021
A buy-to-let doesn’t always need a major refurbishment to make sense. Sometimes the better decision is to buy well, put the property into a suitable condition and avoid spending money on improvements that won’t produce enough extra rent or value.
In my August 2021 video, I visited two single-let projects: one in Rugby and one in Kettering. The video title referred to Northamptonshire, but Rugby is in Warwickshire, so it’s useful to be precise about the locations when assessing the examples.
These were historical project discussions, including forecasts and approximate whiteboard calculations. They weren’t completed rental accounts or proof that the proposed refinancing had happened. The useful lesson is how the purchase price, work and financing interact, including where the figures need more checking.
You can also watch the original Rugby and Kettering property walkthroughs.
The Rugby purchase: a relatively light refurbishment
The first property was a three-bedroom house bought by a client for £165,000. In the video, I estimated its value in its existing condition at around £185,000, with a possible finished value of approximately £200,000.
Those were estimates discussed at the time, not a current valuation. The gap reflected both the purchase terms and the market context, as well as the proposed work. It would be misleading to attribute the whole difference between £165,000 and £200,000 to decorating the house.
The rooms were a useful size, and the work looked relatively straightforward compared with a major conversion. The plan involved removing wallpaper, repainting and replacing carpets. The bathroom was already in a condition where little work appeared necessary.
The kitchen was less convincing. We had hoped to retain it, but after inspecting it more closely I thought replacement was the sensible route. I discussed roughly £4,000–£5,000 for that part of the job within the historical budget.
That is a useful example of why a light refurbishment still needs investigation. The description tells you the intended scale; it doesn’t guarantee that every existing component can stay or that the first estimate will be the final bill.
Electrical work was the main uncertainty
During the walkthrough, I talked about a total renovation around £10,000. At the whiteboard, I increased the allowance to £12,000 and acknowledged that the figure could rise further, potentially into the mid-to-high teens, depending on the electrical work required.
That uncertainty belonged in the decision. A budget with an unresolved item isn’t the same as a fixed-price contract covering everything necessary. If the electrical checks revealed more work, the return calculation would need to change.
I thought the deal had room to accommodate some extra cost, but that was still a forecast. The sensible response is to identify the uncertainty and keep funds available, rather than assume the margin will always absorb whatever happens.
I also wanted the finish to be consistent. Replacing worn or mismatched carpets and using a straightforward decorative scheme could make the house more coherent without turning it into a premium refurbishment. The aim was a suitable rental home, not the most expensive possible specification.
Reconstructing the Rugby cash requirement
At a 75% loan-to-value purchase mortgage, a £165,000 price implies a £41,250 deposit. The video rounded that to about £41,000. Adding the whiteboard allowances of £2,000 for legal costs, £5,000 for stamp duty and £12,000 for work gives approximately £60,250.
Those transaction-cost figures were historical allowances, not a current tax calculation or a quote for another buyer. The total also depends on what is included in each category and whether the work stays within budget.
Using a £200,000 valuation and a hypothetical 75% refinance would produce a £150,000 loan. Against an original £123,750 mortgage, that could release £26,250 before refinancing costs, repayment charges or other adjustments.
The video rounded the release to about £27,000 and the remaining cash to about £33,000. On the reconstructed figures, £60,250 less £26,250 leaves £34,000 before those additional costs. The difference shows why rounded whiteboard numbers need reconciling before anyone commits money.
The principle still holds: a higher supported valuation could allow some cash to be released. But it would be borrowed money, not a second profit added to the increase in value, and the lender would have to approve the terms.
The rental forecast wasn’t a full cost schedule
I discussed rent of around £850 a month for the finished Rugby property. As a broad illustration, I expected roughly half to remain after costs, producing about £5,000 a year. That was an experience-based estimate, not an itemised operating budget.
Using £5,000 against the reconstructed £60,250 cash requirement gives approximately 8.3% before the proposed refinance. Against £34,000 left in, it would be about 14.7%, if the same annual cash profit remained achievable after refinancing.
That last condition matters. Increasing the mortgage can change the interest cost, so you can’t simply reduce the denominator and assume the annual profit stays untouched. The borrowing terms, rent and all expenses need to be recalculated together.
In the video, I quoted rounded returns around 8.5% and 15.5%. They indicated the potential effect of releasing capital, but they weren’t guaranteed or audited returns. I’d use them as the start of a proper appraisal, not the final answer.
Why the HMO idea was left for later
The Rugby property had initially been considered for a possible HMO conversion. The client was buying a first investment property, and the financing available for that situation influenced the immediate plan.
We discussed operating it as a single let first, with the possibility of a different use later. That was a proposed future option, not confirmation that the house had been converted or that all permissions and finance for an HMO were in place.
I think that’s a useful discipline. A possible later strategy can add flexibility, but the current purchase should make sense on the route you’re actually able to carry out. A hypothetical conversion shouldn’t rescue a weak single-let calculation.
Any later change would need its own assessment of layout, planning, licensing, safety, demand and financing. The fact that a property has several bedrooms doesn’t settle those questions.
Kettering: keeping the initial work proportionate
The second property was in Kettering, purchased for £131,000. During the walkthrough, I compared a basic refresh of roughly £5,000 with a more extensive refurbishment that could cost £15,000–£20,000.
The rent difference I discussed was modest: around £775 a month for a basic suitable finish versus perhaps £800 for a higher specification. That extra £25 a month is £300 a year before any extra costs.
If an additional £10,000 of work produced only that extra rent, the simple rental payback would be over 33 years. That isn’t a full investment appraisal because resale value, maintenance and tenant demand also matter, but it explains why I questioned the larger budget.
Some existing features could be retained. The kitchen and bathroom appeared broadly serviceable, while decorating and smaller repairs would improve the presentation. The aim was to spend where it was needed rather than replace everything because a more dramatic transformation would look impressive.
A basic finish still has to be safe and suitable
One of the revealing moments was a stair giving way during the visit. That was a reminder that a low-cost refresh cannot mean overlooking defects. Necessary repairs don’t become optional because the financial plan favours a smaller budget.
I’d separate presentation choices from safety and essential condition. Keeping usable cabinets can be sensible. Ignoring a defective stair wouldn’t be. The budget has to cover the work required to provide a proper home before comparing cosmetic upgrades.
The same applies to checks that aren’t obvious in a video walkthrough. An electrical assessment, condition concerns and other relevant investigations can change the scope. A property looking fairly tidy doesn’t establish that every system is in satisfactory condition.
My article on property refurbishment mistakes explores why discovering the work early is so much better than finding it after the money has already been allocated elsewhere.
The Kettering figures changed between the walkthrough and whiteboard
The video contains different Kettering scenarios. During the visit, I discussed an existing value around £150,000 and a relatively small uplift from a £5,000 refresh. Later, the whiteboard used a £180,000 end value and a £10,000 refurbishment allowance.
Those shouldn’t be blended into one supposedly achieved result. They represent different assumptions, and the source doesn’t fully reconcile the change. Before buying on that basis, I’d want the scope, comparable evidence and budget aligned in one version of the appraisal.
The whiteboard listed a £32,750 deposit, £2,000 legal allowance, £4,000 stamp-duty allowance and £10,000 refurbishment. Those add to £48,750, rather than the rounded £48,000 discussed.
At a hypothetical £180,000 valuation, a 75% mortgage would be £135,000. Subtracting the original £98,250 purchase mortgage gives a possible £36,750 release before refinancing costs. Against £48,750 committed, that leaves £12,000 before those costs and any budget changes.
That is a potentially significant release, but only if the valuation, lender and full cost position support it. It wasn’t evidence of a completed refinance, and the larger loan would need to be reflected in the rental calculation.
How I’d use the income estimate
The whiteboard used £800 monthly rent and an approximate £400 monthly profit for Kettering, or £4,800 a year. Against £48,750 initially committed, that is roughly 9.8% before personal tax and any costs missing from the broad estimate.
I wouldn’t carry that £4,800 unchanged into a post-refinance return without checking the new mortgage expense. Nor would I use the lowest renovation figure from one part of the video with the highest valuation from another and call it a verified deal.
The useful exercise is to create a consistent set of assumptions, then test a lower valuation, a bigger works bill and a weaker rental result. If the project still makes sense, the decision rests on something stronger than the most attractive combination of numbers.
For the value evidence, the government’s sold-price search is a useful starting point alongside local property comparisons. Asking prices and an agent’s estimate can inform a view, but they aren’t the same as completed sale evidence.
To work through a similar project with your own figures, use our buy-to-let deal calculator. It separates cash required, rental cash flow and possible capital release. I’d include realistic refurbishment and purchase costs and test a lower valuation. The result is a pre-tax illustration, not a lender’s offer.
Match the work to the investment plan
What I liked about these examples was the focus on proportionate work and the purchase price. Neither needed to become a major development simply to qualify as an investment. A suitable single let can be a valid objective in its own right.
The caution is that a promising walkthrough isn’t the finished appraisal. Costs, finance, rent and value need to agree with one another, and every forecast should remain clearly labelled until it becomes an actual result.
If you’d like to discuss how a single let might fit your plans, book a free 30-minute call. You can also explore the Starter Club or find out about Done For You.