Goverment Grant/initative vs BRRR

[Jack Mac connoran]

Grant for social renovation house
Up to 40k paid to owner of the house for repairs which all work has to be approved by them. Need to be ber rated B+ or better. They take care of all maintanence within the building, bar structural but that's what's insurance for.
The 40k is paid back in installments against the rent from the council which is a 80% rent based on similar comps in area. The lease to the council must be a minimum of ten years.
Say rent at 100% rate was 1k, although we would be aiming for more.
So if over a 10 year period rent was paid at 80% of 1k- (800) it would equal 96,000 instead of 120
96,000 -40,000 = 56,000 profit
After 10 years 56k profit, and an asset worth 200k plus 10 years apprection.
Initial investment (Aqquisition (50k)? + Renovation (40k(me) 40k(council) ). 90k all in.
Monthly 800-333= 466 monthly cash flow .
•Rent is paid even if nobody lives there
•Handsfree
•Option to sell private (lease stays) or to council
It is a long term investment which is safe.
I would probably do a different design if i went this way.
If you renovated it, refinanced a loan backed by your house and rented it out you would get
200k cash loan and rent of 12k a year, 1k monthly (100%).
Over 10 years would be 120k cashflow Minus the loan repayments. Over 25 years which comes out at 666 +3.5% APR. Leaves 333- minus intrest positive cash flow. 333 monthly over 10 years is 39,960.
200k refinance payout minus aqquisition (50k) + rennovations (80k) = 70k cash + 333 monthly income.
Highlights•••••••
•With option 1 you have a higher cash flow monthly
•No maintenance costs (80% rates)
•Hassle free
•Safe, money paid occupied or not
•Have to deal with council on number of matters
•Can get funding for 40,000 of renovations paid back over 10 years
•466 net monthly, 10 year minimum lease

Option 2
•Refinance package 200k - aqquisition (50k) + renovation (80k) = 70k take home
• Can rent out at 100% market value
• Maintenance, although should be minimal as new renovation.
•Locality close
•Can raise rents
•333 net monthly 70k cash
•70k cash to invest again. 333 monthly towards safety egg on property.

I think although I'd prefer option two as I would like to invest in more properties I believe option 1 would appeal to some also. Truly passive income,  minus your aqquisition fee and Reno costs over 40,000.