6/7 bed HMO
Mellor Road, Prenton, Wirral
Project
Background
& Deal Structure
This is an opportunity to acquire a large already converted HMO ideally suited for leasing to either professional tenants (for example, Arrowe Park hospital is nearby) or for leasing to the Registered Provider, Serco.
Serco have already expressed interest in the property, however Wirral us currently closed for onboarding with Serco.
We do anticipate this to change in the near future and are already in discussions to have this property included in the next series of allocations.
We have had another property pass PCC checks on this road, and subsequently did not purchase post-survey.
As a professional HMO, it is recommended (and priced) to complete the project to a very high-end finish. Demand exists in the market for a premium product.
Professional HMO end valuation based on a 6 bed scheme is likely to be a hybrid of bricks and mortar and also taking income into account. Example scenarios have been outlined below and should be discussed with a qualified broker.
Location
Images
Video Walkthrough
Floorplans
Project
Scope of Works
The schedule of works for this property would be dependant on the exit, but would include…
Professional HMO
- New kitchen
- x4 new en-suites, and associated structural adjustments
- Provision to increase hot water storage/usage capacity
- Complete redecoration & interior design
Serco HMO
- Replace kitchen tops
- New boiler system
- Adjust access on existing en-suite to provide 2nd shared bathroom for the household
Financials
Acquisition Costs
| Purchase Price Sale agreed | £102,700 |
| Renovation Refurbishment & Conversion Costs | £28,000 |
| Architect Budget for plans drafting plans and submission to local authority | £650 |
| Furniture Furnishing to provider’s requirements | £3,000 |
| SDLT Stamp Duty Land Tax | £3,081 UK £5,135 INT |
| Survey RICS Level 2 report | £420 |
| Legals Conveyancing & transaction fees & disbursements | £1,500 |
| Sourcing Sourcing Fee | £5,000 |
| Capital In Total acquisition costs | £145,701 |
Optional Extras
| Project Management @10% of cost of works | £2,800 |
| Lease Setup Lease negotiations & contract admin with Registered Provider | £800 |
Post-Works Refinance
| Gross Development Value Bricks & mortar valuation | £130,000 |
| Uplift Between GDV and original purchase price | £27,300 |
| 1st Charge Lending @75.00% of GDV – recycling funds onto next opportunity | £97,500 |
| Capital Left In Capital remaining in equity post-refinance using mortgage lending | £48,201 |
Registered Provider 10 Year Lease
| Gross Rent p.a. Negotiated rate for area | £14,560 |
| Mortgage p.a. @6.00% lending @75%LTV | £5,850 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. 0.00% | £0 |
| Net Cash Flow p.a. Pre-tax income | £8,710 |
Capital Growth
Capital Gain
| Capital Value @ Year 10 Year 10 value assumed conservative 3.5% annual growth | £183,378 |
| Mortgage Lending 1st Charge lending redemption | £97,500 |
| Equity Investment Capital Capital returned to equity investor | £48,201 |
| Capital Gain @ Year 10 Cap.value less 1st charge lending & equity investor’s capital | £37,677 |
Investor Returns
Income & Return
| Net Cash Flow PA Annual net income after costs | £8,710 |
| Total Net Lifetime Cash Flow Net income over life of lease term | £87,100 |
| Total Lifetime Return on Capital Gain + Total Income (calculated @Year 10) | £124,777 |
Comparables
Availability
Secure Your Next Deal Today…
This deal is available under our standard terms with a 25% downpayment of the Sourcing Fee paid to secure the opportunity, deductible from the final balance due at Exchange of contracts.
Please fill in your information below if you would like to to discuss this opportunity in more detail…
