6 Bed Social Housing HMO conversion
Project:
Background & Deal Structure:
A 3 bedroom end-terraced property requiring modernisation, ideally suited for conversion into a 6 bedroom house of multiple occupancy (HMO) and leased to a Registered Provider on a long-term commercial lease.
We have an established relationship with a Registered Provider (RP) who expressed interest in this property, after passing all their criteria checks.
Vendor requires an upfront 3% reservation fee, deductible from the purchase price and an Exchange of Contracts in 8 weeks.
Area / Location
Located close to the centre of town, with an abundance of local amenities and facilities, a short distance to the train station and motorway networks providing access to Blackpool, Kirkham and beyond, Lytham St. Annes is well located.
The property is perfectly positioned for access into the town, is in close proximity to many local, national and global employers, and benefits from a variety of local recreation spots including local golf courses, parks and forests.
Video Walkthrough:
Scope of Work
- TBC
Financials:
Acquisition Costs
| Purchase Price Sale agreed | £160,000 |
| Renovation Refurbishment & Conversion Costs | £60,000 |
| Architect/Planning Budget for plans drafting plans and submission to local authority | £700 |
| Building Control Estimated cost for compliance inspections & sign-off | £700 |
| Furniture Furnishing to provider’s requirements | £4,500 |
| SDLT Stamp Duty Land Tax | £8,700 UK £11,900 INT |
| Survey Chartered surveyor onsite inspection and report | £600 |
| Legals Conveyancing & transaction fees & disbursements | £2,500 |
| Insurance Buildings insurance to cover the reinstatement value | £550 |
| Sourcing Sourcing Fee | £8,750 |
| Capital In Total acquisition costs | £247,000 |
Optional Extras
| Project Management Coordinating contract teams | £6,000 |
| Lease Setup Lease negotiations & contract with Registered Provider | £2,100 |
Post Works Refinance
| Gross Development Value Bricks & mortar valuation | £200,000 |
| Uplift Between GDV and original purchase price | £40,000 |
| 1st Charge Lending @75.00% of GDV – recycling funds onto next opportunity | £150,000 |
| Capital Left In Capital remaining in equity post-refinance using mortgage lending | £97,000 |
Rental Income
| Gross Rent p.a. Negotiated rate for area | £25,194 |
| Mortgage p.a. @6.00% lending @75%LTV | £9,000 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. @0.00% | £0 |
| Net Cash Flow p.a. Pre-tax income | £16,194 |
Capital Growth
Capital Gain
| Capital Value @ Year 10 Year 10 value assumed conservative 3.5% annual growth | £282,120 |
| Mortgage Lending 1st Charge lending redemption | £150,000 |
| Equity Investment Capital Capital returned to equity investor | £97,000 |
| Capital Gain @ Year 10 Cap.value less 1st charge lending & equity investor’s capital | £35,120 |
Investor Return
Income & Return
| Net Cash Flow PA Annual net income after costs | £16,194 |
| Total Net Lifetime Cash Flow Net income over life of lease term | £161,940 |
| Total Lifetime Return on Capital Gain + Total Income (calculated @Year 10) | £197,060 |
Nett
Yield
Return on Investment
Lifetime
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Comparables
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