4 bed HMO, Morecambe LA4 5UF
Project:
Background & Deal Structure:
A 3-bedroom terraced property ideally suited for conversion into a 4 bedroom house of multiple occupancy (HMO) and leased to a Registered Provider on a long-term commercial lease.
The Registered Provider (RP) has expressed interest in this property, and it has passed their postcode checks.
The RP have offered a 5 year lease on this unit, following renovation and having onboarded the property.
Deal requires cash or bridge for the front-end purchase due to the scope of works.
Vendor requires an upfront 3% reservation fee, deductible from the purchase price and an Exchange of Contracts in 6 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 Lancaster, Preston and beyond, Morecambe 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.
Scope of Work
- Full rip out (including kitchen)
- Install 3m of new stud walling to create new rooms
- Add new circuits where required and replace consumer unit
- Plasterboard and skim new studwork
- Install new kitchen
- Install new bathroom
- Paint throughout
- 2nd Fix all new electrical
- Fit carpets and flooring throughout
- Fire works inc. fire doors and casings to be funded by the RP
UK Financials:
Acquisition Costs
| Purchase Price Sale agreed | £124,000 |
| Renovation Refurbishment & Conversion Costs | £30,000 |
| Project Management @10% of cost of works | £0 |
| Architect/Planning Technical drawings for approval by HMO officer | £650 |
| Building Control UK | £650 |
| Furniture Furnishing to provider’s requirements | £3,000 |
| SDLT:Resi Stamp Duty Land Tax | £6,200UK |
| Survey RICS Level 2 Report | £500 |
| Legals Conveyancing & transaction fees & disbursements | £2,500 |
| Insurance | £400 |
| Sourcing Sourcing Fee | £7,750 |
| Equity Invested Total acquisition costs excluding finance | £175,650 |
Rental Income (Term: 10-Year Lease)
| Rooms | 4 |
| Average Rate/Wk | £0 |
| Gross Rent p.a. Negotiated rate for area | £17,701 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. @6.00% lending @.75%LTV | £6,750 |
| Net Cash Flow p.a. Pre-tax income | £10,951 |
| Rent/m (rm rate reverse calc) | £0 |
| Term (years) | 10 |
Returns
| Equity Invested | £63,150 |
| Net Cash Flow PA Private finance investor partner net income | £10,951 |
| Contract Lifetime Net Cash Flow Private finance investor partner net income over the life of lease term (10 years) | £109,508 |
Rental Income (Term: 10-Year Lease)
Yield
Cash-on-Cash UK
International Financials:
Acquisition Costs
| Purchase Price Sale agreed | £124,000 |
| Renovation Refurbishment & Conversion Costs | £30,000 |
| Project Management @10% of cost of works | £0 |
| Architect/Planning Technical drawings for approval by HMO officer | £650 |
| Building Control Interntional | £650 |
| Furniture Furnishing to provider’s requirements | £3,000 |
| SDLT:Resi Stamp Duty Land Tax | £8,750 |
| Survey RICS Level 2 Report | £500 |
| Legals Conveyancing & transaction fees & disbursements | £2,500 |
| Insurance | £400 |
| Sourcing Sourcing Fee | £7,750 |
| Equity Invested Total acquisition costs excluding finance | £175,650 |
Rental Income (Term: 10-Year Lease)
| Rooms | 4 |
| Average Rate/Wk | £0 |
| Gross Rent p.a. Negotiated rate for area | £17,701 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. @6.00% lending @.75%LTV | £6,750 |
| Net Cash Flow p.a. Pre-tax income | £10,951 |
| Rent/m (rm rate reverse calc) | £0 |
| Term (years) | 10 |
Returns
| Equity Invested | £63,150 |
| Net Cash Flow PA Private finance investor partner net income | £10,951 |
| Contract Lifetime Net Cash Flow Private finance investor partner net income over the life of lease term (10 years) | £109,508 |
Rental Income (Term: 10-Year Lease)
Yield
Cash-on-Cash UK
Comparables
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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.
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