4 bed HMO

Pendle Drive, Litherland

Project

Background
& Deal Structure

A 3 bedroom mid-terraced property requiring modernisation, 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.

We have an established relationship with a Registered Provider (RP) who expressed interest in this property, after passing all their criteria checks.

The RP offered a 10 year lease on this unit, following renovation and having onboarded the property.

Location

Area

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 Liverpool, Chester and beyond, Litherland 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.

Images

Before

Floorplans

Scope of Works

  • Full re-wire including smoke & heat sensors
  • Boiler replacement
  • New doorway for bedroom 4 and stud existing entry from lounge
  • Stud across dining area
  • Fire doors and frames x 6
  • New worktops and cupboard faces to kitchen units, reusing existing carcass (if possible)
  • New bathroom suite, inc. electric shower
  • Flooring throughout
  • Decoration throughout
  • Clearance

Financials

Acquisition Costs

Purchase Price
Sale agreed		£103,000
Renovation
Refurbishment & Conversion Costs		£37,000
Furniture
Furnishing to provider’s requirements		£3,000
SDLT
Stamp Duty Land Tax		£3,090 UK
£5,150 INT
Survey
RICS Level 2 report		£420
Legals
Conveyancing & transaction fees & disbursements		£1,500
Sourcing
Sourcing Fee		£4,000
Lease Setup
Lease negotiations & contract admin with Registered Provider		£800
Capital In
Total acquisition costs		£152,010

Post-Works Refinance

Gross Development Value
Bricks & mortar valuation		£120,000
Uplift
Between GDV and original purchase price		£17,000
1st Charge Lending
@75.00% of GDV – recycling funds onto next opportunity		£90,000
Capital Left In
Capital remaining in equity post-refinance using mortgage lending		£62,010

Registered Provider 10 Year Lease

Gross Rent p.a.
Negotiated rate for area		£14,144
Mortgage p.a.
@6.00% lending @75%LTV		£5,400
Operational Expenses p.a.
@0.00%		£0
Management p.a.
0.00%		£0
Net Cash Flow p.a.
Pre-tax income		£8,744

Capital Growth

Capital Gain

Capital Value @ Year 10
Year 10 value assumed conservative 3.5% annual growth		£169,272
Mortgage Lending
1st Charge lending redemption		£90,000
Equity Investment Capital
Capital returned to equity investor		£62,010
Capital Gain @ Year 10
Cap.value less 1st charge lending & equity investor’s capital		£17,262

Investor Returns

Income & Return

Net Cash Flow PA
Annual net income after costs		£8,744
Total Net Lifetime Cash Flow
Net income over life of lease term		£87,440
Total Lifetime Return on Capital
Gain + Total Income (calculated @Year 10)		£104,702

14.10%

Annualised ROI %

168.85%

Lifetime Return %

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