5 bed HMO
Windsor Road, Workington CA14 5BJ
Project
Background
& Deal Structure
A 3 bedroom mid-terraced property requiring modernisation, ideally suited for conversion into a 5 bedroom house of multiple occupancy (HMO) and leased to a Registered Provider on a long-term commercial lease.
The Registered Provider (RP) have expressed interest in this property, and it has passed their postcode checks.
The RP have offered a 10 year lease on this unit, following renovation and having onboarded the property.
There is a viable exit to renovate, occupy and sell to capitalise the opportunity.
Location
Images
Current Floorplans
Proposed Floorplans
Project
Scope of Works
Rip out – door casings, kitchen, bathroom fittings etc as required, carpets as required.
Interlinked Fire Alarm System interlinked smoke detection to all rooms and corridors and 1 heat detector in the kitchen area. Additonal ringmain factored in for bathroom back to bedroom. Electrical sockets, lights and extraction, EICR test and two EML fittings Kitchen and Bathrooms to have Bulk Headlights. All bedrooms to have 1 no USB Socket and minimum 2 double sockets Communal area to have 1 USB Socket and minimum if 3 double sockets in total Kitchen to have isolation switch for washing machine. Bathroom to have extraction fan.
Supply and fit new fully compliant FD30 fire door casings, fully compliant FD30 fire doors, intumescent fire strips, architraves, fire door closer, push plate to communal door, fully compliant door lock suitable to specific fire door, doorstop to all rooms.
Form new partition wall to split Livingroom into 2 bedrooms at 6.5m2, insulate, plasterboard, supply and fit skirting to both sides and install new doorway c/w with fire-door
Form new partition wall in rear bedroom on 1st floor lintel required (floorplan) to create minimum space required for single bedroom 6.5m2.
Replace shower head and seal around bathroom and deep clean
Remove stud wall in utility room and create more space for lounge, insulate, plasterboard, supply and fit skirting to both sides and install new doorway forming 2.15m2 separate WC and sink created in utitly room, WC to have standard doors and frames with privacy bolt installed.
Carry out all other associated joinery works throughout the property to make good existing woodwork, skirting boards etc.
Plaster all newly formed partition walls NOTE: WHERE WALLS HAVE TEXTURED COVERINGS AND REQUIRE ANY PLASTER THEN FULL WALL WILL BE STRIPPED TO ACHIEVE SMOOTH FINISH. NO IRREGULAR FINISHES/PATCHES.
Fire-board under stairs and to any supply cupboards etc.
New flooring where required, look to save part of existing floors if possible.
Full redecoration of all walls, ceilings and woodwork in white throughout the whole house.
Remove shed at rear make good base.
Install fencing approx 40 feet to side garden, currently open and can be used as a cut through
Financials
Acquisition Costs
| Purchase Price Sale agreed | £75,000 |
| Renovation Refurbishment & Conversion Costs | £35,000 |
| Project Management @10% of cost of works | £3,500 |
| Architect Budget for plans drafting plans and submission to local authority | £650 |
| Furniture Furnishing to provider’s requirements | £3,500 |
| SDLT Stamp Duty Land Tax | £2,250 |
| Survey RICS Level 2 report | £420 |
| Legals Conveyancing & transaction fees & disbursements | £1,500 |
| Sourcing Sourcing Fee | £5,000 |
| Capital In Total acquisition costs | £126,820 |
Private Finance Costs
| Private Finance Private capital requirement for project | £126,820 |
| Loan Term (months) Maximum term required to purchase, renovate and sell project | 12 |
| Private Loan Interest @10.00% over 12 months | £12,682 |
| Capital & Interest Total Capital and interest repaid at the end of the term loan | £139,502 |
Registered Provider 10 Year Lease
| Gross Rent p.a. Negotiated rate for area | £17,680 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. 0.00% | £0 |
| Voids p.a. 0.00% | £0 |
| Net Cash Flow p.a. Pre-tax income | £17,680 |
Primary Exit – Setup, Occupy & Trade/Sell
Investor Returns
Disposal & Return – Primary Exit
| Yield Sale @10% Sale value at 10% of net lease value | £176,800 |
| Profit Sales value over total costs in | £37,298 |
| Margin Profit on costs | 29.41% |
Secondary Exit – Trade Inter-Company, Refinance & Hold
Post-Works Refinance
| Gross Development Value Bricks & mortar valuation | £110,000 |
| Uplift Between GDV and original purchase price | £35,000 |
| 1st Charge Lending @75.00% of GDV – recycling funds onto next opportunity | £82,500 |
| Equity Capital Capital remaining in equity to be refinanced post-mortgage lending | £57,002 |
Long-Term Private Finance
| (LT) Private Finance Long-term private capital requirement for project post-refinance | £57,002 |
| (LT) Loan Term (months) Long-term private capital loan term (months) | 120 |
| (LT) Private Loan Interest p.a. @6.00% over 120 months | £3,420 |
Registered Provider 10 Year Lease
| Gross Rent p.a. Negotiated rate for area | £17,600 |
| Mortgage p.a. @6.00% lending @75%LTV | £4,950 |
| Private Finance p.a. @6.00% lending | £3,420 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. 0.50% | £88 |
| Voids p.a. 0.00% | £0 |
| Net Cash Flow p.a. Pre-tax income | £9,221 |
Capital Growth
Capital Gain
| Capital Value @ Year 10 Year 10 value assumed conservative 3.5% annual growth | £155,166 |
| Mortgage Lending 1st Charge lending redemption | £82,500 |
| Equity Investment Capital Capital returned to long-term equity investor | £57,002 |
| Capital Gain @ Year 10 Cap.value less 1st charge lending & equity investor’s capital | £15,664 |
Investor Returns
Income & Return
| Net Cash Flow PA Annual net income after costs | £9,221 |
| Total Net Lifetime Cash Flow Net income over life of lease term | £92,215 |
| Total Lifetime Return on Capital Gain + Total Income (calculated @Year 10) | £107,789 |
Availability
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