2 x4 bed HMOs
Tickhill Road, Maltby, Rotherham S66 7NG
Project
Background
& Deal Structure
2 x3-bedroom terraced properties adjacent to one another, ideally suited for conversion into 2 x4 bedroom houses of multiple occupancy (HMO) and leased to professional tenants.
The local area has significant demand for good quality professional HMO units, within a strong rental market.
The properties are available to purchase separately, however economies of scale can be delivered by acquiring both together (eg: running 1 build team across both projects at the same time).
Both properties are in a selective licensing area in Rotherham
Deal 1 has been operated historically as an HMO, whilst Deal 2 has been operated as a buy-to-let.
Deal requires cash or bridge for the front-end purchase due to the scope of works.
Location
Images
Deal 1
Deal 2
Floorplans
Deal 1
Deal 2
Proposed Plan – Both Projects
The plan is to adapt the downstairs layout to create a large double at the front, with an en-suite.
This would mean permitted access only to this room via the front door. The back door would become the main access point for the remaining 3 rooms.
Two of the rooms upstairs would have en-suites and the smallest room would have access to the shower room downstairs (an off-suite).
Alternative scenarios could involve a complete knock-through and conversion into an 8 bed and possibly more by going into the roof space to create a third habitable floor. A contingency for an architect has been included in the Financials.
Project
Scope of Works – Deal 1
Moderate works with internal reconfiguration, including…
Project
Scope of Works – Deal 2
Moderate works with internal reconfiguration, including…
Financials – Deal 1
Acquisition Costs
| Purchase Price Sale agreed | £83,000 |
| Renovation Refurbishment & Conversion Costs | £45,000 |
| Architect Budget for plans drafting plans and submission to local authority | £650 |
| Furniture Furnishing to provider’s requirements | £7,000 |
| SDLT Stamp Duty Land Tax | £2,490 UK £4,150 INT |
| Survey RICS Level 2 report | £500 |
| Legals Conveyancing & transaction fees & disbursements | £1,500 |
| Sourcing Sourcing Fee | £7,500 |
| Capital In Total acquisition costs | £147,640 |
Optional Extras
| Project Management Coordinating contract teams, representing the client | £4,500 |
Post-Works Refinance
| Gross Development Value Bricks & mortar valuation | £120,000 |
| Uplift Between GDV and original purchase price | £37,000 |
| 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 | £57,640 |
Professional HMO Exit
| Gross Rent p.a. Negotiated rate for area | £26,000 |
| Mortgage p.a. @6.00% lending @75%LTV | £5,400 |
| Operational Expenses p.a. @20.00% | £5,200 |
| Management p.a. @15.00% | £3,900 |
| Net Cash Flow p.a. Pre-tax income | £11,500 |
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 | £57,640 |
| Capital Gain @ Year 10 Cap.value less 1st charge lending & equity investor’s capital | £21,632 |
Investor Returns
Income & Return
| Net Cash Flow PA Annual net income after costs | £13,320 |
| Total Net Lifetime Cash Flow Net income over 10 year span | £133,200 |
| Total Lifetime Return on Capital Gain + Total Income (calculated @Year 10) | £146,377 |
Financials – Deal 2
Acquisition Costs
| Purchase Price Sale agreed | £85,000 |
| Renovation Refurbishment & Conversion Costs | £50,000 |
| Architect Budget for plans drafting plans and submission to local authority | £650 |
| Furniture Furnishing to provider’s requirements | £7,000 |
| SDLT Stamp Duty Land Tax | £2,550 UK £4,250 INT |
| Survey RICS Level 2 report | £500 |
| Legals Conveyancing & transaction fees & disbursements | £1,500 |
| Sourcing Sourcing Fee | £6,000 |
| Capital In Total acquisition costs | £153,200 |
Optional Extras
| Project Management Coordinating contract teams, representing the client | £5,000 |
Post-Works Refinance
| Gross Development Value Bricks & mortar valuation | £120,000 |
| Uplift Between GDV and original purchase price | £35,000 |
| 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 | £63,200 |
Professional HMO Exit
| Gross Rent p.a. Negotiated rate for area | £26,000 |
| Mortgage p.a. @6.00% lending @75%LTV | £5,400 |
| Operational Expenses p.a. @20.00% | £5,200 |
| Management p.a. @15.00% | £3,900 |
| Net Cash Flow p.a. Pre-tax income | £11,500 |
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 | £63,200 |
| Capital Gain @ Year 10 Cap.value less 1st charge lending & equity investor’s capital | £16,072 |
Investor Returns
Income & Return
| Net Cash Flow PA Annual net income after costs | £11,500 |
| Total Net Lifetime Cash Flow Net income over 10 year span | £115,000 |
| Total Lifetime Return on Capital Gain + Total Income (calculated @Year 10) | £131,072 |
Financial Snapshot – Both Deals
Investor Returns
Income & Return
| Net Cash Flow PA Annual net income after costs | £24,820 |
| Total Net Lifetime Cash Flow Net income over 10 year span | £248,200 |
| Total Lifetime Return on Capital Gain + Total Income (calculated @Year 10) | £277,449 |
Comparables
Availability
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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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