4 bed HMO

Collin Road, Prenton

Project

Background
& Deal Structure

A 3 bedroom semi-detached 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, Birkenhead 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

During

After

Video Walkthrough

Collin Road, Wirral

Floorplans

Financials

Acquisition Costs

Purchase Price Sale agreed	£117,000
Renovation Refurbishment & Conversion Costs	£31,864
Project Management @10% of cost of works	£3,186
Architect Technical drawings for approval by HMO officer	£650
Furniture Furnishing to provider’s requirements	£3,000
SDLT Stamp Duty Land Tax	£3,510
Survey RICS Level 2 report	£420
Legals Conveyancing & transaction fees & disbursements	£1,500
Sourcing (4k contributed as sweat equity)	£0
Capital In Total acquisition costs	*£161,130*

Post-Works Refinance

Gross Development Value Bricks & mortar valuation	£140,000
Uplift Between GDV and original purchase price	£23,000
1st Charge Lending @75.00% of GDV – recycling funds onto next opportunity	£105,000
Capital Left In Capital remaining in equity post-refinance using mortgage lending	*£56,130*

Registered Provider 10 Year Lease

Gross Rent p.a. Negotiated rate for area	£14,560
Mortgage p.a. @6.00% lending @75%LTV	£6,300
Operational Expenses p.a. @0.00%	£0
Management p.a. 0.50%	£73
*Net Cash Flow p.a.* Pre-tax income	*£8,187*

Capital Growth

Disposal

Capital Value @ Disposal Year 10 value assumed conservative 3.5% annual growth	£197,484
Mortgage Lending 1st Charge lending redemption	£105,000
Equity Investment Capital Capital returned to equity investor	£56,130
Capital Gain @ Disposal Cap.value less 1st charge lending & equity investor’s capital	£36,353

Investor Returns

Income & Return

Net Cash Flow PA per party Equity partner net income	£4,094
Total Net Lifetime Cash Flow Equity partner net income over life of lease term	£40,936
Split on Capital Gain Equity partner’s share on capital gain	£18,177
Total Lifetime Return on Capital Gain + Total Income	£59,113

7.29%

Annualised ROI % per party

105.31%

Lifetime Return %