4 bed HMO
Mackenzie Road, Wirral
Project
Background
& Deal Structure
A 3 bedroom end-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
Images
Before & During
After
Video Walkthrough
Floorplans
Financials
Acquisition Costs
| Purchase Price Sale agreed | £120,000 |
| Renovation Refurbishment & Conversion Costs | £27,000 |
| Project Management @10% of cost of works | £2,700 |
| Architect Technical drawings for approval by HMO officer | £650 |
| Furniture Furnishing to provider’s requirements | £3,000 |
| SDLT Stamp Duty Land Tax | £3,600 |
| 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 | £158,870 |
Post-Works Refinance
| Gross Development Value Bricks & mortar valuation | £130,000 |
| Uplift Between GDV and original purchase price | £10,000 |
| 1st Charge Lending @75.00% of GDV – recycling funds onto next opportunity | £97,500 |
| Capital Left In Capital remaining in equity post-refinance using mortgage lending | £61,370 |
Registered Provider 10 Year Lease
| Gross Rent p.a. Negotiated rate for area | £13,832 |
| Mortgage p.a. @6.00% lending @75%LTV | £5,850 |
| Operational Expenses p.a. @0.00% | £0 |
| Management p.a. 0.50% | £69 |
| Net Cash Flow p.a. Pre-tax income | £7,913 |
Capital Growth
Disposal
| Capital Value @ Disposal Year 10 value assumed conservative 3.5% annual growth | £183,378 |
| Mortgage Lending 1st Charge lending redemption | £97,500 |
| Equity Investment Capital Capital returned to equity investor | £61,370 |
| Capital Gain @ Disposal Cap.value less 1st charge lending & equity investor’s capital | £24,508 |
Investor Returns
Income & Return
| Net Cash Flow PA per party Equity partner net income | £3,956 |
| Total Net Lifetime Cash Flow Equity partner net income over life of lease term | £39,564 |
| Split on Capital Gain Equity partner’s share on capital gain | £12,254 |
| Total Lifetime Return on Capital Gain + Total Income | £51,818 |