4 bed HMO

Fieldside Road, Birkenhead

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, 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

Floorplans

Scope of Works

  • Full rewire including Install Grade D1 or D2 LD1 Fire Alarm System
  • Fire doors x 5
  • New Boiler
  • Double Glazing – fire escape windows x 3
  • New Kitchen
  • Bathroom – part replace suite
  • Damp Proof Course
  • Part Plaster and Part Skim
  • Stud wall bedroom 3 – false divider room 2
  • External door x 1
  • Gutters replace front and rear
  • Roof ridging tiles and chimney pointing and + lead flashing
  • Decor throughout
  • Flooring throughout
  • Secure units in rear yard

Financials

Acquisition Costs

Purchase Price
Sale agreed		£105,000
Renovation
Refurbishment & Conversion Costs		£33,000
Architect
Technical drawings for approval by HMO officer		£650
Furniture
Furnishing to provider’s requirements		£3,000
SDLT
Stamp Duty Land Tax		£3,150 UK
£5,250 INT
Survey
RICS Level 2 report		£420
Legals
Conveyancing & transaction fees & disbursements		£1,500
Sourcing
Sourcing Fee		£4,000
Capital In
Total acquisition costs		£150,720

Post-Works Refinance

Gross Development Value
Bricks & mortar valuation		£130,000
Uplift
Between GDV and original purchase price		£25,000
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		£53,220

Registered Provider 10 Year Lease

Gross Rent p.a.
Negotiated rate for area		£12,480
Mortgage p.a.
@6.00% lending @75%LTV		£5,850
Operational Expenses p.a.
@0.00%		£0
Management p.a.
0.00%		£0
Net Cash Flow p.a.
Pre-tax income		£6,630

Capital Growth

Capital Gain

Capital Value @ Year 10
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		£53,220
Capital Gain @ Year 10
Cap.value less 1st charge lending & equity investor’s capital		£32,658

Investor Returns

Income & Return

Net Cash Flow PA
Annual net income after costs		£6,630
Total Net Lifetime Cash Flow
Net income over life of lease term		£66,300
Total Lifetime Return on Capital
Gain + Total Income (calculated @Year 10)		£98,958

12.46%

Annualised ROI %

185.94%

Lifetime Return %

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