4 bed HMO
Inglemere 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
Images
Before
Floorplans
Scope of Works
- Re-wire + smokes
- Boiler
- Double glazing unit replacements x 2
- DPC
- Board stairs
- Part Decor
- Part Flooring
- Part Skim – studs
- Studs x 2
- Remove x 2 chimney breasts
- Fire doors x 5
- Chimney mortar bag-rub
- Point ridge stones
- Replace gutters F+B
- Kitchen units + tops + faces
- Replace bath + clean up
- Seal-up bay roofs
Financials
Acquisition Costs
| Purchase Price Sale agreed | £107,500 |
| Renovation Refurbishment & Conversion Costs | £29,500 |
| Architect Technical drawings for approval by HMO officer | £650 |
| Furniture Furnishing to provider’s requirements | £3,000 |
| SDLT Stamp Duty Land Tax | £3,225 UK £5,375 INT |
| Survey RICS Level 2 report | £420 |
| Legals Conveyancing & transaction fees & disbursements | £1,500 |
| Sourcing Sourcing Fee | £4,000 |
| Capital In Total acquisition costs | £149,795 |
Post-Works Refinance
| Gross Development Value Bricks & mortar valuation | £130,000 |
| Uplift Between GDV and original purchase price | £22,500 |
| 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 | £52,295 |
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 | £52,295 |
| Capital Gain @ Year 10 Cap.value less 1st charge lending & equity investor’s capital | £33,583 |
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) | £99,883 |