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PROPERTY INVESTMENT PACK Lincoln – NCLS35 (HMO)


PROPERTY INVESTMENT PACK

Purchase Price: £87,500 | BMV Discount: 29%

Lincoln - NCFS35

K:\HF Portfolio Building & Property Buying\4. Properties\New Form Spread Sheet\Pics\Fairfield St\Front.jpg SUMMARY INVESTMENT Property Type: Location:

4 x Studio Apartments Lincoln, Lincolnshire

Refurbished Valuation*: Purchase Price: Deposit Required (@25%): Cost of works: BMV Discount: Rental Income*: Rental Yield: Positive Monthly Cashflow: Equity:

£73,000 (09/11/2011)£73,000 (09/11/2011)£73,000 (09/11/2011)

£165,000 £87,500 £21,875 £30,000 29% £1,820 25% £1,574 £40,950

Capital required to purchase: £54,075 + Newbrick Fee


DUE DILIGENCE RESEARCH

SOLD PRICE COMPARABLES (within 1/4 Mile) As the property is a House of Multiple Occupation (HMO), the ‘Market Value’ is calculated as the investment value of the property for lending purposes. This is based upon rental and yield calculation as such:

CURRENT

The Rental Income: 4 x Studio Apartment: £105pw ASKING PRICE COMPARABLES (within 1/2 Mile) Total Per Annum: £21,840 Minus 25% deduction for voids and maintenance = £16,380 Divided by Local yield of 10% = £165,000

The mortgage lender would therefore calculate the Market Value of the property as £170,800 and would provide finance for up to 75% of this value.

RENTAL COMPARABLES (within 1/4 Mile) Studio apartment

Monks Road

£115pw inc. bills (LHA Tenants)

Good

1 bed apartment

Swann Street

£125pw ex. bills

Good

Double Room

Eastborne Street

£95pw inc. bills

Good

TARGET TENANT MARKET & RENTAL RESEARCH Agent

Rental Income

Notes

Mundys

£100-£105pw

Your Move

£100pw

Winkworth Estates

£110 - 115ppw

Popular rental area, close enough to town to walk and on a main bus route. Will appeal to workers in town centre or Key workers from Hospital which is close by. Students also would be interested. Strong rental area for HMO’s. Most likely will be students or working tenants. Good area for students and city centre workers, plus may get interest from key workers at the hospital just up the road.

POSITIVES The property is located in a popular area of Lincoln for both students and workers Newbrick have very good experience in letting HMO on and around this particular street The property offers an excellent return on investment All rooms in the property will be created into studios, which has a very strong appeal to the tenants in this area The property is within ¼ mile of Lincoln County Hospital and walking distance to the city centre of Lincoln

NEGATIVES The property does not boast as greater curb appeal as others, though this will not deter from its rental appeal due to the attraction of its location and the studio apartment layout. It does however offer excellent returns, a high end valuation and thus is certainly an extremely attractive investment opportunity from a figures perspective. The property does benefit from a drive but does offer street parking and is on a quiet cul-de-sac


LIST OF REFURBISHMENT WORKS & PHOTOGRAPHS

ADDITIONAL INTERNAL/EXTERNAL SHOTS

LIST OF WORKS Remove stud walls on first floor and replace with new layout to create bigger studio

Treat internal wall for damp at rear of ground floor

Install 3 x en suites and upgrade existing bathroom

Install new carpets and skirting throughout

Install 3 x kitchenettes and upgrade existing kitchen

Full internal redecoration Furnish

Reskim entrance hallway Upgrade electrical installation Upgrade gas central heating system

Total

£36,000

Minus Newbrick Discount

£6,000

TOTAL

£30,000


LIST OF REFURBISHMENT WORKS & PHOTOGRAPHS

FLOOR PLAN

Ground Floor

First Floor


LOCATION, AREA & ECONOMIC FACTORS

LOCATION Lincoln is a historic and picturesque market city renowned for its striking fusion of old and new. With a vibrant past dating right back to the Iron Age in the 1 Century BC, its location to the River Trent and the River Witham enabled it to become a major flourishing settlement and then on to be a provincial capital and during the Roman Empire. It is perhaps most well-known for the Iconic Lincoln Cathedral (used recently for the Motion Picture ‘The Da Vinci Code’) which towers above the city atop a steep hill - celebrated as one of Europe’s finest Medieval Landmarks. st

Economy Today Lincoln has a booming economy based on agriculture, commerce and tourism. In recent years the city has become a hotbed for IT & ecommerce services (such as online mail-order companies) driven forwards by cheap start-up costs, good infrastructure and easy transport links into London and other major cities. In addition, focused investment activities in these sectors, such as the major development of the University of Lincolnshire, has over the last 10 years been able to provide a springboard for new IT start-ups. It is also popular with commuters due its city offerings, excellent transport links and cheap house prices and rental accommodation.

Redevelopment The city has benefited from on-going redevelopment of its numerous commercial and retail districts including Tritton Road trading estate and the recently developed St Mark’s Square, home to the Debenhams Flagship store. In early 2012, plans were finalised to begin working on the Lindongate scheme, a £100million rejuvenation and redevelopment to part of the city center which is proposed to bring approximately 2,590 new full time jobs.

The Hospital University

The Property Train Station


BREAKDOWN OF FIGURES

CASHFLOW FORECAST TYPE OF PROJECT: BTL – LONG TERM INVESTMENT

Conservative

Expected

Purchase Price

£87,500

£87,500

Deposit (25%)

£21,875

£21,875

Mortgage Loan Amount

£65,625

£65,625

Rental Income (pcm)

£1,734

£1,820

£246

£246

£1,488

£1,574

23%

24%

Conservative

Expected

Deposit (25%)

£21,875

£21,875

Works Cost

£30,000

£30,000

Survey and Legal Fees

£2,200

£2,200

TOTAL INITIAL INVESTMENT REQUIRED

£54,075

£54,075

TOTAL COST OF PROPERTY

£119,700

£119,700

Conservative

Expected

6-7 months

6-7 months

Estimated RICS value after refurbishment

£156,000

£165,000

New Mortgage Loan Amount

£117,000

£123,750

Capital Released by finance

£51,375

£58,125

NET COST OF PROPERTY AFTER CAPITAL RELEASED

£2,700

+£4,050 (Cashback)

NEW POSITIVE MONTHLY CASHFLOW (after refinance)

£1,295

£1,304

EQUITY

£39,000

£40,950

Mortgage Payment (pcm) (currently based on 5%) (subject to change depending on product availability)

POSITIVE MONTHLY CASHFLOW (approx) RENTAL YIELD (Based on initial purchase price)

INITIAL INVESTMENT REQUIRED

REFINANCE DETAILS Timescale

CASHFLOW FORECAST To reserve this property we would require a £1000 goodwill holding deposit. This deposit is entirely refundable in any circumstance other than yourself pulling out.* Our fee for a complete hands free service – which includes sourcing the property, arranging the mortgage, managing the coveyancing and project managing the refurbishment works is Newbrick Fee: £9,995 (inc. VAT) For more information or to make you reservation, please contact Newbrick on 01727 834458 or email enquiries@newbrickproperty.com


TERMS & CONDITIONS

TERMS & CONDITIONS  

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Mortgage rates are based upon HMO finance 5% fixed rate, interest only mortgage @ 75% LTV. These are subject to change. We will endeavour to advise the investor on current rates. Some mortgage products include arrangement and various other fees. These fees are not included in the calculations as they are typically added to the mortgage loan amount. This additional increase on average adds less than 0.08% to the monthly repayments. We recommend that the investor checks all mortgage products with our mortgage advisor before choosing and agreeing a specific product. All other fees listed are approximate and subject to change. They are provided for illustration purposes only. Typically cash purchases of freehold properties incur lower fees. The deposit payable to reserve the property is refundable in any case other than the investor pulling out up until the instruction of the solicitors and payment of the full fee. If the property falls through then we will endeavour to replace the property with another similar property. The remaining Newbrick fee is due on instruction of the solicitors and mortgage decision in principle (DIP) having been completed. The remaining fees are non-refundable unless the property has non-resolvable legal issues. We recommend that the investor uses our solicitors to enable us to manage the sale and purchase the property efficiently on behalf of the investor. The investor must sign a separate client care form to instruct the solicitors if using our solicitors. Valuations are based on comparable method and valuation experience in these areas. They are as accurate as possible. We cannot guarantee the future value of properties as they are based on current market conditions and are subject to change. In our estimation of costs we have included the instruction of an independent RICS surveyor to provide a current and refurbished valuation along with an estimate of the refurbishment cost (The current fee is approximately £225+VAT but subject to change). We do not base our valuations on speculative future capital appreciation. Valuations are based on either previous sold price evidence or a calculation of investment yield. The refurbished valuation represents a tangible figure based on value added by the refurbishment works. The costs for refurbishment works are based on our estimates only. Please allow a contingency for extra works. (As much as we try to examine all parts of the property we cannot test gas appliances, electrics, damp or inspect the loft during our pre purchase inspections. From time to time it must be understood that unforeseen issues arise during the refurbishments which were not evident at the time of inspection). After completion we will ask that the money for the works is made available in our client account before we commence the refurbishment. Our client account only deals with refurbishment works and a client ledger is kept backed up by all invoices which is provided to the investor each week in their refurbishment report. If the agreed property is a House of Multiple Occupation (HMO) then the cost of the relevant HMO registration via the council (where applicable) will be passed on directly to the investor as a disbursement. Our fee for any HMO purchase will include dealing with the relevant council to obtain the relevant HMO registration (where applicable) – Please note all councils/boroughs have different requirement Final equity calculation after refurbishment is typically 25% of the estimated end value of the property, i.e. the capital remaining in the property after 75% has be drawn out by the refinance (at 75% loan-to-value). All descriptions, dimensions, areas, reference to condition, positives and negatives are provided for illustration purposes only and should not be relied on as statement of facts. We do not provide financial or tax advice under the regulations of the Financial Services Authority, and any statements referring to these subjects are to be considered opinion only. We recommend that you seek independent financial advice from regulated organisations in these fields before committing to any decisions. We do not provide legal advice under the Law Society regulations, and any statements referring to these subjects are to be considered opinion only. We recommend that you seek independent legal advice from regulated organisations in these fields before committing to any decisions. It is rare that the refurbishment cost is higher than estimated. In this eventuality the investor will be notified of any additional costs required during the refurbishment and will have the option to proceed with the works. Furthermore, where possible we will endeavour to include the any additional costs within the original refurbishment budget. We will act as the management agent for the property. Legally the property is the Investor’s responsibility. We notify utility companies etc. of the investor’s new ownership and forward on any bills we find at the property. We do not accept responsibility for any utility bills, or any other bills, are inherited from the property. We conduct extensive research and due diligence on each property to be as confident as possible on the rental income and rent-ability of each property. We recommend that our investors also conduct your own diligence before committing to purchase. The refurbishment works do not include the provision of extra keys or any maintenance issues that arise within one month of the tenant moving into the property for the first time unless it is a faulty item or installation made on our instruction during the refurbishment. Any additional costs will be deducted from the rent statement where necessary. We endeavour to inspect the property on a 3 monthly basis subject to access.


t

Tel. Email.

www.newbrickconsultants.com

Registered with:

Lincoln - NCLS35  
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