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B.R.R.R Strategy: A Winning Approach for HMO Conversions

by | Feb 19, 2024 | Clients

Short Term Loans (STLs) form the foundation of the Buy, Refurbish, Rent, refinance property investment strategy.  This is where you purchase a property, add value through refurbishment, rent it out and finally refinance onto a term buy-to-let mortgage. The below case study is a perfect example of B>R>R>R. in action where a property investor converted a single residential three-bedroom semi-detached property into a six-bedroom House of Multiple Occupancy (HMO).

HMO conversion case study:  Three bedroom semi-detached to a six bedroom, all en-suite, HMO

The original property was identified for conversion: a three-bedroom semi-detached property with untapped potential. Purchased for £585,000, the property came with the benefit of planning permission for a rear single-story extension and a garage conversion.

Recognising the property’s potential, CPC Finance’s client acted swiftly.  To start the project, a day one bridge loan of £447,304 was secured. The client had their own funds to cover the refurbishment costs.

With a clear vision in mind, the investor allocated £180,000 for renovations. The focus was on converting the property into a six bed, all en-suite, HMO.

With the renovation complete, the property had a rental income of £900 per room meaning an annual income in the region of £64,900.

The strategic investment paid off with the property’s Gross Development Value (GDV) rising to £850,000 using a commercial investment valuation.

A term mortgage of £637,500 was secured at 75% loan to value.