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.