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Case Study: Converting flats above a social club to an HMO

by | Jan 31, 2024 | Case Study, Clients

This case study concerns a project undertaken by CPC Finance client Samir Patel, who won four awards at the 2023 Property Investor Awards including HMO property deal of the year.

Originally, the property was a social club in Watford with 11 bedsits upstairs, opposite Watford Junction train station. The property available for sale included the freehold of the upper floors, while the ground floor had been sold off separately on a long leasehold basis. Samir believed that its central location, near the station, would play a crucial role in attracting tenants and generating a high rental income. Due to its proximity to public transport, the property does not need parking facilities.

Another party originally successfully agreed the purchase of the site but they did not complete so it went back to the auction house. CPC Finance’s client seized the opportunity to purchase it and realized its potential through strategic upgrades. CPC Finance facilitated the financing process, using funds from remortgaging on other properties in Samir’s portfolio to enable a cash purchase under auction conditions

With a full license in place for the HMO and spending £30,000 to upgrade the property, including alterations to partitioning to maximize room sizes. In total, the works took two months to complete. Now, the property contains eleven HMO rental units, consisting of four single occupancy rooms and seven double rooms. Two of the bedrooms were reconfigured to ensure they met HMO standards. Communal facilities included a large communal kitchen and seven communal shower rooms. One of the rooms has an en-suite bathroom and six rooms feature small kitchenettes. It is licensed for 11 rooms, accommodating up to 15 people. The property’s unconventional layout and design allowed for effective use of space and contributed to its strong income potential.

Post-upgrades, the property was valued at £1.41 million. CPC Finance supported the investor in remortgaging the property. The remortgage resulted in a cash release of 75% of the new value of the property. The remortgage process commenced in June 2023, with completion in October 2023. Now, the property commands an annual rent of £116,100.

Samir Patel said, “This project was a unique opportunity for me due to its location, as well as the set-up of the rooms. CPC Finance could see the possibilities of this property and worked with me throughout the process to help me access the funding I needed. I was delighted that this project won me the HMO Property Deal of the Year (Above 6 rooms) award at the Property Investor Show.”

photo of social club exterior

photo of bedsit interior