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Case Study: Residential conversion – three-bedroom house to five-bedroom HMO

by | Oct 29, 2020 | Brokers, Client Lenders, Clients

Loan type: Heavy refurbishment short term loan and buy-to-let mortgage

An investor purchased a three-bedroom house with a non-conforming construction and adjoining land. The investor paid £340,000 to buy the property and land together, intending to convert it into a five-bedroom House of Multiple Occupancy (HMO). CPC Finance helped the investor obtain a heavy refurbishment short term loan of £255,000 to purchase the property and split title on completion.

A valuation was carried out, which provided a GDV figure which could be relied upon for a 6-month period and excluded the adjoining land. 

The investor spent £80,000 to convert the property. The works included a rear extension and en-suite bathrooms for each of the new five bedrooms.

A re-inspection for the valuer to confirm all works were completed and as this was within 6 months, the lender could rely on the figure confirmed in the original report.

Upon completion of the term facility, the investor owned a five-bedroom HMO property worth £460,000, generating an income of £35,000 per annum and a separate parcel of land mortgage-free, giving the investor the option to build on the land in the future.