A year ago, CPC Finance started working with Savoys Group and Octane Capital to offer investors an opportunity to own a House of Multiple Occupancy (HMO).
The Origins of Game Changer
The Game Changer process was created so that investors can secure an initial bridging loan or use their own funds for an HMO conversion project, have an expert develop and manage a property for them, and then secure a term HMO mortgage at the end to exit. From the beginning, it has been aimed at investors new to HMOs, with at least £100,000 available to invest; who have difficulty securing initial lending for HMO projects due to a lack of experience or people who do not have time to manage the project.
For these investors, there are a number of benefits:
- Initial short-term finance guaranteed – Because of the experience of the developers, Savoys Group, Octane Capital will lend every time on a Game Changer project, subject to clean credit.
- A commercial valuation on your property – This enables you to undertake the Build, Refurbish, Rent & Refinance (“B.R.R.R.”) strategy and pull out additional funds, with the remaining funds left in the deal working hard.
- A reliable developer – Savoys Group locates, secures, refurbishes, and manages properties to provide high-quality homes for professional tenants.
- Guaranteed exit – You can take out both a bridging loan to start the project and a term HMO mortgage at the end of the loan with our lenders.
In case this is not enough to convince you, here is why one investor values the Game Changer process: “Savoys Group has been invaluable in this project. I would not have been able to do it without them. They do a lot of the upfront work in identifying the most suitable properties. Without them, it would have taken me a lot longer to research and find the right property to convert to an HMO. They make sure that the numbers add up and that it is a profitable venture for all involved. They also introduced me to CPC Finance and Ronald Fletcher Baker LLP, solicitor, which made it straightforward to obtain finance and process the paperwork.”
Game Changer case study – converting a single residential property to a six-bedroom HMO
Over the past year we have teamed up to work on a numbers of Game Changer projects. Here is just one example.
Last March, investors bought a single residential property in Windsor intending to convert it into a House of Multiple Occupancy (HMO). They bought the property at auction using their own money for the initial deposit and a short-term refurbishment loan to settle the balance as part of the Game Changer process. They used the experience of Savoy Group to source the property, complete the conversion and manage the property.
In order to convert the single residential property into a six-bedroom HMO, on behalf of the investors, Savoys Group undertook extensive work including full renovations, an internal brick skin, and rear extension. The property was a non-standard construction, made from concrete slabs so was unmortgageable with most lenders. In total the works took five and a half months.
Now, the property is a six-bedroom HMO with en-suite bathrooms for each bedroom and a communal kitchen. Now, having followed the Game Changer process, the investors have a profitable HMO on a mortgageable property.
To learn more about the financing of this project, read the full case study.
Game Changer of the future – (semi) commercial to residential
The Game Changer process was originally conceived as a way to create an HMO from a single residential property. However, as the market evolves, the Game Changer is evolving with it. Now, we are also working on projects where the starting property is a commercial or semi-commercial premises and the final product is a residential property as an HMO or multiple flats.
Through the permitted development rules introduced in August 2021 to help use existing property stock, developers do not need full planning permission to convert a property from a commercial or semi-commercial property to a residential property. This makes the administration of a property conversion more straightforward.
There are few differences between a commercial property to flat or HMO project and a residential to HMO project. One is that on day of purchase, if you want a short-term loan to fund the purchase you will only be able to borrow up to a maximum 70% LTV of the property’s value depending on the planning position.
If you are interested in either type of Game Changer project, get in touch with us by emailing investors@cpcfinance.co.uk or give us a call on 01923 655441.