In 2018 our client, an experienced property developer, purchased a run-down, four-bedroom terraced house in Acocks Green, Birmingham, for £160,000 utilising a Tuscan Capital bridging facility for £110,000.
The refurbishment budget of £75,000 was funded by the developer.
The property was reconfigured into a six-bed compliant HMO by refurbishing the house so it offered tenants a fully-equipped shared kitchen and individual high-quality bedrooms, each with en-suite, wardrobes, fridges, microwaves and internet/utility bills all paid.
The refurbishment project was monitored throughout by a qualified building surveyor and successfully achieved building regulators’ approval. When the building control certificate was provided, the local authority approved the property for HMO licensing.
The client’s total investment was £240,000. With rental revenues of £37,000 p.a. quickly achieved, a gross annual yield of 15% has been delivered. With a current capital value of circa £325,000, the asset has achieved capital growth of over 30% in under 24 months.
The developer recently refinanced the property through a term mortgage which provided 75% LTV against the uplifted valuation, so allowing Tuscan Capital’s bridging loan to be repaid together with all the client’s original capital investment.