PMF SPV 74 Loan
Fixed 9% p.a secured loan for PM SPV 74 Ltd
About this property
This is an opportunity to provide a 58% Loan to Value [LTV] secured 1st charge loan to enable the purchase, renovation and sale of a residential property. The investment runs alongside the equity investment in the same property that you can see on the site now (subject to availability).
The property is planned to be funded with 25% equity and a 75% loan from this investment. The interest rate payable on this loan will be 0.75% per month (net 9% p.a.) and it will be secured by a 1st charge on the property and a charge against the SPV. The total LTV of the loan is 58% giving plenty of headroom to all parties.
The loan will be for a target period of 6-months which is the projected time to renovate and sell the property. Should the property not sell during this period, the loan will remain in place for a maximum term of 18 months after which point the loan will be repaid and you will receive full interest for the whole period.
The average period for selling a property in the North East is 10 weeksand, for the purposes of the calculations, we have assumed a total deal period of 6 months from completion to sale.
We will shortly be publishing a blog on our new Buy to Sell investments but, in the meantime, to ensure that a property is not left for a prolonged period without use, if the property is not sold or a sale agreed within 12 months, then the property will be advertised for rent and move to a yearly buy-to-let investment unless 75% of the equity investors vote that it should be placed in auction.
The property is a large 4 bedroom, mid-terrace, which benefits from an extension to the rear. The property comprises of double glazed windows and UPVC doors, and a front facing bay window. There is also a small yard to the front and back of the property. The entrance hallway leads into a dining area, a separate lounge area and a kitchen. The kitchen is towards the back of the house and overlooks the yard area. The main family bathroom also sits at the back of the house on the ground floor. Upstairs leads to 1 single bedroom and 3 double bedrooms, one of which is considered the ‘granny flat’ (which was included in the extension) and benefits from its own toilet and wash area.
As shown in the images, the property’s décor is dated and not suitable for immediate let. Therefore, the property is due to be renovated as part of the project. Such renovation works will include:
- Full damp proof course
- Full re-plaster
- Full re-decoration including painting and new flooring
- New central heating system
- Update of electrical system
We have received a quote of £10,000 for the renovation, which we expect to be completed within 8 weeks. This estimated time-frame takes into account presumed delays over the Christmas season. For buy-to-let buyers, we expect the property will be in a desirable condition and let at £500 per calendar month.
The property is located in Shotton Colliery, a quaint village in County Durham. The village centre is easily reached in a 3-minute walk, where tenants can access a supermarket, banks and schools. For larger amenities, Castle Dene shopping centre is less than a 10-minute drive east to Peterlee, and by travelling west, Durham city centre can be reached in a 20-minute drive.
Two market appraisals carried out on the 28th November value the property at £79,950 and £80,000 respectively as an asking price after the £10,000 renovation works. Using the average of the two values, £79,975, this equates to the property being purchased at a discount of £24,975 (31.2%) to the open market value (£45,000 purchase price + £10,000 renovation).
About the area
The property sits within a twenty-minute drive to Durham University, which is a popular choice for students after topping a student quality of live survey in 2013.
In 2015,the university was listed to have the best value for money in the country for students pursuing further education. In addition, the university continuously strives towards improvement, with a recent investment of £60 million through ‘The Durham Project’. This is intended to strengthen the facilities and opportunities open to students. Given the numerous attractions, it’s no surprise that the university has ranked in the top five universities in the UK for the past seven years.
The region is also home to growing technology businesses such as Atom Bank, the UK’s first exclusively digital bank that has chosen the North East as the new headquarters for the company and aims to host 400 employees in the area by 2020. With a recent [LINK: ] investment of £45 million from Spanish banking group, BBVA, it is improving the fintech opportunities for future generations. BBVA is already creating synergies with Durham University by giving students the opportunity to work for the company. Due to the job opportunities available, it’s clear why the North East is a popular choice for students, as evidenced by Durham University topping a student quality of life survey in 2013.