PM SPV 71
2x One bedroom flat conversion
About this property
Your capital is at risk if you invest.
- Two converted one bedroom flats in Grimsby, Lincolnshire
- The first floor flat is currently tenanted at £325 per calendar month
- The ground floor flat is due to undergo a £5,000 renovation to bring it up to market standard
The property is a mid-terrace that has been converted into two, one bedroom flats. The first floor flat is in good rentable condition and is reflected in the current longstanding tenancy on an Assured Shorthold Tenancy (AST) agreement at a monthly sum of £325. The ground floor flat is currently vacant and due to be renovated as part of this project. The renovation work includes:
- Repairing the guttering
- New kitchen
- Full redecoration throughout including new flooring and painting
We have received written quotes for £5,000 for the work which is expected to complete within 6-weeks of completion. Once the renovation work is complete on the ground floor, we expect to secure a tenant for a monthly sum of £350 per calendar month. This is an increased rent compared to the other flat due to its larger size and direct access to the garden. Upon full tenancy, we project that the property will produce a total rental income of £675 per calendar month.
The property is located close to the heart of Grimsby. The local primary school is accessible within a 4-minute walk, in addition to a number of surrounding amenities such as main chain supermarkets including Sainsbury’s and LIDL, pet groomers, car dealerships and local bars. The property is also exposed to a number of different options of public transport as nearby bus stops provide additional accessibility to Grimsby Shopping Centre, Grimsby Docks train station and other neighbouring towns and cities.
Two market appraisals carried out on the 9th December value the property (post renovation work) at £55,000 and £72,000 respectively, and the specialist asset management company recommends a post-refurbishment open market asking price of £65,000. At £65,000, this equates to the property being purchased at a discount of £13,000 (20%) to the open market value (£45,000 purchase price + £5,000 renovation).
The Royal Institute of Chartered Surveyors have predicted a 6% property price increase for the Yorkshire and Humber. You can see more information on our blog post HERE but please remember that property prices can go down as well as up.
There is an additional ‘Acquisition cost’ (shown as 'Furniture cost') which represents a finance fee paid to PMF A Ltd, and property management disbursements (auction fee, inventory, checkout, inspection, visit). This structure can provide access to new routes of property sourcing at large discounts. In addition, a monthly Accounting Fee and Corporate Governance fee of £25 and £25 respectively has been factored into the rental yield calculation (this is shown as an annual 'Service Charge' cost and represents £600 of the total).
Please bear with us while we update the names of these fields on the website. To confirm, the projected returns are net of these fees. There is no British Gas utility cover on this property, and the insurance cost of £261.42 per annum reflects the landlord insurance, which is put in place on all investments and also now benefits from a rent recovery option in the unlikely instance that a tenant may withhold payment of rent.
About the area
Tourism is set to be worth more than £2 billion to Lincolnshire over the next four years, making it one of the most important growth drivers for the region. North Lincolnshire offers a variety of attractions for tourists from the Lincolnshire Wolds AONB to Cleethorpes seaside village that won the Seaside Awards in 2015 and is home to coastal attractions such as Pleasure Island theme park and the Cleethorpes Golf Club. In 2014, North Lincolnshire was also named one of the most affordable areas in the country to buy a house, making the area an ideal location for buy-to-let landlords who are looking to benefit from potential high yield investments.
Grimsby is known for being the home of food manufacturing in the UK, largely due to its fish industry, which recently experienced a £1.2 million investment from the European Fisheries Fund to allow the area to continue to compete with other markets. It is no surprise then that UK food manufactures choose to call Grimsby home, including Young's Seafood Ltd, the UKs leading fish processor, which employ nearly 2,000 people in the town and who are currently looking at the possibility of expansion following a profit rise of 6% in the past year. The Grimsby based, The Saucy Fish Co. were once named the number 1 seafood brand in the world (as of 27/04/2016), reiterating the success of the current food manufacturing industry in the North East Lincolnshire town.
Not only in fishing, but in energy as well, Grimsby is undergoing great regeneration as the Humber Coast is due to be home to the World's largest offshore wind farm by the world-leading DONG Energy. Along with the offshore farm comes a £25 million onshore power station generating an extra 300 permanent jobsfor the region and 1,000 construction jobs to support the build. Not only a success for Grimsby, but the whole UK, as once 'Hornsea Project One' is complete in 2020, the wind power will be able to meet the electrical needs of over 1 million homes.