Hi Kalyan,
100 G & H Swansea Road, Trebanos, SA8
I received a call off of one of my contacts about these two properties that someone bought as part of a multi-million pound portfolio so wants to discard.
They are awkward in 4 ways, structural, knotweed, title issues and proximity to a river.
Structural
One corner of the properties had subsidence in one corner that is now rectified.
One of the properties has had some structural works done, this has been done properly under building control regulations and is secure. The legal pack below page 122 is the sign off and details of the piling works done are on the pages above.
Ignore the auction fees in the legal pack they aren't a part of this.
Knotweed
This is something I work with often but if you haven't before it can be worrying. It is almost everywhere in the area, the properties have a full PCA backed insurance plan which means it values at 100% and is mortgageable as per normal.
We have spoken to the provider of the plan, it is classed as low risk so is not a problem.
Title Issues
The two houses are currently on one title, we will need to split them, the splitting of the titles is how we make our money on this one, I have £1,200 allocated for that.
The council also have an outsanding bill for £200 for remedial works they did which we will need to pay (we have the bill it's in the legal pack).
Proximity to a river
This is something I've been working on because it could affect the mortgage, at first look it's not ideal:
Howver, it is over 25m from the flood zone and up a hill, there's no way it could flood due to the elevation.
Working with Ali I have made sure it is mortgageable.
Mitigations:
I have confirmed with Ali that these would be mortgageable.
I have downvalued the properties quite a bit in my calculations but the normal market if we were to sell these would have buyers with residential products that have no issues with the location.
The Properties
As mentioned earlier, these two properties came as a part of a large portfolio purtchase and don't fit with the rest of it. The owner went to sell these with a national general auctioneer rather than a local specialist, didn't get what he wanted and spoke to my contact who forwarded them onto me.
Trebanos is on the outskirts of Pontardawe where a couple of years ago we made a 3 bed for £68k worth £130k on sale.
It is a nice area to live and drive around, althouse these proiperties are ex council which will take a little bit of the value off of them.
They are both 3 beds, one has a tenant in paying £495 / month which isn't enough, we can rent the other straight away for £650+ given the current rental market conditions.
Works required
Both properties are rentable as they stand, I've allocated some money for miscellaneous items, garden tidy, clear gutters, remove a bit of rubbish etc and monies for the council bill, knotweed plan and the person I got the properties off.
Comparables
This 2 bed property on the same street sold in Feb 22 for £100k in decent condition.
https://www.zoopla.co.uk/property/uprn/100100625186/
This 2 bed property on the same street sold in April 21 for £95k in decent condition but looking at the floor plan it's a really small one.
https://www.zoopla.co.uk/property/uprn/100100625190/
This 2 bed property nearby sold for £132,000 in October 2022, £2k above the asking price.
https://www.zoopla.co.uk/property/uprn/100100625190/
There are examples of similar houses 3 bed selling for up to £152k in the area, I definitely think that we could put these up for sale for £130k each with a view to taking offers around the £125k mark, certainly the comparables support that.
Options
These make so much money they're perfect to flip but can also be used to
Purchase Conditions
These are to be purchased under auction conditions so we will have 30 days to complete, Ali is ready to go with a bridging product.
My part
I have not taken any money out of this deal as yet, I would be happy with the same agreement as on 1 Central Buildings rather than taking any money out.
The provider wants £5k for getting these properties as his cut which is included in the calculations.
All the details
Original Listings:
https://www.rightmove.co.uk/properties/129613577#/
https://www.rightmove.co.uk/properties/129612890#/
As you can see they were originally listed for £75k each so the reserve would've been £82,500 on each or a combined purchase price of £165,000.
The calculations sheet is here:
To get started
1. Exhange contracts, 10% due plus auctioneer fee (the £5k, it goes to a Fine And Country auction office in London (Long story, will explain).
2. Appoint sols, hopefully Sam Hawkings, if not the bridging ones.
3. We will complete in 30 days.
4. Either sell or rent them.
These two will be resolved and up for sale or rent before the HMO, we will do the title split with the purchase.