p2pfan
Member of DD Central
Full-Time Investor
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Post by p2pfan on Oct 31, 2021 14:06:17 GMT
Facts & Figures for my records (from an Ex building surveyor, estimator & buyer) From the proposal. 'gross development value of £1,290,000 (based on a yield of 6.5% gross).'Value based on HMO rental yield, as with 166. Good deal for borrower, with 10 year rental agreement. During conversion works, using LTGDV would be wildly overstated & inaccurate; more so if the borrower has problems with construction work or finances. Rental agreement with Government/Housing Association does not kick in until conversion is complete & handed over. Assuming the 1st charge holder provides an initial tranche to pay for the partial purchase of the property to be converted, over & above the Ablrate/PeeOne contribution; then at no point, until nearing completion will the LTV be less than 100%. The GDV for a purchaser buying the property, (if defaulted by the current borrower), without a rental agreement could be as low as £720k. Half started property conversions have on average a 60% valuation of the finished GDV; this could be even worse at present due to escalating labour & material costs as well as shortages of labour & materials. Only 11% interest. No risk to borrower. DYOR That's a great overview. Thanks. It's certainly a higher risk profile than one would ideally like. High reward too, in the sense that 11% with monthly interest payments is rare in P2P (or outside) nowadays.
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GreenZero
Member of DD Central
The early bird may get the worm, but it's the second mouse who gets the cheese
Posts: 222
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Post by GreenZero on Oct 31, 2021 14:54:43 GMT
Facts & Figures for my records (from an Ex building surveyor, estimator & buyer) From the proposal. 'gross development value of £1,290,000 (based on a yield of 6.5% gross).'Value based on HMO rental yield, as with 166. Good deal for borrower, with 10 year rental agreement. During conversion works, using LTGDV would be wildly overstated & inaccurate; more so if the borrower has problems with construction work or finances. Rental agreement with Government/Housing Association does not kick in until conversion is complete & handed over. Assuming the 1st charge holder provides an initial tranche to pay for the partial purchase of the property to be converted, over & above the Ablrate/PeeOne contribution; then at no point, until nearing completion will the LTV be less than 100%. The GDV for a purchaser buying the property, (if defaulted by the current borrower), without a rental agreement could be as low as £720k. Half started property conversions have on average a 60% valuation of the finished GDV; this could be even worse at present due to escalating labour & material costs as well as shortages of labour & materials. Only 11% interest. No risk to borrower. DYOR Spot on. I think similar was said about the valuation and yield of 166
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agent69
Member of DD Central
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Post by agent69 on Oct 31, 2021 17:46:20 GMT
Facts & Figures for my records (from an Ex building surveyor, estimator & buyer) From the proposal. 'gross development value of £1,290,000 (based on a yield of 6.5% gross).'Value based on HMO rental yield, as with 166. Good deal for borrower, with 10 year rental agreement. During conversion works, using LTGDV would be wildly overstated & inaccurate; more so if the borrower has problems with construction work or finances. Rental agreement with Government/Housing Association does not kick in until conversion is complete & handed over. Assuming the 1st charge holder provides an initial tranche to pay for the partial purchase of the property to be converted, over & above the Ablrate/PeeOne contribution; then at no point, until nearing completion will the LTV be less than 100%. The GDV for a purchaser buying the property, (if defaulted by the current borrower), without a rental agreement could be as low as £720k. Half started property conversions have on average a 60% valuation of the finished GDV; this could be even worse at present due to escalating labour & material costs as well as shortages of labour & materials. Only 11% interest. No risk to borrower. DYOR Is the pope a catholic?
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