bernard
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Post by bernard on May 4, 2016 17:45:15 GMT
Something in the valuation needs clarification. The valuer states a rental of 80k pa for existing use, once refurbished (roof repaired etc). They state an applicable gross yield of 10%, giving a valuation of 800k, once refurbished. They state that the costs of refurb (incl developer profit) to be 300k. That would seem to me to imply that the valuation in the current condition, assuming current usage, of 500k (or less for a restricted marketing period). Giving an LTV of 100%? fundingsecure or others what am I missing? |
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Post by mrclondon on May 4, 2016 18:00:21 GMT
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Post by mrclondon on May 4, 2016 18:05:15 GMT
And also of general interest is that the first planning application for change of use to a restaurant and car park was rejected last August.
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Post by fundingsecure on May 4, 2016 21:47:34 GMT
Regarding the valuation I believe the valuer has not made it very clear but the actual calculation used was as follows:
Ground Floor Industrial estimated rent: 3076m2 x £25pm2 = £76,900
First Floor Industrial estimated rent: 380m2 x £15pm2 = £5,700
Ground Floor Office estimated rent: 289m2 x £55pm2 = £15,895
First Floor Office estimated rent: 289m2 x £40pm2 = £11,560
Total Estimated Rent: £110,055
At 10% yield value = £1,100,550
Less Refurbishment £300,000
Current Value = £800,550
The £80,000 rent referred to would be the rent for the property in its current state - although it would be unlikely a suitable tenant could be found.
FundingSecure
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Post by earthbound on May 4, 2016 22:31:43 GMT
Sorry but it does not exactly infuse me with confidence when i read.. "Regarding the valuation I believe the valuer has not made it very clear" and "the £80,000 rent referred to would be the rent for the property in its current state - although it would be unlikely a suitable tenant could be found."
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on May 4, 2016 23:24:18 GMT
There is plenty of potential to overestimate this one.
If we allow for a 10% error at each stage then we have
Total Estimated Rent: £99,049.50
At 9% yield value = £891,445.50
Less Refurbishment £330,000
Current Value = £561,445.50
Then factor-in the 180 day valuation which is 25% less.
That gives a valuation of £421,084.
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mikes1531
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Post by mikes1531 on May 5, 2016 3:08:54 GMT
Total Estimated Rent: £99,049.50 At 9% yield value = £891,445.50 : You've made a maths error above. With £99kpa rent, the 9% yield value would be £1.1M. (If investors are willing to accept a 9% yield, they'll be willing to pay more for a property than they would if the insisted on a 10% yield.) So if you want to make a pessimistic valuation assumption, you'd assume investors would value the property based on an 11% yield -- at which point the £99k rental would justify a price of £900k. In short, the wrong yield assumption and the wrong calculation cancel each other out and the answer is pretty much as you calculated! 
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woodland
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Post by woodland on Dec 11, 2017 20:44:15 GMT
This looks like a reasonable bet to me - coming up for renewal tomorrow.
1 acre of land with some mixed office & (derelict) industrial space. Unclear if the office space is let, but I’m guessing not. Land value using residential figures from .gov comes in around £580K. Valued at £800K but update says this has increased as the roof has been renewed at a cost of £200K. Assuming this is accurate (and I appreciate a big ask for some) the LTV could be as low as 50%. Can’t see anything on the Birmingham planning portal.
I am tempted for my standard investment of £10K. Any thoughts anyone else? DD Central members?
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rogerthat
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Post by rogerthat on Dec 11, 2017 20:49:53 GMT
This looks like a reasonable bet to me - coming up for renewal tomorrow. 1 acre of land with some mixed office & (derelict) industrial space. Unclear if the office space is let, but I’m guessing not. Land value using residential figures from .gov comes in around £580K. Valued at £800K but update says this has increased as the roof has been renewed at a cost of £200K. Assuming this is accurate (and I appreciate a big ask for some) the LTV could be as low as 50%. Can’t see anything on the Birmingham planning portal. I am tempted for my standard investment of £10K. Any thoughts anyone else? DD Central members? I thought it might be worth a few sheckles too..though mine end in 'p' but you might check out FS DD which ive just read...this latest renewal is a month late...also (I haven't verified this) is the valuation the same as the original loan despite having had a new roof ?
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Post by mrclondon on Dec 11, 2017 20:56:51 GMT
woodland I've merged your post into the previous thread for this loan. Until the new roof the place has been unihabitable / unusable so its very unlikely there are any tenants. Their latest planning application for the development of the place into a restaurant complex was withdrawn at some point this year. Its a contraversial proposal that has had practically zero support since first tabled in 2015. FS mention a change of plans, which combined with the industrial grade roof suggests that perhaps it is to be renovated for warehousing. I gave the brownfield land value up thread of c. £200k, to which the £200k roof can be added. Based on the condition of the place it would need maybe at least a hundred thousand more* spending to make it letable as warehouse given it has been open to the elements for many years. * The FS post higher up gives a £300k figure for making the place usable.
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woodland
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Post by woodland on Dec 11, 2017 21:01:51 GMT
Thank you rogerthat - very helpful. It’s always enlightening to see what other people find when they dig! Strange, I didn’t see anything on the planning portal myself.
The valuation assumptions made seem not unreasonable, so will probably take a dig.
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woodland
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Post by woodland on Dec 11, 2017 21:03:51 GMT
TY mrclondon too....
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Post by mrclondon on Dec 11, 2017 21:15:05 GMT
Land value using residential figures from .gov comes in around £580K. This site has never had residential permissions and nothing in any of the planning applications suggests it will. You need to be using the brownfield / industrial land values which for West Midlands are £500k / hectare, valuing the underlying land at c. £200k
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woodland
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Post by woodland on Dec 11, 2017 21:20:23 GMT
Yup - absolutely correct. Let me sleep on it!  |
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rogerthat
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Post by rogerthat on Dec 11, 2017 21:26:35 GMT
Land value using residential figures from .gov comes in around £580K. This site has never had residential permissions and nothing in any of the planning applications suggests it will. You need to be using the brownfield / industrial land values which for West Midlands are £500k / hectare, valuing the underlying land at c. £200k So c£200K + £200K roof + * The FS post higher up gives a £300k figure for making the place usable. = ~£700K...FS loan valuation £800K..doesnt leave a lot of headroom..or indeed a tenant yet
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