easylender
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Post by easylender on Sept 2, 2020 12:01:22 GMT
I can see that some HMO conversions are worthwhile repurposing of otherwise redundant buildings. However some seem to be unjustified vandalism of perfectly good family homes which are blighting previously desirable residential areas. Personally I'm not willing to finance such projects. Do other lenders care about this?
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Post by overthehill on Sept 2, 2020 12:35:13 GMT
I'm clueless about the actual demand for HMOs which I trust is a major factor for any developer, it is obviously profit and rental driven, everybody knows that. Covid-19 produced an unexpected bombshell for these types of properties and the large student HMO's, I doubt there will be many new ones over the next year. HMOs outwith dense population areas like this one are a bit of an anathema to me but that could be just ignorance. I must admit I like HMOs around or in large multicultural cities, London or Birmingham!
I also didn't invest in this property based on its surface water flooding risk, sea/river was low.
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zlb
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Post by zlb on Sept 4, 2020 10:35:08 GMT
I can see that some HMO conversions are worthwhile repurposing of otherwise redundant buildings. However some seem to be unjustified vandalism of perfectly good family homes which are blighting previously desirable residential areas. Personally I'm not willing to finance such projects. Do other lenders care about this? I would have thought that it's a matter of HMOs, or building on green-field, or choosing some people to evict from the island; and the issue of a capitalist country which enables any source of income without question, particularly the commodification of a home.
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Ukmikk
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Post by Ukmikk on Sept 4, 2020 11:51:50 GMT
Do other lenders care about this? The speed at which these projects are funded would suggest not.
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Nomad
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Post by Nomad on Sept 4, 2020 13:13:38 GMT
Do other lenders care about this? The speed at which these projects are funded would suggest not. I usually opt out of the HMO projects.
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easylender
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Post by easylender on Sept 4, 2020 17:20:05 GMT
I was particularly concerned about the recent Norwich project. Lending £335,000 against a property valuation of £250,000 makes an LTV of 134%. On top of that there were no drawings to show what internal works were to be done that would so dramatically increase the value of the property. I suspect the GDV here as in other HMO projects is based on the projected rental income, which is not the same as the market value of the property.
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Post by overthehill on Sept 4, 2020 20:01:48 GMT
I was particularly concerned about the recent Norwich project. Lending £335,000 against a property valuation of £250,000 makes an LTV of 134%. On top of that there were no drawings to show what internal works were to be done that would so dramatically increase the value of the property. I suspect the GDV here as in other HMO projects is based on the projected rental income, which is not the same as the market value of the property.
I believe you can ask them for a copy of the valuation and legal documents, this has always seemed a bit strange to me even if they are more qualified to judge.
They should definitely be making it clear whether the GDV is based on brick+mortar or brick+mortar+business income, that will be in the valuation document. Based on the increase in GDV against the cost of work I wouldn't like to guess. I reckon the current valuation is cautious, the property next door sold for 275k in Feb 2019 and it must have a smaller square metres of floor.
I assume you realise the LTV% will never go above 64% at any stage of the project.
There is still room for improvement with CP. The drawings and diagrams are not legible in the videos unless you're the bionic man and I can't see any obvious way to zoom in without losing resolution. They need to start attaching documents to the projects, I think it is more a software platform limitation than they don't want to, there isn't even a link in messages to the relevant project, you have to go searching if you want to check anything. The other feature I would like to see is an accrued interest value, investors know it wouldn't be a promise to pay, just an indication of your portfolio's current notional value, it's trivial for them to do which I'm having to do manually in a spreadsheet.
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Post by Ace on Sept 4, 2020 20:46:33 GMT
I was particularly concerned about the recent Norwich project. Lending £335,000 against a property valuation of £250,000 makes an LTV of 134%. On top of that there were no drawings to show what internal works were to be done that would so dramatically increase the value of the property. I suspect the GDV here as in other HMO projects is based on the projected rental income, which is not the same as the market value of the property.
I believe you can ask them for a copy of the valuation and legal documents, this has always seemed a bit strange to me even if they are more qualified to judge.
They should definitely be making it clear whether the GDV is based on brick+mortar or brick+mortar+business income, that will be in the valuation document. Based on the increase in GDV against the cost of work I wouldn't like to guess. I reckon the current valuation is cautious, the property next door sold for 275k in Feb 2019 and it must have a smaller square metres of floor.
I assume you realise the LTV% will never go above 64% at any stage of the project.
There is still room for improvement with CP. The drawings and diagrams are not legible in the videos unless you're the bionic man and I can't see any obvious way to zoom in without losing resolution. They need to start attaching documents to the projects, I think it is more a software platform limitation than they don't want to, there isn't even a link in messages to the relevant project, you have to go searching if you want to check anything. The other feature I would like to see is an accrued interest value, investors know it wouldn't be a promise to pay, just an indication of your portfolio's current notional value, it's trivial for them to do which I'm having to do manually in a spreadsheet.
My bold. I would really like this. I did ask for it a long time ago, but they said it was too difficult. Perhaps they would reconsider if more people asked for it. They also need a way of linking projects to updates. Currently it needs a very cumbersome trawl through emails. There isn't even a search facility.
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rocky1
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Post by rocky1 on Sept 5, 2020 6:31:10 GMT
The speed at which these projects are funded would suggest not. I usually opt out of the HMO projects. the speed at loans being repaid is not so good.i now have quite a few late loans,one six months so far.ok extra 2% default interest and rest accruing but i have heard all this before.CPs default interest and charges are also accruing.i know about forbearance and covid but it seems loans are struggling to refinance at amounts to cover the loans and interest/platform fees.
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jj
Member of DD Central
Jolly Jammy
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Post by jj on Sept 5, 2020 10:48:30 GMT
Yes, I have been with CP a while now and there are way more loan being "furloughed" than being paid back.
BUT CP have not let me down yet.
Be careful guys, don't just put the money in without doing your homework!
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