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Post by Ace on Sept 1, 2021 20:52:21 GMT
Would LTV be relevant when £450k is handed out for a £350k property (as it reads) & the borrower immediately say's 'go whistle' ?
If the borrower's contribution as a first loss is used to purchase the property, that makes it roughly 85% LTV. I don't know if it says the borrower will get the rest upfront or have to submit invoices and evidence of work, that small detail makes a huge difference.
You're probably safer with a 8% Crowdproperty loan, if you can get in one!
In the absence of any other info, we have to assume the cash is handed to the borrower on day 1. Especially since the borrower is paying interest on the whole amount from day 1. Otherwise ABLrate would usually raise in tranches. So it's an LTV of 128.6%!!!
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criston
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Post by criston on Sept 1, 2021 21:13:48 GMT
After discussing the initial security LTV value, we need to turn to the completed valuation price of £850k.
How can this property end up at more than double the ceiling price of the area.
£100k spend is large admittedly.
So is it loft & rear/side extension & convert to HMO or several flats ?
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Post by Ace on Sept 1, 2021 21:37:28 GMT
Come on guys and gals. Its absolutely clear in the borrowing proposal that the GDV has been valued "in accordance with the RICS Valuation – Professional Standards", so nothing to worry about. Cue ozboy 😉 |
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Post by Badly Drawn Stickman on Sept 1, 2021 21:43:19 GMT
After discussing the initial security LTV value, we need to turn to the completed valuation price of £850k. How can this property end up at more than double the ceiling price of the area. £100k spend is large admittedly. So is it loft & rear/side extension & convert to HMO or several flats ? I think the key is 'social housing' which in old money was Council housing. The term being used is 'beds' so not even the mildly more grand bedroom. This is not a property being prepared to sell but supply 'social housing' with a long term tenancy lease thingy in place (which is where the added value supposedly is) It is fairly obvious in the proposal. I am in no way advocating the loan (only had a token investment myself out of interest).
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Sept 1, 2021 22:05:45 GMT
Come on guys and gals. Its absolutely clear in the borrowing proposal that the GDV has been valued "in accordance with the RICS Valuation – Professional Standards", so nothing to worry about. Cue ozboy 😉 You're right ... more specifically in line with the standards applicable to the residual methodology - lick you figure, stick it in the air and see how much residual moisture is left after exposure to the hot air.
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eeyore
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Post by eeyore on Sept 2, 2021 8:59:27 GMT
£850k for a three-bed semi in New Addington? I did over ten years as a volunteer adviser at my local Citizens Advice Bureau and I soon learned that CAB clients came predominantly from the sink estates, which in the south London boroughs are: Sutton - the Roundshaw estate in Wallington; Bromley - the Crays; Croydon - New Addington! The woeful valuations are the primary reason why I'm running down my Ablrate loans.
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Post by overthehill on Sept 2, 2021 9:17:16 GMT
Any idea what the exit strategy will be and will it be interest only or amortising ? Assuming it was bought at a good price and the money is well spent then worst case the 4 unit house only needs to sell for an amount sufficient to repay the loan, not 850k. I'm digging for the positives. As the borrower won't be selling, the exit strategy is key as they won't be able to borrow with a valuation of 850k.
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nick
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Post by nick on Sept 2, 2021 9:30:20 GMT
Any idea what the exit strategy will be and will it be interest only or amortising ? Assuming it was bought at a good price and the money is well spent then worst case the 4 unit house only needs to sell for an amount sufficient to repay the loan, not 850k. I'm digging for the positives. As the borrower won't be selling, the exit strategy is key as they won't be able to borrow with a valuation of 850k.
If my understanding is correct, the exit strategy is to long term lease (10-25 years) the property to a Housing Association. With the lease in place, a commercial mortgage should be easy to obtain (almost certaint to be interest only) - lending will be based on the lease value and credit worthiness of the lessee which we are led to believe to be effectively back-stopped by government. I view the key risk being the ability to secure the lease from the housing association after refurbishment. This should be a fairly low risk as I expect that there is already has been soft agreement, subject to refurbishment meeting the housing associations requirements.
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GreenZero
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The early bird may get the worm, but it's the second mouse who gets the cheese
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Post by GreenZero on Sept 2, 2021 10:33:45 GMT
In addition to what nick posted. Their intention to turn the property in to 4 self contained bedsits has a benefit that HOMO with under 7 residents doesn't require residential planning permission which reduces red tape and objections from the neighbours which will help get it occupied quicker. However, as others have said, I have not seen any figures how they reach a GDV of £850k from a HOMO property worth £350K. A guess at the gross rental income, between £35-40K, to cover service/admin fees, insurance, maintenance and interest payments. |
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blender
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Post by blender on Sept 23, 2021 21:30:48 GMT
This one is taking a time to draw down. Maybe someone is checking that at least the first repayment can be made.
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Post by ladywhitenap on Sept 24, 2021 8:23:31 GMT
This one is taking a time to draw down. Maybe someone is checking that at least the first repayment can be made. We are still getting instant returns so is there a problem with slow drawdown? Possibly a hiccup in legals. Anyway it has been suggested that we might get a video soon from the Bearded One....... LW
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blender
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Post by blender on Sept 24, 2021 14:28:21 GMT
This one is taking a time to draw down. Maybe someone is checking that at least the first repayment can be made. We are still getting instant returns so is there a problem with slow drawdown? Possibly a hiccup in legals. Anyway it has been suggested that we might get a video soon from the Bearded One....... LW There has been an email. You are right.
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Post by ladywhitenap on Sept 24, 2021 14:53:36 GMT
We are still getting instant returns so is there a problem with slow drawdown? Possibly a hiccup in legals. Anyway it has been suggested that we might get a video soon from the Bearded One....... LW There has been an email. You are right. I had a personal reply from Emma on this after my comment. Seems the usual legal eagle dealing with this is away and the one deputising has taken a long time to familiarise themselves with the details. There was no suggestion of a problem per se Just thankful of the instant returns system here. LW
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Post by Badly Drawn Stickman on Sept 24, 2021 16:50:55 GMT
There has been an email. You are right. I had a personal reply from Emma on this after my comment. Seems the usual legal eagle dealing with this is away and the one deputising has taken a long time to familiarise themselves with the details. There was no suggestion of a problem per se Just thankful of the instant returns system here. LW Sounds like the 'Class system' working as it should. The Lady gets a personal response and the rest of us feed on scraps. I am always happy for a slow drawdown. Was sort of hoping it would repay before it did.
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Post by ladywhitenap on Sept 24, 2021 17:07:48 GMT
I had a personal reply from Emma on this after my comment. Seems the usual legal eagle dealing with this is away and the one deputising has taken a long time to familiarise themselves with the details. There was no suggestion of a problem per se Just thankful of the instant returns system here. LW Sounds like the 'Class system' working as it should. The Lady gets a personal response and the rest of us feed on scraps. I am always happy for a slow drawdown. Was sort of hoping it would repay before it did. We girls have to stick together lol. To be fair I did share the information gleaned with the "proles" and the email from Emma was a reply to a direct question or two I had asked her earlier. LW
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