gustapher
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Post by gustapher on Feb 16, 2018 21:51:06 GMT
I just want to add a small note to this, but I want it to be small, that is I want you all to note that I AM NOT AN EXPERT ON ANYTHING and I don't want throw hysterical negativity around... However, I live in Cardiff, and there's reportedly a bit of an over supply of student flats here: www.walesonline.co.uk/news/wales-news/second-student-flats-block-cardiff-13924531I don't know how this plays in to the profitability of this project, but I think it's something worth knowing if you're thinking of investing here. Apologies if this has been covered before, I haven't read the whole thread, I'm pretty new here. Please do treat this information as part of the bigger picture, as I'm sure you will! This is quite a different location from the blocks in the newspaper report, which is low on details to be honest. (If anyone wants to have a long, off-topic discussion on the wisdom of putting so many of Cardiff's economic eggs in the education basket then please just give me a shout!) I'd also add that Cardiff's a fine city, a good place to live and work and no-doubt a good place to study too. (There, I think I've covered all my bases there.) Don't disagree with anything you have written but I'd add: 1) Cardiff Council are actively discouraging traditional student housing in the form of HMO houses in Cathays from new investors. They see the existing stock of terraced houses in the area as future potential affordable family homes. With additional taxes and bureaucratic schemes like RentSmart Wales they are working with the Welsh Assembly to make BTL in the city less and less attractive. Along with Osborne's original tax changes this will steadily reduce the supply of existing student properties which would be the main competitor for this block. 2) Given the above, I would assume the Council would be broadly supportive of this kind of development as it fits in with their long term plans. 3) Not only are family homes in demand in the area, the HMO's that are there are also in demand from professionals who can outbid students if an investor were to upgrade the quality. There is currently plenty of demand from professionals and I know from personal experience that if you improve the standard of some of these houses rental yields increase and demand is high. 4) On the flip side the business case of these new blocks for investors (who would be the exit strategy on this investment) does not add up as I looked into it before I'd even heard about Lendy. Hazellend is spot on with his analysis. The projected yields that they "guarantee" to investors for a set period are well above market rate (at about £400-£450 per room pcm compared to the wider market's £300-£350 pcm) so while it may attract some retiree chasing yield any savvy investor would see they are high risk and unproven as long term investments (that's not to say they would be bad investments though). 5) The location isn't brilliant for Cardiff University or the town centre which generates the most demand but it is in range. 6) There are plenty of overseas students who would much prefer this type of accommodation to the traditional student house so assuming that demand stays they will appeal to some. 7) My knowledge may be out of date (12 months old +) but according to a local architect there are no plans for competing blocks nearby. Mixed bag and I haven't looked at the valuation but I don't think this is a turkey or in same league as the one in that article.
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Post by ColinR on Feb 16, 2018 23:03:06 GMT
Thank you for the welcomes and the kind words. Gustapher brings much more specialised knowledge to bear - thank you! As a Cardiff resident I find this all very interesting. It's the proximity of many of these blocks and the fact they all seem to have appeared within the past couple of years that has given them such impact to the more casual observer like me, I suppose. It's also true that Cardiff is quite a compact city centre and a fair portion of the university is still sited close to it. There's a surprisingly in-depth article on the scene here: www.walesonline.co.uk/news/wales-news/high-rise-student-flats-what-13722048 (Wales Online is the website of the local paper, the Echo and its many siblings across Wales.) The block featured in the earlier article has a good position, I would have thought - it's 10 minutes' walk from the city centre, on a lively street that's packed with international restaurants and shops, and with some of the main university buildings just around the corner. A possible plus of the Lendy site is its proximity to the Heath Hospital, which is a university teaching hospital and presumably has large student accomodation needs of its own. I guess the success of the universities will be the main determinant of the success of these blocks. I know Cardiff University has put a lot of effort into making links with China and attracts a lot of students from there. Of course, the B word throws a lot of things up in the air... I wonder how his colleagues at Cardiff University feel about Patrick Minford's ebulient forecasts for post-Brexit Britain as they try to work out the cost to the institution of all those potentially lost international fees... |
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gustapher
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Post by gustapher on Feb 17, 2018 10:24:20 GMT
4) On the flip side the business case of these new blocks for investors (who would be the exit strategy on this investment) does not add up as I looked into it before I'd even heard about Lendy. Hazellend is spot on with his analysis. The projected yields that they "guarantee" to investors for a set period are well above market rate (at about £400-£450 per room pcm compared to the wider market's £300-£350 pcm) so while it may attract some retiree chasing yield any savvy investor would see they are high risk and unproven as long term investments (that's not to say they would be bad investments though). Great post gustapher . One thing I'd like to check are the figures mentioned above. I had been looking for info about over-supply in respect of some PBSA developments in Plymouth, and came across this report. I recalled it mentioned Cardiff and going back to it, I note that the average en-suite price (as opposed to studio) for Cardiff is quoted as £125pw, and that is very much at the lower end of the spectrum. (Incidentally, the figures used for the revised DFL006 valuation has taken £140 pw but that is for a studio which, based on a typical major city average premium of 30% for studio accommodation over en-suite, seems to compare favourably.) Are the figures you quote nett of management costs or something? (I should say that I too am not an advocate of this sort of investment. Seems far too much 'jam today' for there not to be 'tummy-ache tomorrow' to my way of thinking.) I have to be honest my figures may be wrong as I was talking from memory and it was a while ago now. Basically I run a Ltd company property business as a side-project from my everyday work and we built a cash generative base by focusing on student lets in Cathays. I'm from Cardiff originally and my business partner works as a senior architect there on a lot of these kinds of builds (old school friend) so given we knew the market it seemed like a good starting point. We are now diversifying away from Wales, however, due to political risk but that is another story. Anyway before we settled on a formula that worked we started out thinking 7% yield was good (because that's what every BTL article tells you). As part of this we came across these blocks (and this developer) advertising "7% guaranteed yield after fees" with all these projections of how much more they would make after the guaranteed period was over. Eventually our research led us to three conclusions 1) That if the Ltd holding company goes bust during construction you are screwed; 2) That you are at the mercy of the property management company who can increase fees to whatever they like after the "guaranteed period", and 3) The projected rates after the "guaranteed period" were over were not in line with what students could pay elsewhere. The formula we settled on was to achieve 10% ROI (not yield) by buying a 4 bed (with existing HMO as they can't take it away once you have it), convert it to a 5 bed, upgrade the HMO and then pimp it out so it stands head and shoulders above the competition in terms of interior design/finish etc. We wanted to appeal to professionals in the Heath hospital and students in the University. So far it is working well with all properties being snapped up within weeks of being advertised and so far they are being kept in excellent condition by tenants (touch wood). Anyway, speaking to all the estate agents we found the max you could get in a shared house (4 bed) was about £350 pcm per person. For a 5 bed it was about £325 pcm pp. From there we could work backwards, look at the purchase price, the work that needed doing to it and then assess if it would achieve the 10% ROI. Those figures are current, based on todays market and for properties equal in quality to or even nicer than the ones being offered here (definitely not slums etc). They are also better positioned than this block would be. Now I know a studio or en-suite attracts a premium, but it is balanced by the fact many students (particularly British) don't want to live in a block like that. They would much rather live in a house for all sort of reasons I won't go into. These blocks appeal more to 1st year students new to the area or foreign students who have more money and their priority is to study rather than enjoy the social aspects of being in a proper house. So as long as foreign students keep coming to the UK to study I think these blocks (local market supply/demand notwithstanding) will always have appeal to a certain type of student. Regarding my figures of £400-£450 pcm I may be completely wrong but I think I got that from working out what 7% yield would equate to based on the purchase price - so it probably was net of fees. Looking at my emails this morning it was actually nearly two years ago we were looking so things might have changed. I can't find all the research we did but I do remember our main concern was that there were cheaper equally good alternatives in Cathays for those that wanted it. That's a big difference in price and made us think the yields may not increase after the "guaranteed" period was over as per the models they advertised. So yeah, take the numbers with a pinch of salt but that's where I got them from. Btw how do you tag people on here? I can't work it out.
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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 Feb 17, 2018 11:21:46 GMT
Btw how do you tag people on here? I can't work it out. Click on the button with the @symbol in the tool bar & enter the name (display or user) or just type @ symbol & the user name. (Beware that some people have a different display name to user name so the second method wont work in their case. You can find out the user name by hovering over the display name in their avatar)
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gustapher
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Post by gustapher on Feb 17, 2018 12:47:51 GMT
Thanks all for the help with tagging. Much appreciated!
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gustapher
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Post by gustapher on Feb 18, 2018 16:27:54 GMT
Nothing substantial here but just got off the phone to my business partner and I asked him about the over-saturation of student blocks in Cardiff. He said that is what they keep hearing but they are still building. He said the sites that didn't do well or that are now getting permission for change of use were not built in good areas. That said he did think it was reaching saturation point.
On this project in particular he felt it was all down to the success of the Metropolitan University which is growing. The location is Gabalfa which is a bit rougher than Cathays and too far out for the majority of students in Cardiff Uni. It's an £8-9 taxi ride from the town centre. He said it is perfect for all the Chinese students coming who just want to study but not so great for those who want the nightlife. He also said there are no competing blocks that he knows of that would be closer to the Metropolitan University which has got to be a good thing. So mixed bag and overall sounds ok to me.
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Post by ColinR on Feb 18, 2018 16:33:11 GMT
My Brexit comment was off-the-cuff and off-topic.  Thank you for the welcome. I'm glad you enjoyed your time in Cardiff. |
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lobster
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Post by lobster on Mar 8, 2018 22:29:02 GMT
This is a 12% loan with over 400 days left to run, and yet availability has been building up all day with over 75k available now. Also , massive availability of 223k on DFL030 too, which is another 12% loan with 300 days to run ?
Mmmm, it never used to be like this.
As Bob Dylan would say "Times, they are a changin' ..." (at least they are on Lendy)
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hazellend
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Post by hazellend on Mar 8, 2018 23:39:22 GMT
This is a 12% loan with over 400 days left to run, and yet availability has been building up all day with over 75k available now. Also , massive availability of 223k on DFL030 too, which is another 12% loan with 300 days to run ? Mmmm, it never used to be like this. As Bob Dylan would say "Times, they are a changin' ..." (at least they are on Lendy) Maybe something to do with end of tax year approaching and people try
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hazellend
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Post by hazellend on Mar 8, 2018 23:39:58 GMT
This is a 12% loan with over 400 days left to run, and yet availability has been building up all day with over 75k available now. Also , massive availability of 223k on DFL030 too, which is another 12% loan with 300 days to run ? Mmmm, it never used to be like this. As Bob Dylan would say "Times, they are a changin' ..." (at least they are on Lendy) End of tax year need 60 k for ISA and SIPP maybe?
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huxs
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Post by huxs on Apr 16, 2018 16:14:29 GMT
Does anyone have any updated views on this one, 52K on the SM has building actually started?
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Post by ColinR on Apr 20, 2018 9:33:27 GMT
huxs Just to add that there is a report on the planning process at the BBC website that links to the full report of the planning officers to the committee: And the company is listed with its accounts at Companies Houes I'll try to take a drive up that way in the next week or so and report what I can see. As I'll be alone in a car it's unlikely I'll be able to take pictures, and as I am extremely inexpert in matters of architecture and building there's a limit to what I can report, but I'll see what I can see in any case.
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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 Apr 20, 2018 10:26:31 GMT
Remove the links Colin!! The forum police are on there way!  Are you not allowed to post links? I've posted them in the past, on this very thread in fact, and those are pretty much the two most reputable websites in the UK...! You cant post anything that identifies the borrower or the asset on the public boards (fine in DDcent) Clause 4 DO NOT post information$, links, attachments, images or any material that allows a borrower, their companies or their assets to be identified, either directly or indirectly p2pindependentforum.com/post/172634/thread
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Post by ColinR on Apr 20, 2018 10:31:11 GMT
Ah, thank you. Any reason why? It's very obvious from my posts here that I am not an, ahem, SOPHISTICATED INVESTOR (TM), but this is all public domain stuff that a child of four could find within seconds of seeing the "official" listing of the loans at Lendy's own website. I see @gustafer has quoted me and the links remain in that post, so you might want to remove them too (aren't you the chap who hacked Hilary Clinton's emails?  ) |
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Post by skint4achange on Apr 20, 2018 10:35:09 GMT
I think the main reason is that although a child could identify it (Regardless of how many ***'s go into the name) the forum does not want to leave itself open to legal action etc.
P.s There is more than one student accommodation block in this location!
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