Forthcoming Edgbaston property loan

In mid 2014, the most expensive residential property ever to be sold in Birmingham and it's surrounding areas went for £1.6m.

This year, the 7 most expensive residential properties covering the same area have shared average price tags of £1.5m-£1.7m - the most expensive of them all is currently  advertised at OIEO £2.5m, and has been for some time.

The above would suggest that Edgbaston property's VR, even with PP, is more than a little optimistic as has been suggested. A quick search of itself and neighbouring properties would suggest the same is likely to apply to the Cornwall property loan due to be on offer, too.

As the Edgbaston loan is not for development purposes, the proposal's security is the property 'as is', requiring extensive refurbishment throughout, inside and out, with PP for a new build luxury residence. The borrower has given assurances that no work will commence for the duration of the loan, so a speculative residual value of a cleared plot with PP cannot be a consideration in this case. The property has been and still is advertised to sell 'as is' with PP - no price listed and what would appear to be no interested parties to date.

Additionally - both the Edgbaston and Cornwall proposals are to the same borrower. The borrower, SA's close relative, MA (likely to be SA's father), currently owns both companies that own both of these properties that SA is allegedly looking to buy with investor's funds.

The borrower, SA, and his close relative, MA, are joint shareholders in many, many other property, financial, and a few less tasteful enterprises; the majority of which have either already been, or are in the process of being wound up due to insolvency.

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savingstream - it is understood that in order earn 12%pa returns there is a high probability investors will have to take on more risk than possibly a mainstream fund provider might, by lending to less than prime candidates, leaving a strong reliance on the loan's security and it's accompanying VR being sound. When taking into consideration the previously and current advertised guide and sale prices for both of these properties, the proposals appear to have little, if any equity left in them to fall back on. Like yourselves, I'm certain I'm not alone in wanting the platform to produce a steady flow of deals, but there is a sizeable feeling of a capital raise by sale by loan with this borrower and both proposals, so any intervention and insight you could offer that might suppress these concerns would be timely and much appreciated.

The valuation on this one bothers me - not that I have any reason (from past recent experience on SS) to question any valuation produced by professionals. I don't know the area at all, so cannot offer any local knowledge. I only have a few decades of experience in the property market to fall back on, and some seaweed.

If you look at the calculations of value /squ ft, for 21 *** Road (section 13.4 of the valuation report) the square foot value used is 6340. This exact same figure is used for 5 *** Road, maybe why the division sum for number 5 doesn't produce the stated result. It is probably just a typo. A few other figures don't quite add up (or divide) either.

For example, number 21 was marketed at 1.7 M but achieved 1.535M - yet the figure of £268/squ ft is calculated from 1.7M/6340 = 268 rather than from 1.535M/6340 = 242 / squ ft. This was in 2013, and with 8 bedrooms and in immaculate condition.

Looking at the proposed size of the subject new-build, it would appear to be rather extensive at 12,300 squ ft (gross)- with 8 bedrooms all ensuite.

As a general point, the value/squ foot of large properties located within 'lesser' properties can suffer owing to their being 'tainted' by close association with the 'lesser' people who occupy mere £2 or £3 million houses. Conversely it can be the case that the value/squ ft of modest properties situated amidst more expensive houses can be higher than you might expect, because they benefit from 'uplift by association'. Similarly, house prices can be influenced by proximity of a good school (one where they teach reading, writing and long division?).

This factor, together with the feeling that the value/squ ft may be optimistic given the larger than usual  fraction of total area that may be devoted to bedrooms and particularly to ensuites, leads me to question the base figures of £375 to £400 per squ ft.

In the days when I used to do this sort of calculation I always used the total habitable area as a guide to value - this would include bedrooms but not ensuites or bathrooms, it would include living areas and kitchens but not hallways etc. It may be simplistic to base valuations for very dissimilar properties on gross area when a close fit for comparable properties can often achieved by using net (habitable) area.

In any case with 'one-off' houses they are always worth what anyone will pay for them.

If you ask rightmove for the area in which this property is located and properties between 2 and 5 million you get number 9 on the same road (10,000 squ ft for a mere 3 million and including fabulous period features) and the information that number 5 was sold in 2015 for 1,650,000  - not the 1,250,000 figure mentioned in the valuation report. I don't know which if either figure is wrong - maybe look up the land registry details? Number 9 looks in excellent condition - yet at a tad under 3 million divided by 10,000 = 300/squ ft - and if 10,000 is in any way a net rather than a gross figure then maybe we should be dividing 3 million by (say) 12500 to give £240/squ ft. Please compare this to the figure of 242 cited above (2013 values).

Given that a "house with period benefits" in the area is available for 240 to 300/squ ft, I'd think twice before paying up to 400. Unless maybe you like new-build and are overly concerned by the heating bills for older property?

There is a floorplan on rightmove if anyone fancies working out how the 10,000 figure is derived.

The serious point (once again.....) is that competent valuations are surely a cornerstone of the credibility of any P2P site.

Cornerstone: an important quality or feature on which a particular thing depends or is based (or) a stone that forms the base of a corner of a building, joining two walls. 

I'm going to bed. I'll read this again in the morning and maybe correct all my errors.

They are welcome to it. I fancy that the pre-funding level must have been very low.

I think this would have filled, as I also think the related Cornwall loan would have.  I'm going to give SS the credit here and guess that this didn't pass their own internal DD

Says something about BridgeCrowd when they are taking in a SS reject.  I wonder if the Cornwall loan will appear soon?

It is - corrected now.  Even I would be tempted if the rate was 49% 

I was thinking that 49.3% was excessive, even incredible. LTV does make more sense.

  Your credit is declining?