Old Swan, Liverpool L13 - 4 bed end-tce - rentback, repossession

White & Co Property Solutions Ltd

Date Year
20/12 2007

Old Swan, Liverpool L13 - 4 bed end-terraced property, potentially undervalued, great longterm potential

ALREADY VALUED - SEARCHES STARTED

URGENT DEAL - FIRST-COME FIRST-SERVED

Ref 053

Vendors avoided repossession last week, but judge only granted 28 days for completion

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The Numbers

by Article Author		Basic Figures Market Value: Ł 135,000 (undervalued!) Purchase Price: Ł 115,000 Below Market Value By: 15% Rentals : Ł 750-800* pcm (minimum estimate based on a multi-let valuation; vendors want to rent back and will pay 575pcm) Finder's Fee: Ł 1,000 (see below) Cashback at 90% / 85% LTV Ł 6,500 / Ł 0 Equity * Ł 20,250 or more due to under valuation Upfront Costs Deal Fee: Ł 100 Survey: Ł 299 (compensate me for this, and you may need to pay for a retype although they are sometimes free) Loan to vendors: Ł 450 After Successful Valuation Finders Fee: Ł 500 half-payment or Ł 800 full-payment (see ** below) Search Fees (solicitor) Ł 300** There may be other fees depending upon finance arrangements Upon Completion Broker (typically 1%) Bridging Finance (if applicable, varies) Any remaining Finders Fee (see above, varies) Purchase Solicitor (typically Ł900 - Ł1,100 inc VAT + disbursements) Vendor's Solicitor (normally a flat Ł500) Notes All mortgages are subject to survey and the purchasers own financial standing. Figures given are for illustrative purposes only. * This is usually given as a conservative minimum, or if the property is already tenanted, what is currently being paid by the tenant. Cashback is a raw figure, not taking into account all the various deductions that are taken out upon completion - such as mortgage setup fees, broker/bridging/solicitors/finders fees, stamp duty where applicable, etc. If the number is given in blue, this mean the deal requires CASH IN at this LTV figure (plus associated costs as mentioned). Cashback is possible due to the unique methods of purchase we will teach you (we can get you a mortgage based on the open market value, and not the purchase price) * Please read above note. The figure assumes a standard 85% LTV mortgage and does not account for fees and charges added to the loan amount, which reduces the equity proportionately. **** I am willing to take Ł800 in one payment now, rather than Ł500 now, Ł500 upon completion. Thats a 80% BMV offer! FINALLY - please remember we can provide you with a 'deal stacker' template (MS Excel - if you do not have Microsoft Office please contact me for an alternative). This spreadsheet will give you a much more comprehensive financial analysis, which also allows you to play with the variables involved, and allows you to compare and contrast different mortgage products.

The Details

		AREA / PROPERTY DESCRIPTION Old Swan is a popular residential location with great links to the city centre and nearby motorways. It also has all the local amenities one would need in its compact village centre. Prices have risen well here against the trend, and there is a lot of rental. For area info click here, and for local government info please click here. The property is a four bed, two reception Victorian end terrace. It is an end-terrace onto an alleyway before another row of house begins. The alleyway is security-gated. Its and end-terrace with the extra space, greater extension possibilities on the gable end, but without the disadvantages like vulnerable windows or kids kicking a ball. The street itself is either private rented or owner-occupied, and judging by the improvements to properties and number of cars about, seems to be a decent area. It has quick links to Old Swan village and transport routes. There are several houses within the vicinity which are in multiple occupation (house share). The vendor has a decent kitchen but is in the process of putting in a new one; part of the reason they got in debt (the other being redundancy). It is sitting in boxes in the kitchen ready to go in, the vendor will do this if they can rent back. Both reception rooms have been done up to a high standard. Upstairs there are four decent-sized bedrooms and a bathroom. The house is fully double glazed including front and back doors, and has gas central heating. Some aspects of the house are in the process of being completed - such as skirting boards to one bedroom, some walls to be painted, etc. The fundamentals are there but the cosmetics need finsihing off. If the vendor stays he is very likely to complete all this anyway. WHY BELOW MARKET VALUE? The vendors are a young couple who spent too much doing up the house. Mr Vendor is self-employed and was made redundant due to the firm getting into trouble. Now he has found work again with Sky installing aerials and their financial situation has improved. Mrs Vendor works P/T as a care assistant. The financial difficulties were spread out over a six month (or so) period, and the damage had already been done. When the vendors contacted me the next day (last Weds 13th) was the date of the eviction. I went to court and got the eviction warrant suspended. The judge ordered that we have 28 days to complete, and that the next secured loan payment and a sum for the arrears was to be paid on the 21st December. The valuation result came in on Weds this week at Ł135,000. This despite strong comparable evidence (available to the purchaser) that 5 other houses either had mortgage valuation or sold at higher than this - on the same street alone. Additionally, other comps were mid-terrace, did not have the potential of this one, and were 3 bed not 4 bed. The surveyor would not come up any higher - but I feel it is definitely undervalued and longterm would prove an excellent purchase. There is multiple occupation in the area, and eventually upon vacant possession, the new buyer could easily get 750-800pcm on a shared house basis (lots of Eastern European workers in the area too). As its two-storey and 4 beds it would not need HMO licensing. Finally, a few important points agreed with the vendors: 1- the new buyer would need to agree to pay the vendor Ł450 as deposit on an immediate exchange. That sum would then go to pay the lender and stave off eviction. In exchange the vendor agrees to pay their own legal bill (similar amount of money). 2- the vendors will rent back for consecutive 6 month AST tenancies. They will be automatically renewed, except were rent is late or unpaid, or other tenancy breach. The owner will not increase the rent by more than 6.25% per annum (fine!). 3 - the vendors will have the Option to Buy Back the property for Ł145,000 within three years. This will be made void if they breach any tenancy agreement or are late or miss any rent payments. In reality their credit is ruined and they will not be able to buy back. They have a baby and with P/T work and self-employment, both unskilled, and will find it very hard to get a mortgage or save for the necessary purchaing costs. They will not have the deposit for starters, and any 'adverse lender' will charge them a fortune and make the idea a non-starter. Should they buy back - you will have had three years of having your mortgage paid for you (with rent increasing from Ł575 to Ł611 to Ł650 per month, from year to year), on a nil-deposit purchase, and will make a tidy Ł30,000 profit. 4 - the property is already valued and an MX instant remortgage at 85% set up. You would simply pay my broker to get it retyped into your name. It might be possible to get a 90% mortgage if you exchange now, meaning you'd get the property with cash back for fees and possibly more. 5 - please remember this is highly likely to be undervalued - see above. Should they fail to buy back, which is highly likely, you will get a terrific property which they will continue to keep in good nick for you. The day-one equity, longterm rental and capital growth potential, make this a real bargain. This is now urgent - anyone interested please contact me for finance details and photos. All interested parties will get this. The first person to ring me back and confirm they will proceed, will get the deal. WHAT OTHER INFO IS AVAILABLE? Photos, full - can be sent by email Deal Stacker

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