An HMO in a Grade II listed Georgian building in Southampton

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An HMO in a Grade II listed Georgian building in Southampton

449.00

Reserve this investment opportunity for £449

Figures in Brief:
Asking Price: £295,000
Sale Agreed at: £275,000
Estimated Done Up Value: £425,000
1st exit: Flip Profit: £34,633
2nd exit: Cash Flow (HMO): £929.31

Property Description: 12 Henstead Road is a large 5-Bedroom 2-Bathroom, 3 storey student HMO set in the heart of Southampton's city centre and prime student residential area near the Polygon and Bedford Place and is superbly located for easy walking into town centre, local student haunts/night life, Southampton Central railway station and Southampton Solent University and short bus ride/cycle to Southampton University.

It's a 999 year3 storey leasehold property and has a share of the freehold which is shared with an adjacent studio apartment and 1 bedroom basement apartment (no 12a Henstead Road) immediately beneath no12 which has also been secured for sale and would make a great addition purchase to enhance overall value.

The property is set within Article 4 area and has been a fully licensed HMO until April 2018 when the property was marketed for sale following finalisation of a probate process and the license was not renewed. An investor will need to reapply for new HMO license with Southampton Council.

Set within a block of 5 terrace house within a large Georgian 3 storey facade the property strikes an impressive look. It has 2 large bathrooms (1 with double aspect and 1 with triple aspect) set out on the first and second floors and 5 separate double bedrooms arranged on the ground, first and second floors - the smallest of which is 12'10" x 11'3" and largest 17'2 x 15'5.

The ground floor is arranged with 1 large double bedroom to the front (15' x 13'2"), large communal kitchen with modern Aga to the middle (13'11" x 12'9") and communal living area to the rear (10'3 x7'9") leading out to a secluded shared courtyard garden. The courtyard garden is shared with the 1 bedroom basement flat 12a Henstead Road mentioned above.

The first floor has 2 further large double bedrooms to the front and middle/rear with large bathroom (10'4" x 7'9") with separate bath and shower to the far rear.

The second floor has 2 double bedrooms to the front (17'1" x 14'5") and middle/rear (12.9" x 11'4") and another large bathroom (10'3" x 7'11")

The property benefits from large sash windows and period Georgian features and has subject to an investor purchasing this property been fully conditionally pre-let to a student group for the student year commencing 1 July 2019 at £93pw per room based on expected refurbishment works and a successful completion and an investor should expect this to rise to c£105/110pw for the following year post completion of proposed refurbishment works below that will see cashflows improve by over £300 pcm

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Property Information:
Property Address: Southampton
Number of Bedrooms (current): 5
Is there potential to add a bedroom?: Yes but only but with a reconfiguration of the 2nd floor accommodation which would compromise its current large 5 bed 2 Bathroom layout Reception Rooms: 1
Bathrooms/shower-rooms: 2
Property Asking Price: £295,000
Agreed Sale Price: £2750,000
Fair Market Value (DUV): £425,000

Comparable 1: 14 Henstead Road, Southampton, SO15 2DD - 7 Bedroom - sold 20/08/10 - £380,000 - https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=36067913&sale=75587769&country=england

Comparable 2: 18 Henstead Road, Southampton, SO15 2DD - 6 Bedroom - sold 30/09/10 - £320,000 - https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=68287657&sale=75587763&country=england

If no comparables, please state why there are no direct comparables: The property is part of a 5 terraced property Grade II listed Georgian building and unique to the road and area. All properties within the Georgian block are currently laid out over 3 or 4 floors as high end student HMOs run by local agent who has direct access to Southampton University accommodation team. The property is superbly located for the student market and Henstead Road has seen significant capital uplift as a result. Properties in the Georgian block rarely come to market hence the comparables date back to 2010 and prior to significant HMO works that have been carried out since they were acquired. These properties were acquired and run by the current letting agent being proposed to act for 12 Henstead Road.

Market Status: Sale Secured by Sourcing Agent

Why is the property being sold?: The landlord or co-operate selling off assets

Is the property in a lettable condition: Yes

Is the sale price negotiable?: No

Property Type: House

Freehold or Leasehold: Leasehold

Is the property part of portfolio?: Yes, seller has more

Exit Strategy 1: Multi-let / HMO

Exit Strategy 2: Capital Growth

Exit Strategy 3: Cash Purchase Flip (or bridge)

If HMO strategy please select: Property is in an article 4 area and does not have an HMO licence from the local authority. Investor needs to apply.

Potential Target Demographic: Students


Refurbishments Required: The property requires a full renovation of all rooms, bathrooms and kitchen to bring the property up to full compliance standard and elevate the look and finish to a premium student accommodation property:

The full draft schedule of works is set out below and compiled by the premium letting agent of student HMO accommodation in the area and their refurbishment building specifications in line with the Grade II nature of the building and student market needs:

Front Door and Front Elevation - Clear all guttering to the front and rear - Decorate front elevation - Strip front door and decorate - Install Posh complete front door furniture - Install 2 x front lights with motion sensor - Fit frosted film onto front door glass panels - Fit reverse number transfer above front door - Install bell push - Fit 1 x euro deadlock and 1 x night latch lock

Entrance Hallway - Install down lights along hallway to kitchen with new light switching - Install emergency lighting and interlinked smoke detector - Install all new laminate floor and skirting board - Install black coir matting with oak door bar - Install picture rail - Install bell ringer above picture rail - Upgrade consumer unit (TBC) - Patch plaster light switch chases and skim ceilings - Decorate walls and ceilings and woodwork

Stairs and Landing - Install router into under stairs cupboard (pre-wire for virgin media) - Install down lights along landing with new light switching - Install emergency lighting and interlinked smoke detector - Install picture rail - Patch plaster light switch chases - Skim ceilings and walls (TBC) - Decorate walls and ceilings and woodwork - Decorate staircase in grey - Install carpet along stairs and landing

Kitchen / Lounge (kitchen design will be provided) - Install all new cabinets with high gloss handless doors - Fit grey stone worktops and upstands with new sink and tap with glass splash back - Install all new appliances - Install new compact Worcester combi boiler to fit inside kitchen wall unit (decommission Aga) - A new central heating system will be installed throughout (all new radiators) - Install all new electrics in kitchen and sitting room - Install all new downlights in kitchen and lounge with interlinked heat detector - Level kitchen and sitting room floors ready for laminate floor and tiling - Install new skirting boards and picture rail - Install all new laminate floor through living room - Install new Posh Pads grey tiles through kitchen - Block up living room window to accommodate new SMART TV on LH wall. - Move rear garden door of living room to make space for long sofa along RH wall

Install new sofa on RH living room wall - Plaster all walls and ceilings - Decorate walls and ceilings and all woodwork - Fit new flat screen TV and bracket - Install 2 x tall panel radiators into kitchen and living room - Install fire blanket and CO2 alarm into kitchen

Bathroom - Install bath with mains shower valve and riser rail kit - Ply bathroom floor then tile in Posh Pads grey tiles - Tile around bath only up to the ceiling in marble tiles - Tile removable bath panel and tile upstand where wall meets floor tiles - Remove wall paper and plaster all walls - Install 6” fan with PIR motion sensor - Install down lights into bathroom ceiling with new switch - Film window in frosted film - Install chrome towel radiator - Install vanity unit with bespoke mirror - Install ceiling mounted shower track with curtain - Install new toilet with toilet roll holder

Shower Room - Plaster and decorate new shower room - Fit new walk-in shower cubicle - Fit new mains shower valve with riser rail kit - Tile shower cubicle in marble tiles - Ply floor and tile floor with upstands in Grey tiles - Install chrome towel radiator - Install vanity unit with bespoke mirror

Bedrooms (x 5) - Install picture rail around the whole of bedroom - Install laminate floor - Install all new skirting boards - Complete all new electrics to suit room layout - Install down lights into ceiling - Install all new furniture (double bed, chest of drawers, bedside, book shelf and study desk) - Install floor to ceiling bespoke wardrobes (double hanging rails) - Install new radiators into every room - Plaster and decorate whole room - Install new curtain batons, curtain track and seamed curtains

Fire Doors and Locks - Install all new 4 panel smooth fire doors throughout to existing door linings - Install all new door handles and locks onto bedroom doors with bedroom numbers - Install 3 x communal master dead locks onto the front and rear doors. - Fit euro master locks onto every bedroom door

TV Aerial - Install new high reception digital TV aerial into loft space with booster - Run all new TV coax into all bedrooms and new lounge flat screen TV

Refurbishment Costs: £84,000 based on 5% VAT


Flip Figures (Buy, Renovate, Sell)

Entry Legal Cost Estimate: £1,200

Exit Legal Cost Estimate: £1,200

Stamp Duty: £12,000

Survey Costs: £516

Broker Fee: £495

SMP Consultation Fee: £6,000

Estimated 6 months bills costs: £1,767

Estate Agent Selling Fees: £2,223

Re-sale price (DUV): £425,000

Estimated Flip Profit: £33,633


BTL Figures (Buy To Let)

Deposit Required if BTL: £68,750

6 months mortgage costs: £1804

BTL rental Income: £2,383 based on post refurb expected market rate from agent for 2020
£2,015 based on current conditionally pre-let agreements for 2019

Lettings Management Charge %: 12% including VAT - £286 pcm based on £110 pw rent expected post refurb

MOE %: 10% as student HMO no council tax and £238 pcm

Cash Flow most likely 3%: £1,062 pcm based on expected £110pw/room long term rent and £775 pcm based on current conditional pre-let rate of £93pw/room

Cash Flow stress test 5%: £531 pcm based on expected £110pw/room long term rent and £243 pcm based on current conditional pre-let rate of £93pw/room

Money Left in the deal: £63,149

Years and months to money paid back: 5.7yrs


Area Description: The immediate area by Henstead road is well serviced by new Sainsbury store and a host of vibrant bars and restaurants and evening venues frequented by students and corporate workers alike as well as The town's principle theatre (The Mayflower). Being 0.7 miles away from the main train station and walking distance to the town, the location has a gravitation pull for students. Property prices in the area have consistently grown over time making the property a strong long term investment opportunity. Average property prices in Southampton have increased by 24% in the last 5 years and over 40% in the last 10 years.

Nearest Train Station: Southampton Central Station - 0.7miles away

Any key journey times: Southampton City Centre - Bedford Place - 0.1 miles
Southampton Shopping Centre (West Quay) - 0.7 miles
M27 - gateway route to Portsmouth and Bournemouth - 4.1 miles
M3 - gateway route to London - 5.0 miles
Southampton Central to London Waterloo Rail journey time - 85 mins
Southampton Airport - 4.1 miles


The fine Print
SMP operates in trust with its potential investors. SMP is registered with the Property Ombudsman Group. SMP prides itself on delivering BMV deals with accuracy and confidence. The sourcing fee for this deal is £4997 which is paid on completion of the sale. A £499 deposit is required to secure the deal which is refundable if the investor decides not to proceed to an agreed sale with the vendor, ie after viewing. The deposit is not refundable if the investor pulls out of the purchase after sale agreed. 

SMP takes no responsibility if deals “fall through” for matters out of our control. It is always highlighted that property investment carries an element of risk and ultimately a deal may not be successful. There for deal owners are advised to carry out their own due diligence to confirm for themselves the findings SMP present. SMP has no control of the UK property market prices and investments can be lost or profit margins shortened with the fluctuating market