Three bedrooms in, six en-suite rooms out
Heavy Refurbishment
A house in multiple occupation conversion funded from purchase through to completion, on the strength of a track record.
Location: Cadishead, Greater Manchester
Property: Three bedroom end-terrace, converting to a six bedroom en-suite house in multiple occupation
Purchase Price: £160k
Valuation: £160k
Gross development value: £390k
Day one loan: £110k
Refurbishment facility: £123k
Total facility: £233k
Loan to gross development value: 70% gross, including fees and interest
Term: 12 months, interest rolled
Exit: Refinance onto a term loan
A limited company borrower came to us through a broker to buy a three bedroom end-terrace and convert it into a six bedroom house in multiple occupation, every room en-suite. The works were to be carried out under permitted development rights over an eight month programme.
The numbers were the point of the deal. A £160k purchase and around £123k of works producing a gross development value of £390k — roughly £107k of value created above the combined cost.
Track record did the heavy lifting
The director had been refurbishing property since 2014: eleven completed flip projects, an earlier five bedroom house in multiple occupation conversion, two buy-to-let refurbishments and a purchase lease option agreement.
Most of that had been funded from his own resources, but he had used bridging finance twice before and exited both facilities cleanly. That matters more than almost anything else on a heavy refurbishment — we were not asking him to do something he had not already done.
His credit score sat in moderate territory, so we asked for a full bureau report, which showed clean conduct. Behind the guarantees sat around £315k of equity across three investment properties and a further £261k in his own home.
How it was funded
£110k on day one against the purchase, with the full refurbishment cost held and released in stages as work was completed and signed off by our monitoring surveyor.
Security was a first legal charge and a debenture, supported by a personal guarantee and a corporate guarantee from the borrower’s holding company.
Why it worked
- A conversion the borrower had done before, at a scale he had done before.
- 100% of the refurbishment cost funded, released against inspection.
- A clear rental exit in a location with proven demand for rooms.
- Insight Real equity standing behind the guarantees.
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