Today it’s time for an overdue monthly update. We missed May, so this is a combination of May and June – everything we’ve been up to over the past couple of months. You might not think there’s a huge amount for us to cover, but actually as we dig into it, we’ve made good progress and learnt a couple of important lessons along the way.
We’re going to be sharing how our life has changed drastically over the past couple of weeks, a new hire to our team, the Covid situation on our HMO and SA portfolio as well as Covid-valuationgate(!), which has been top of my mind for the past couple of days. And, our usual updates on latest projects, an offer accepted on our future project and a couple of others that we’re appraising as well, so plenty for us to dig into!
Listen to this episode below:
Here’s a sneak peek at what discussed this time:
5.22 – Our positive thought for the month – “There are two ways to have the tallest building; you can build a building taller than anyone else or you can spend your time trying to tear down everyone else’s building.”
6.35 – We’ve finally made it back to the boat after several months of camping in one of our Airbnb properties. We’ll spend the next month or so working on boat repair and maintenance and settling back into boat life before we head off on our travels.
7.43 – A warm welcome to our new letting’s manager Jess!
- 8.01 – We briefly explain why we hired a full-time lettings manager 2 years ago.
- 10.06 – But when we left the UK, things began to slip – we weren’t around for day to day management, and it became clear that we’d made a bit of mistake hiring a lettings manager without experience, so we amicably parted ways in Jan/Feb this year.
- 10.36 – We learned our lesson and hired our new lettings manager Jess, based on her fantastic experience gained over a decade in property management. After only one month, she’s updating processes, getting tenants back on board and filling rooms, and delivering the initiative and trust we needed to enable us to come back to Spain.
12.08 – Room lettings
- Due to Covid, we’ve seen more than 20 tenants give notice or disappear, which has left a huge hole in our income and, with not being allowed to carry out viewings, the past couple of months have been quiet.
- 12.50 – But with Covid restrictions easing and Jess’s help, things have really started to pick up and we’ve already had 4 rooms reserved in the past week alone
“The market, generally, seems to be coming back to life.”
13.41 – SA post-Covid
- Covid hit the SA market even harder than the HMO market – we saw all of our bookings cancelled and tenants move out, but things are starting to pick up again now. We have 50% occupancy in July, a whole month booking for October and can see the SA market slowly improving.
16.00 – Hall Street
- We finally got the valuation on Hall Street, our commercial conversion 8 bed HMO, that we finished work on at the beginning of this year.
- Our expectation, based on a previous valuation of a HMO of the same size with the same lender and surveyor, was around £450k. But the new valuation came in at £380k, a 15% reduction on expectation.
- The LTV also dropped to 70% and then – the triple whammy – interest also increased by .25%. It’s safe to say this was a bit of a knock for us.
18.43 – What can we do?
- Obviously we’d like the funds back to progress with other projects, and we’re currently on a bridge that’s costing us money every month, but there are rumours of LTV increasing and a possible interest rate reduction, so we can wait it out to an extent.
- We can also appeal the valuation based on our previous valuation.
- Or, look at a 2-year fix instead of a 5-year fix as originally planned, and hope there will be some meaningful market improvement within those 2 years.
21.19 – Underbank project progress
- The back apartments, which will be used as SA units, are flying along and due to be finished by the end of August.
- In the meantime, all the planning has been submitted for the front apartments and we need to get a few things approved before final plans are submitted to the heritage team for our National Lottery funding.
- We’ve managed to convert a one bed into a two bed, added some historical details to the frontage to help improve the street scene and it’s all looking great – hopefully it will be worth the few weeks delay to get everything right.
24.20 – Cross Street project progress
- We’ve potentially secured a new commercial tenant for the ground floor which is great news; we’re just finalising the heads of terms and looking at some additional work at the tenant’s request.
- After being on hold because of Covid and funding issues due to this project bring related to Hall Street, the HMO conversion is also moving forward and looking to be completed in October.
27.18 – IPI Car Park project progress
- We’re making progress with the steel frame design and fabrication.
- Unfortunately, the legal dispute we thought was resolved is still hanging over our heads.
28.15 – Before we left the UK, we started to scout for future projects:
- 28.31 – We’ve had one offer accepted and, whilst the new project is still early days meaning we can’t give too much away, we can say that it’s a ground floor commercial with vacant office space above that we can convert to an apartment. It’s in Preston, which isn’t our usual area, but this was a direct to vendor opportunity for us.
- 29.20 – We’re also appraising two other projects we viewed just before we left. One small project that we’re looking to do with Si, our PM, as a trial joint venture, and one larger commercial to resi conversion we’re really keen on. If that offer gets accepted, keep an eye out as we’ll be looking to work with a few investors on a private raise, as we did with the Underbank brewery project.
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33.00 – We’re about to hit 20,000 followers on Instagram so we have a big giveaway planned to say thanks to everyone who keeps in touch with us there. We’re keeping it close to our chests for now, but if you already follow us on insta keep your eyes peeled, and if you don’t then now’s the time to get over there!
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