front elevation
Latest Valuation
£334,000
Yield
37%
Selling Agent
Sourced Uxbridge

Commercial to Residential Conversion in Blackpool

Investment property with planning permission for 13 units
Guide Price
£334,000

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Key Features

  • 37% Gross Yield Financed Buyer
  • Prime Location
  • 5 Year Lease
  • Next to a £300m Development
  • £38,100 PA Net Cashflow
  • Hands-Free

The Property

The development is situated just off the promenade directly across the road from the £300m Chariots of the Gods development.
The vendor is an active developer and bought this plot at risk over 12 months ago, without planning permission and then proceeded to submit a planning application with the council to get a scheme passed for 13 spacious units:
• 3 x 1 Bedroom Apartments
• 10 x 2 Bedroom Apartments

Now with the planning permission approved, the developer is looking for a swift sale to allow them to realise a small profit, allow the buyer the majority of profit on the table to build out and reap the rewards of the new scheme.
The vendor is looking for quick completion and has priced it accordingly to sell.
Once developed, there are operating tenants ready to go and are willing to sign a 5 year fully repairing Insuring lease before the renovation has completed. Meaning income will be produced from the day the snag has been signed off.

The premises are traditional red brick premises with windows with stone heads and cills. There are commercial uses on the ground floor of the Central Drive frontage of the premises with angular
bays at first-floor level and residential uses above. The premises were within a Resort Neighbourhood in the Local Plan but are not part of the South Town Centre Main Holiday Accommodation
Area. The premises are opposite the Central Car Park where a year-round leisure attraction is proposed.

No affordable housing

One Freehold Title

External alterations to Central Drive elevation, provision of bin and cycle stores to rear and use of premises as altered at part ground floor and upper floors as 12 self-contained permanent flats and 1 maisonette. 10 x 2 bed, 3 x 1 bed

The site is clearly highly accessible and effectively town centre.

The Financials:

£1,210,000 GDV

£334,000 PURCHASE PRICE
£495,000 DEVELOPMENT
£41,580 PROJECT MANAGEMENT
£780 BUILDING SURVEY
£5,000 OTHER LEGALS
£6,200 SDLT
£8,428 OPEN SPACE CONTRIBUTION
£5,000 SOURCING FEE

PURCHASE LEGALS £0
CIL £0
S106 £0

TOTAL COST / CASH BUYER £895,988

Finance;

FINANCED BUYER. WE HAVE LENDERS IN PLACE READY TO FINANCE
PLEASE NOTE THE FINAL FINANCE OFFERED WILL BE BASED ON YOUR PERSONAL CIRCUMSTANCES
THE FIGURES PROVIDED ARE FOR TYPICAL LENDING ON THIS TYPE OF PROPERTY

£334,000 Purchase Price
£495,000 Development

Finance to purchase;

Borrow 60% LTV of purchase price £334,000 = £200,400 Loan / £133,600 Deposit
100% Funding for build costs
Total Loan £695,400
One-off 2% Arrangement fee
The interest of 0.9% per month over 12 months. Total interest payable (incl. arrangement fee) = £89,011
Exit Fees: None

Money in
£133,600 Deposit
£41,580 in Project Management
£780 Building Survey
£5,000 Other Legals
£6,200 SDLT
£8,428 Open Space Contribution
£5,000 Sourcing Fee

TOTAL CASH IN £200,588

Exit;
This exit strategy is to build the development out and then rent all of the units out for a profit. There is good demand for high-end luxury apartments for rent in this area with good examples of arguably inferior schemes letting very well within close proximity to this site.

Post Development, refinance against GDV;

GDV: £1,210,000
1 Bedrooms @ £70,000 x 3 Apartments £210,000
2 Bedrooms @ £100,000 x 10 Apartments £1,000,000

75% LTV of £1,210,000 @ 4% = £907,500 Loan. £36,300 per annum / £3,025 pcm
£907,500 pays original loan £695,400 + finance costs £89,011 + £123,089 of your initial capital invested of £200,588, Money left in £77,499

Cashflow
Once developed, there are tenants ready to go and are willing to sign a 5 year Fully Repairing Insuring lease before the renovation has completed. Meaning income will be produced from the
day the snag has been signed off. The management company will pay you market rents for each flat-

3 x 1 Bedroom Apartments @ £400 each pcm £14,400 per annum
10 x 2 Bedroom Flats @ £500 each pcm £60,000 per annum
Total Gross Income £74,400 per annum

Less:
Mortgage @ 4% PA £36,300 per annum

Circa Net Cashflow £38,100 per annum
Circa Net Cashflow £3,175 per month

Yield based on GDV:
6% - GDV of £1,210,000 with gross income £74,400 pa
3% - GDV of £1,210,000 with gross income £38,100 pa

The yield based on invested funds:

Cash Buyer
8% - £895,988 invested and £74,400 gross annual income
4% - £895,988 invested and £38,100 net annual income

Financed Buyer
37% - £200,588 invested and £74,400 gross annual income
19% - £200,588 invested and £38,100 net annual income

ROI
Cash Buyer
8% - £74,400 gross annual income divided by £895,988 total capital invested X 100

Financed Buyer
19% - £74,400 gross annual income less £36,300 annual mortgage interest = £38,100 divided by £200,588 total capital invested X 100

Limited risk exposure;

DEVELOPMENT: £495,000 with 10% contingency built-in. Overseen by RICS Building Surveyor. Alternatively, you can use your own team.
The duration is estimated to be 12 months
Introduction to the main contractor can be made upon request along with a site visit to talk through the scheme. The price is subject to some slight changes when going to detailed design and tender, and the RICS Building surveyor will provide the full renovation schedule of works and specifications. The RICS Building surveyor will give the full renovation schedule of works and specifications. The builder has surveyed the building in detail and priced against the plans. A detailed schedule providing a breakdown of costs and timelines will be supplied. You have a choice to use your development team. The developer undertaking the conversion are specialists in this location, having carried out several developments in the area. A schedule of works with a detailed breakdown of costs and timelines can be sent on request.

Project Manager –Experienced RICS Buildings Surveyor
An RICS building surveyor will act as the contractor overseeing all works. The works have been costed already, and a schedule of works provided.
You have a choice to use your project management team. Introduction to the main contractor can be made upon request along with a site visit to talk
through the scheme. The project managers job is to take care of the development and deliver the job on time and within budget, subject to unexpected circumstances arising.
All payments will be verified by the RICS building surveyor via payment certificates to ensure that payment is made for only works that have been completed. Meaning all payments will be made in arrears. The project manager will administer all of the paperwork concerning the building works, including a JCT contract between you, the client and the contractor. Also, a service agreement between the project manager and you the client. Throughout the project, the project manager will provide weekly updates via written, photo and video updates. The surveyor’s details/contact can be sent on request.
The RICS surveyor is Carter Zub Building Consultancy

GDV: £1,210,000 (AFTER DEVELOPMENT)
Based on sold comparables

Exchange
5 % and subject to the outcome of RICS survey

DEPOSIT TO RESERVE: £5,000 (DEDUCTIBLE FROM PURCHASE)
Fully refundable if surveyor downs value or discover undisclosed problems or undisclosed legal issues with Title

STAMP DUTY £6,200
Commercial Rates

BUILDING SURVEY £780
This is the estimated cost of instructing your own RICS survey whether for a finance application or cash purchase

PURCHASE LEGALS £0
The vendor will pay for the buyers to purchase legal fees in turn for the buyer using a solicitor that is recommended. The vendor is willing to do this for fast exchange and completion as he knows the solicitors can achieve this

OTHER LEGALS
All other legal costs are paid for by the buyer. i.e. splitting titles.

SOURCING FEE £5,000
Payable at Exchange through solicitors i.e. after RICS survey
Fully refundable if legal issues with Title discovered that were previously undisclosed

Sold As Seen
The development opportunity is sold as seen and all numbers provided are a guide only based on professional opinions and should not be solely relied upon. You must do your own due diligence and seek professional advice if necessary.

FRI Lease
All residential units will be used as serviced accommodation by an in-place operator. They will offer a Fully Repairing and Insuring leases for five years
All maintenance will be carried out by the operator, so there is no management fee, no voids, and no repairs. There will be a tenant only break clause at the end of year 1
The rent reviews will be cap and collar with the retail price index, so rents are increased relatively in line with the market, they will pay you £400 per month for each of the 1 Bedroom Apartments and £500 per month for each of the 2 Bedroom Apartments which are the market rents

FINANCED BUYER. WE HAVE LENDERS IN PLACE READY TO FINANCE
PLEASE NOTE THE FINAL FINANCE OFFERED WILL BE BASED ON YOUR PERSONAL CIRCUMSTANCES

One investor who has been buying for a few years now numerous BMV commercial to residential conversion projects has used the recommended build team, project management and the end to end services and was pleased to see figures, time-frames, and GDVs holding true. His quote: "Working with the teams was easy, trustworthy and reliable. Their teams are well versed in dealing with projects and investors alike. I don't live locally so having hands-on support as and when needed, was critical to seeing our projects through. I wholly recommend working with them and see massive value in their turnkey service." Tiruven, UK Property Investor.

Planning Information

All details can be found; www.blackpool.gov.uk under planning reference 18/0596
Decision Issued Date; 04 Jan 2019

CHANGE OF USE OF VACANT PREMISES FROM GUEST HOUSES AND RETAIL SHOP AND CAFE TO C3

The Plan

This exit strategy is to build the development out and then rent all of the units out for a profit. There is good demand for high-end luxury apartments for rent in this area with good examples of arguably inferior schemes letting very well within close proximity to this site.

Money in
£133,600 Deposit
£41,580 in Project Management
£780 Building Survey
£5,000 Other Legals
£6,200 SDLT
£8,428 Open Space Contribution
£5,000 Sourcing Fee

TOTAL CASH IN £200,588

ROI
Cash Buyer
8% - £74,400 gross annual income divided by £895,988 total capital invested X 100

Financed Buyer
19% - £74,400 gross annual income less £36,300 annual mortgage interest = £38,100 divided by £200,588 total capital invested X 100

The Location

Location in relation to £300m Chariots of Gods Development;

Arguably the biggest draw of this property is the proximity it is to the brand new £300m development, by Nikal Ltd, which is going to be an indoor amusement attraction, with the most notable the UK’s 1st flying theatre, mixed with a Hotel, casino and residential apartments. Having all of this on the properties doorstep can only be a good thing. The site is going to take the best part of 9 years to develop, which means only one thing. Contractors, and lots of them. There will be approximately 1,500 contractors working on the construction works and they need somewhere to stay whilst they are away on the job, making this property the perfect accommodation as they will only need to roll out of bed and they will be on site. Further to the benefit of having contractors; once the development is finished it is estimated that a further 600,000 tourists will be visiting Blackpool, which all will need accommodation for their trip to Blackpool.

https://www.placenorthwest.co.uk/news/blackpool-central-300m-regeneration-site-sold/

The application site is on the eastern side of Central Drive and on the southern side of the junction with Havelock Street.

Blackpool confirms £100m town centre regeneration plans

Blackpool Council has confirmed the details of its £100m project to regenerate the seaside destination’s town centre.

In a statement, the local authority said it is committed to ‘focusing large-scale investment’ in a series of major schemes that will ‘breathe new life’ into the town centre over the next three years.

The projects include a £26m investment in a new, state-of-the-art conference centre next to the Winter Gardens which will open for business in August 2019 attracting visitors throughout the year.

There will also be a new £23m tram extension from the Promenade to Blackpool North Station, creating a link to the newly-electrified rail line and a new 144-bedroom, 4-star Holiday Inn and restaurant that will be sited at the North Station transport interchange on the site of the old Wilko building.

Also, a £7m Quality Corridors programme will see the refurbishment of Deansgate, Edward Street, Topping Street, Cookson Street, and Dickson Road.

The block is in an ideal location for Blackpool tourism located on the promenade with a sea view and short walk from all the major attractions. There is a large car park a 2-minute walk from the property for ample parking for Guests.

Regeneration and Investment Into Blackpool

Blackpool is a perfect location to invest in both residential and commercial property. It is an unsaturated improving market filled with opportunity for investment and a great return on that investment. The town has a population of circa 150,000 and the demand for rental residential property is very high. There are hundreds of millions of pounds in investment presently being made in Blackpool with regeneration schemes throughout the town, breathing new life into areas with the creation of new leisure sites, hotels, and restaurants. Large hotel chains such as Premier Inn, and Hilton is building a brand new state of the art hotels on the sea-fronted promenade. Hilton, in particular, has invested £30 million in their new 130 bedroom hotel, which is set to transform the street scene on the south shore coastline.

Another massive boost to the Blackpool economy is the fracking site that commenced operations in the summer of 2017 and which has brought over 15,000 jobs to Blackpool and Lancashire. There has never been a better time than now to invest in Blackpool.

Lytham Festival is held every summer on Lytham green, attracting thousands of tourists. Night prices will be up on these dates

Royal Lytham golf course is situated within close proximity to the property and there are regular professional golf championships played on this course which attracts golf fans from around the world.

BAE Systems Warton is a corporate employer just outside of Lytham (5 min car drive) this is a corporate outfit we will approach for long term stays.

Blackpool Pleasure beach attracts thousands to the area every single year. Perfect for Families

Sandcastle waterpark another great attraction for families

• Hampton by Hilton to open in Blackpool 2018 - Part of £31Million regeneration project
• Leisure Giant Whitbread proposed £10 Million Premier Inn Hotel Approved
• Cuadrilla Natural gas from UK shale creating thousands of jobs
• Persimmon Homes - Coastal Dunes Development
• Kensington's
• Redwood Point Blackpool landmark development
• £300m Chariots of the Gods Development in the centre of Blackpool
• Blackpool Central State of the Art Development

9-year Development which will be implemented in 3 phases starting in 2020

Average estimated value for a house in FY1

£91,000

Regarding the GDV, current similar new builds for sale in area;

https://www.rightmove.co.uk/property-for-sale/property-84393710.html

Sold comparables - Within 1/4 mile - Sold in last 1 year - Flat

Jun 2019 £94K Flat 7, Argyll Court, Argyll Road, Blackpool, Blackpool FY2 9UF
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=68874334&sale=56359103&country=england

Sep 2019 £88K Flat 8, Argyll Court, Argyll Road, Blackpool, Blackpool FY2 9UF
https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=70989928&sale=10751764&country=england

Similar New Builds currently For Sale;

£94,950 Blenheim at Devonshire Gardens, Coopers Way, Blackpool, FY1 3RJ
https://www.rightmove.co.uk/property-for-sale/property-84393710.html

Similar currently available to let;

£500 PCM Yorkshire Street, Blackpool
https://www.rightmove.co.uk/property-to-rent/property-73685482.html

£500 PCM King Street, Blackpool
https://www.rightmove.co.uk/property-to-rent/property-74091754.html

£500 PCM Saville Road, Blackpool
https://www.rightmove.co.uk/property-to-rent/property-86302295.html