On joining PPP, Liam and Claire Gallagher’s initial plan was to do two HMOs and refinance them to enable them to do project three, maybe four. Well, plans are there to flex right? This plan has definitely been flexed.
“Part way through the refurbishment of our other two properties (the 6 bed HMO that is now fully tenanted and the 10 bed HMO which is still occupied by builders), we came across two opportunities that we felt were too good to miss.
The first was in fact on our list to view for our Purchase Mentoring, but it was Sale Agreed at that time and the vendor was not open to further viewings. However, having developed a good relationship with this estate agent (the same estate agent that we bought our first two properties through), he let us know that the property was coming back on to the market.
The property was advertised as a ‘3 bed semi’ and had no further information apart from one external photograph. However, we could see from the photograph and by driving past that the property was not a ‘3 bed semi’ and so were certainly interested to arrange a viewing. It was only at the viewing did we appreciate that the street scene masked the true size of the property. It was a bit like Dr Who’s tardis – didn’t look too big from outside, but was huge when you got inside!
Far from being a 3-bed semi, the property was (and had been for most of its existence) a hotel! About 10 years ago it was converted to a child day care nursery that clearly closed very suddenly and quickly. As such, the viewing was quite eerie as everything that you would expect to find in a child day care nursery was still in situ (cots, toys, paperwork etc.) even though the business had closed in 2009 – it really did look like everybody went home one night and never came back!
By restoring the property to approximately 90% of its original hotel layout, a 13 bed HMO is achievable. However, there are a number of considerable obstacles to cross:
– The property has Grade 2 listing, which is extremely difficult to appreciate given the extent of remodelling that has been undertaken in converting to a nursery.
– In addition to Grade 2 listing concerns, the scale of the project and coupled with how long the building has been lying empty – there are some major considerations for refurbishment costs – e.g. significant damp present.
– Full Planning Application and Change of Use will be required, but the previous history as a hotel should certainly help us in that respect.
We submitted a pre-application advise submission to the council and have just received their response. Whilst it certainly is of use, it does not provide any specific nor tangible information on the Grade 2 Listing considerations which is undoubtedly the detail that we needed most from the Council. Therefore, we now have scheduled a meeting with the Council ‘s conservation officer at the property and this will inevitably be a pivotal meeting.
The second of these properties has now effectively become the first property – This wasn’t so much planned, but more kind of happened … and very quickly!
We had seen the property advertised in an auction and ultimately did not attend. A few weeks afterwards, we checked on the outcome and found that it never sold and in fact there had been zero bids and was still available. Once again, the property details were very limited and there was only one external photograph.
We called the auctioneers (who luckily are also estate agents) and asked whether a viewing could be arranged – this was on Wednesday. We were advised that a viewing was possible, but that the sale was still being conducted under auction conditions – i.e. 10% deposit to secure the sale and 28 days to complete. Furthermore, a developer who was well known to the agent has already notified the agent that he would be paying the necessary 10% to secure on Monday.
On Thursday we had a 20-minute viewing of the property, which was just about enough time to count the rooms! The property is a large Georgian House with a barn and is 240 years old, it is not listed and is located +/- 50 metres outside of a conservation zone. Despite it’s obvious size, we really do feel like we have found a hidden jewel!
Whilst it did seem like a great opportunity, we had 24 hours to establish and compute our various plans and potential outcomes (thanks to the HMO Analyser too on the PPP intranet!) – it certainly was a long night! However, at the end of it we knew that we had a number of potential plans, some of which were non-HMO dependant in case of any planning problems. Therefore, we just knew that we had to buy it and were in a position (just) to pay 10% funds and secure the property on Friday. Given the complete lack of planning, let alone notice, PPP’s dedicated mortgage brokers have been truly great at helping to arrange the remaining finance required to complete the purchase.
The house and barn were connected around 25 years ago and since then it has been an 18-bed residential nursing home with a private two-bedroom apartment (used by previous owners) in the upstairs barn.
Our plan is to separate the house and barn into two standalone buildings, with the house to be a minimum 12-bed (easy) up to a potential maximum 15-bed (not so easy) HMO. The barn would be converted into two separate upstairs and downstairs apartments, with the downstairs (which was part of the residential nursing home) to be reconfigured to be the same layout as existing upstairs.
Like the nursery, it is vacant possession and was expected to be sold and reopen as a similar business. As such, it is also fully furnished and so we have 18 bedrooms plus various other fixtures & fittings that you would expect in residential care home to find new homes for!
If all goes to plan, we could have a six, 10, 12 (minimum) and 13 bed HMO. That’s 40 plus rooms across four properties. It’s causing Claire and I to review our original plans, which were to get sixty rooms in five years based on the idea that we’d have six per property, so 10 properties in total. We will have two thirds done if all goes well over four properties in just over a year. We know that this year will be crazy getting three and four done, but we’ll stop, take a break and review our plans. We could plod along at one a year if we wanted to. We can afford to slow down.”
Read Liam’s previous diary entry ‘One fully tenanted HMO’.