This post is about prepping for a commercial valuation for highly adapted and/or Sui Generis HMOs. Most developers are looking for the highest valuation possible (even if they don’t want to gear to the maximum level).
This has the advantage, of lowering the LTV and therefore lowering the interest rate. Be warned, though, that getting a high valuation is not an excuse to leverage up to one's eyeballs.
Also, for clarity - I am only talking about buildings that have either been specialised for HMO use only and/or have won hard-fought planning battles for an increased number of occupants. Otherwise it will most likely be a bricks and mortar valuation.
THIS IS HOW I TRY AND PREP FOR A VALUATION:
I try and do the surveyors leg work for them. In my experience, surveyors are unfamiliar with valuing HMOs – often overstretched – so the more info you can give them, the better:
So here are some “DO’s” and “DON’Ts”
DO have a folder ready for them, printed out and tabulated ready to rock and roll:
· all ASTs,
· Deposit protections certs,
· licenses (PAT, HMO, Fire lights, Fire alarm etc),
· floor plans,
· certificates (all of them)
· building insurance,
· Professional pictures
DO talk about how quickly rooms rents out – to prove this you can screen shot the demand in the area from places like spareroom (you can slip this into the folder above with annotations).
DO talk about local employment opportunities – put an annotated map with all the large local businesses circled and show how easy it is to get to those locations, in your file.
DO talk about how well your property is set up for remote working. Set up great broadband infrastructure and show it off.
DO talk about why tenants stay longer. There maybe superior decor or community that you'd want to draw attention to.
DO talk about local transport and the opportunities that afford residents to travel.
DO talk about the high-quality service your residents receive.
DO arrive early, try and open all the rooms up, knock on all the door - warn tenants well in advance of your arrival (obviously) but also give a knock on the door.
ALSO...PUT TOGETHER MEANINGFUL COMPARABLES, FOR THE SURVEYOR TO LOOK THROUGH
DON’T be impatient and treat the surveyor with contempt (in my earlier days, for some reason I used to be on my guard a lot around surveyors)
DON’T let the surveyor inspect a messy place. Get the gardener and handymen round, make sure it is looking its best. Give the place a spruce. Ask the tenants to clean their rooms.
DON’T be late. Punctuality is just common courtesy. They have places to be and are most likely self-employed - the more you hold them up the less work they can do.
DON’T expect them to bring their own ladder. Have some way to access the loft, for them to poke their head up there and glance around.
DON’T expect them to find parking. If you have their office number, give some advice to the office – so they can relay it on to the surveyor coming to the property.
These are ways I prep for a survey. How do you do it? Are there any tips I am missing?
Cheers
Neil
#toptips #valuation #hmolandlord #hmoproperty #hmo #landlords
