A Modern Day Landlord With A Great Business Idea Finally Gets The Help He Needs
Case Study Category: Bridging Loans
As a highly successful landlord looking to expand his business empire, Jeff Khan was always looking for new and more profitable areas in which to grow. He had been investing in standard terraced and semi-detached properties that needed updating before refinancing onto a BTL basis, however Jeff was no longer happy with the scale of this method as the ongoing squeezed rental profit margins were much lower that he was looking to achieve. Whilst generating ideas, he came across a badly fire damaged small brick-built ex-mill and following a eureka moment he had the idea of converting this into flats that could be used to compliment the student and young professional lets in the area. The project would give Jeff a vastly improved profit return as well as improving the view of the area that was being badly blighted by the appearance of the building. The structure of the unit was fine despite the dilapidated internal condition and as Jeff was renowned for the high end finish of his properties he knew that he would be on to a winner provided he could obtain the finance required for the purchase and renovation.
Although Jeff was a very well organised and professional individual, his local business bank, due to his lack of experience, was not able to arrange the required finance. However, luckily for Jeff, the manager had good experiences of recommended UK Property Finance in the past and gave him our number to call. We met Jeff on site and reviewed in-depth the reams of paper that Jeff had meticulously prepared in support of the development. Due to our wide ranging knowledge, we immediately knew that Jeff would be wasting his time and effort by visiting numerous high street lenders in his attempt to obtain and locate the required finance. High Street lenders usually prefer to fund tried and tested applicants and as this was a new and much larger venture than Jeff had attempted in the past, it was clearly not something for the traditional banks. With this in mind, we contacted a number of so called ‘challenger banks’ and gave a brief overview. These are smaller specialist lenders who are growing in stature and challenging the dominance of the much larger and better known institutions. A number of those approached could see the benefit in Jeff’s project and within a week we had 3 firm offers to discuss with Jeff. One of the offers included the funding for the full cost of the development and as such this was the lender chosen by Jeff.
We worked with Jeff in presenting the full case to the lender in the right manner and soon achieved a formal offer and subsequent funding for the project. Jeff, being Jeff, already had the builders lined up and work commenced immediately on receipt of the first tranche of money. A fully completed ‘show flat’ soon followed and within 9 months of the 18 month agreed term, Jeff had the project finished to the highest of standards and over half of the 200 flats had been pre-let, with deposits taken.
On Jeff’s behalf, we were able to obtain highly competitive longer term finance for the now completed and part rented property and within 12 months of initial receipt, Jeff had repaid the development finance and was sitting back and watching the profits roll in. It is anticipated, due to the rent receipts, that the property will be mortgage free within 5 years.
We are currently working with Jeff on his 2nd project.