Partner Completes on £1.5M Essex Development Project
Partner Completes on £1.5M Essex Development Project Loan to Purchase Part-Build Project – Deal Summary One of Brokerplan’s network partners has recently completed on a £1.5M loan with Octane Capital! The clients approached our network partner looking to purchase a half-build project in Essex, which had sat untouched for four years after being abandoned by the previous developer. The clients were looking to take out a facility that would assist them in purchasing the development site, complete the refurbishment works of the existing property and also with the building of 10 flats and 4 houses on the grounds of the property. The Brokerplan partner worked closely with the team at Octane and managed to get this case from application to drawdown in just 20 days, receiving £33K in commission from the Procuration and Broker fee on the case. For more information on how you can become a commercial finance broker and earn commissions on property and asset finance deals call 0333 405 6666 or email info@brokerplan.co.uk for more information
Case Study – Stoke on Trent BTL
Case Study – Stoke on Trent BTL Our AR was approached by a client who owned two unencumbered BTL properties of low value in the same street in Stoke on Trent, for a refinance to release some funds for a forward purchase. He believed each property was valued in the high £40ks. Our regulated team were unable to place the application due to the low values. As the client was looking to refinance both properties at the same time, and having previously completed on a similar case, we approached our lending partner Shawbrook who have some discretion on their minimum value of £50,000 when there is more than one security. Once the client had agreed to proceed with Shawbrook, we started the application on 4th October, requesting a £75,000 loan against a total value of £100,000. Shawbrook advised that they were able to use the Automatic Valuation Model (AMV) and agreed a maximum loan of £71,900. As the client wasn’t entirely sure of the valuations, he was happy to proceed on this basis and also avoided valuation fees and delays waiting for the valuation to take place. The indicative mortgage offer was issued on 10th October and all requested documentation provided by the client immediately. This made the process quick and helped the case immensely and as a result was offered on 22nd October. As he already owned the properties, Shawbrook advised that the client could go ‘Non-Represented’ on the legal side, so the legals would be actioned by Shawbrook’s solicitors only, thus again saving both time and money. From there, the lender moved swiftly and the case completed on 6th November, with both the client and the AR very happy with the service provided. Total fee income of £1902.74.
Case Study – Semi-Commercial Capital Raise
Case Study – Semi-Commercial Capital Raise Executive Summary: Client: Limited Company Client was a highly experienced property developer/investor located in the North West The client overall portfolio consisted of 136 Residential Units and 11 Commercial Units, with a combined value of c£18m vs. v£9m of debt All debt is on a fully amortising basis Debt was spread with a mixture of Tier 1 and Tier 2 lenders In 2018 the client had purchased an empty retail outlet on the ground floor with two floors of empty office space above consisting of over 30,000 square feet of space Successfully achieved planning approval for 28 apartments (split between 1 and 2 bedroom units) and 3 commercial units on the ground floor. The smallest residential unit was c45 square meters Due to the overall size of the project, client split the property into two separate freehold titles The 1st Phase was to create two commercial units (Restaurant and Tanning shop) as well as developing 12 x 1 bedroom apartments on the upper two floors During the initial development stage of Phase 1, the client created 14 individual 125 leases, with the freehold being held by the ‘Groups’ holding company The commercial units were completed at the start of 2019, with 2 x new 5-year leases being agreed The two commercial units are generating £33,700 in annual rent The residential units were given final Building Control approval on 5th September 2019 All 12 residential units were immediately let by way of standard AST agreements generating £90,120 in annual rent Client estimated an indicative value of c£1.65m across all 14 units Client Requirement Client wanted to borrow up to 75% of the indicative value of the said property Client was looking for a committed term of up to 25-years The client wanted a fully amortising facility over the committed term, ideally with an initial 5-year fixed rate However the client No1 requirement was for the facility to be drawn no later than Friday 4th October, as the funds were required to purchase an iconic commercial property in the same town centre, which the client had committed to purchase no later than 4th October Background The client made a direct approach to the Client Manager within the practice with whom he had undertaken 3 successful facilities whilst the Client Manager was working at Aldermore before joint Whiterose Finance as a Senior Client Manager The client manager arranged a site meeting with the client on 5th September, the same day the subject asset obtained its final building control approval notification from the Local Building Control Officer Client Manager’s Approach The client manager made contact with 3 potential funders and provided he funders with detailed terms of the client’s requirements, together with comprehensive details of the clients existing portfolio and borrowing One lender wanted to restrict the term of the facility to 20-years due to the, commercial and residential elements of the asset being pledged as security One lender would be happy to consider 75% Loan to Value and were happy to consider an initial 5-year fixed rate – however they were not prepared to commit to the client’s requirement in terms of completion The client manager also approached Mark Dolphin our Business Development Manager from Redwood bank who on his recent visit to the practice advised of the willingness of the bank to look at the interest rate for top quality proposals – which this case clearly was I provided Mark, with a detailed synopsis of the proposal along with the client’s requirements in terms of completion on 10th September 2019 I received a very positive response from Mark with indicative terms, which split the commercial properties from the residential properties Due to the quality of the client and the overall proposal Mark was happy to recommend a reduction in Redwoods standard interest rates by c1% The client manager provided the indicative terms to the client, which although was not exactly what the client wanted: lack of an available fixed rate, maximum Loan to Value of 70% was accepted on the basis the lender committed that they could complete the transaction within the clients timeframe Events to Completion Upon receiving a positive response from the client 11th September, the BDM prepared and submitted a detailed credit appraisal by the CoB on 12 September having already obtained the buy-in from Head Office in relation to the timescale Head of Credit approved the facility by close of business 13th September, but due the size of the facility the request also required the approval from 3 board members Received confirmation a sufficient number of board members had approved the facility by lunchtime on Saturday 14th September Client Manager advised the client by text and advised that arrangements re valuation and legal will be done on Monday, along with the credit backed facility letter By 17th September, the client had decided on the surveyor re valuation from the two who were prepared to undertake the request and report back within 5 days of site visit and also requested Redwood appoint Freeth’s as there solicitor Valuation date set for the following Tuesday 24th September, with the report being available by Monday 30th September By the time the surveyor was due visit the property, he was in receipt of the Certificates of Title of all 14 properties from the lender’s solicitor Our BDM also arranged for his colleague to undertake a site visit on 24th September Meeting arranged with the BDM and the client for the Wednesday 26th September Valuation report received Monday 30th September Valuation slightly lower than anticipated by c£20k, potentially reducing the client overall debt quantum by c£14k BDM suggested that the arrangement fee (2%) is added to the residential element of the facility rather than being deducted The commercial element of the proposal also exceeded the lenders maximum 70% LTV by 0.5% – the BDM suggested the facility remain unchanged as within 12-months the LTV would be back within 70% LTV Request approved by the Head of Credit
Case Study – Commercial Portfolio Refinance
Case Study – Commercial Portfolio Refinance Executive Summary: Clients: Husband & Wife operating as a Partnership Clients were experienced commercial and semi-commercial landlords with over 30+ years experience Clients owned 8 individual units with an approximate vale of c£1.9m, generating an annual rental income of £188,000+ per annum The clients had existing borrowing of c£536k Clients were looking to re-finance the portfolio to c£850k c45% LTV, which would allow the clients to undertake significant portfolio improvements and to leave surplus cash for annual repairs and maintenance, which would ensure the portfolio, remained in excellent order The portfolio enjoyed 100% occupancy, although a majority of the commercial leases were less than 3-years before expiry The clients had lending facilities with Danske Bank and Bank of Ireland both of whom declined the clients request to increase the level of borrowing Issues Clients ages with Mr ages 70 and Mrs aged 66 All of the properties were located in Ballymoney Northern Ireland Mr & Mrs both were directors of a number of limited companies which had entered into Liquidation, following a CVL Approach Discussed the proposal with both Atom Bank and Assetz Capital as both have a strong appetite for commercial property located in Northern Ireland Both lenders wanted details of the client’s succession plans and whether they were involved in the portfolio on a regular basis Both lenders were advised of the clients directorship of failed companies and were provided with full details surrounding the circumstances around the companies failure Atom Bank unfortunately could not get fully comfortable, however Assetz Capital were happy to move forward with the proposal at an expected LTV of c45%, albeit the interest rate was significantly higher Clients decided to go with the Assetz ‘Agreement in Principle’ which was expected to generate c£300k in additional ‘cash’ Facility was part amortising with a 15-year profile and a 5-year commitment Upfront costs The valuation cost of the portfolio was in excess of £8,000, paid prior to any formal offer Upon receipt of the reports and valuations, the actual Loan to Value increased to 51%, which increased the borrowing rate by 0.25% to the client as the Loan to Value had exceeded 50% Client accepted the valuations and agreed to move forward with the next stage – legal This required the client to pay his solicitor a cost undertaking of £6k (to cover Assetz Capital legal fees) + the clients own upfront legal fees, resulting in a further upfront commitment of £10k At this stage the client had committed a total of £18k in fees Issues Faced during Legal Process Many times during the legal process the client was considering withdrawing, and it was only the strength of relationship the Authorised Representative had built with the client, which ensured the case continued through until completion Overall Length of Case 16-weeks from initial approach from the Authorised Representative through until funds were received This case generated a Gross Income of £17,300 and was the Authorised Representative first submission Senior Client Manager Overview This case is a great example of what can be achieved where the Authorised Representative was fully prepared to be engaged with both the client and his client manger at ALL stages of the process, including getting the clients authority to speak directly to the clients solicitor and worked in conjunction with the case manager as follows: Chasing up the legal conditions imposed by the clients i.e. Asbestos Survey/Management Report across the portfolio, EPC Certificates for all properties with a minimum rating of E Collecting the Assetz Capital Relationship Manager from Belfast Airport to introduce the RM to the client, which included a tour of the subject security
Case Study – Chesterfield Development
Case Study – Chesterfield Development Case Overview We were approached by a client wanting to buy an investment property in Chesterfield, a single dwelling with a large garden, on the market for £260k. The client was prepared to pay £280k but he only had £60k of his own money to put in. He was a contractor for a large development company but had not been involved in any builds himself, if anything this was more like a refurbishment as the house was mortgage-able day one but could have done with a spruce up. This looked a no-brainer.Not only could we only get him at best 80% of the purchase price (£208k) but at a yield of £650 pcm this wasn’t even a good investment buy. Then we dug a little deeper… The client had made an arrangement with the vendor 6 months ago who was in no hurry to sell. If the vendor would wait 6 months and sell to him he would pay over the asking price but only if the vendor cooperated with him in securing planning permission for a new build with separate access in the garden. A number of neighbours rs had done something similar and ultimately the client was successful but was now struggling to secure funds to buy the property having sunk £20k into the planning process. We suggested that he approached a solicitor about splitting the title to the land at purchase as this would save him money on tax later (by attributing the value now rather than when built), but more importantly it would allow us to put two loans into place day 1. A buy to let mortgage on the house without the garden at 80% The land loan element of a development bridge on the garden which would lend at 70% gross followed by all of the build costs. The new build would cost 80k to build and be worth 220k on completion. We got an 80% BTL lender to get their surveyor to value the house without the garden and it came out at £240k so the client could borrow £192k from them. The bridging lender valued the land with PP at 80k and he was able to borrow once fees and interest were deducted circa £40k net day 1 then all the build costs in tranches in arrears. This gave the client a total day 1 borrowing from both lenders of £232k which even on the inflated purchase price of £280k allowed him to complete with his £60k- just! When the new build was complete we were able to secure him a buy to let at 80% which on the £220k gave him £176k – more than enough to pay off the £136k bridge. In fact once the legal and other costs were factored in he had about £30k left over. The client now had two properties with £58k of equity in one and £44k of equity in the other. He had sunk £80k of his own monies in but had been left with just £50k in the project. The properties were earning him £650 +£600 pcm so a gross income of £14,700 per year. With plans to refurbish the first property at the end of the buy to let discount period and hopefully take even more cash out on an increased value he was a happy man. As was the AR. We had two buy to let’s where the Proc. Fee had been only 0.5% so £368k = £1,840. The £136k bridge had paid a Proc Fee of 1.5% so £2,040. The real earn though was in the broker fee as the client had agreed to a 1% FSA on the entire borrowing as we had effectively created the loan structure for him so at £504k total the client paid £5k. Just short of £9k in income for a project that on first assessment had seemed impossible. Prospects of future earning on the refurbishment of the house and a client looking to use the AR for his next project as added bonuses.
Recent Partner Case Studies
Recent Partner Case Studies Here you can read some of our current network partner’s recently closed case deals and the commissions they earned.
Case Study – HMO Development
Case Study – HMO Development Development Finance Deal with Bridging Finance Client: Highly experienced multi-unit developer and landlord. Owns HMO properties with licenses. 2nd Deal (Returning Client) Purpose of Loan: Purchase & Development – £512,000 loan (Development Tranche 200k, initial Advance 312k) – 12-month loan Project: Development of former 18-bedroom, 2 storey care home Into a House of Multiple Occupancy (HMO) with four ‘cluster’ flats (2 per floor) of 5 and 6 beds – Each flat having shared kitchen/dining/sitting room, each bedroom with its own bathroom. Exit: Refinance on completion Partner Commission: £512,000 of funding was arranged with Mint Bridging for the client. 60% of the total case commission was paid to the partner – Which totalled £6,144
Case Study – CBM Cafe Purchase
Case Study – CBM Cafe Purchase Earlier this year one of Brokerplan’s network partners approached the case team to source funding via a commercial mortgage. The client who has an existing mobile catering business which they have grown over the last 14 years, intended to buy a freehold building consisting of a trading café and a self-contained residential flat, for a total consideration of £225,000. The client had a gifted deposit from family and had equity in their own property. The café’s current owners were retiring and winding down the business, leaving an opportunity for someone to take over the business and help it reach its full potential. £145,000 of funding was arranged with Natwest Bank for the client which has enabled them to purchase the café and flat. 60% of the total case commission was paid to the partner – Which totaled £1,566.
Case Study – Accountancy Acquisition
Case Study – Accountancy Acquisition Unsecured Business Loan for Accountant We were approached by an accountant who needed a loan for £500,000 to acquire the goodwill of an existing accounting practice. This would allow a significant synergy of staff and skills and the acquired business was to be fully incorporated into the existing accountancy business. The client already ran a profitable accountancy practice and although we suggested that either he or ourselves could approach a high street lender we were told speed was of the essence. The client had already approached a previous broker who had put together a quite competent package of lending for £275,000 with a “coalition of the willing”; a series of asset finance providers working together, but when we worked out what they were charging the client as a blended overall cost of finance it was over 14% APR over terms of 36 to 60 months. We structured a deal from a single provider instead that didn’t quite get to the same level (£250,000) but at a rate of 8.05% APR fully over 60 months, this enabled the client to negotiate with the vendor a higher level of deferred consideration (with the balance in 12 months) and so these funds proved to be enough. From application to approval took 1 working day but in the main due to the client timing his purchase with the vendor it then took a further 2 weeks but at the end of this 2 weeks the money was in the clients account. To win the business from the other broker the fee structure was minimised to a £4k earn but as an example of how to take business away from the competition who had, by our calculations, put in over £10k of fees into their proposal this shows solidly the speed of unsecured business lending. In addition – with this lender we can loan up to £500,000 and so when the client has to pay the balance of purchase in 12 months’ time then of course we are well placed to also provide that finance and of course …. earn further commission.
Case Study – BTL Fishguard
Case Study – BTL Fishguard Case Overview Type of Loan – Buy to Let Purpose of Loan – Refinance to Capital Raise Security – 2 bedroom terrace in Fishguard Value of Loan – £108,750 Details & Difficulties Time taken from submission to completion – New case came into the practice on the 5th February for assessment, application put through to Precise Mortgages on the 13th February and the cases completed on the 28th March. The security is adjacent to the applicants residential – Some lenders will refuse applications on this basis. One applicant had an outstanding tax bill that needed to be cleared prior to the offer. The valuation came in at £10,000 lower than anticipated so the available loan was reduced accordingly. Had to take a 5 year fixed rate due to the rental stress test. Partner Commission Gross Fees Generated – £1631.25 Lender – Precise Mortgages Any Subsequent Fees/Opportunities as a result – client also currently has a commercial application with us to refinance their commercial property
