Re: How to calculate evaluation for a property that has been converted to flats when there are no other similar properties on the neighbouring streets
I want to make an conditional offer (subject to building inspection survey) on a property that has been converted into a block of 5 studio apartments but I am hesitant as I don't know how the property would be valued by the bank. The property is based in Liverpool, postcode L7 and I will be using a mortgage. The gross income is £25,000 per annum and is fully tenanted. I have done the numbers and if my offer is accepted then the ROI would be 22%. (This is assuming that no extra capital expenditure is required). When I do my analysis, the expected cashflow and ROI meets my criteria. But I don't know how to value the property as there are no comparables nearby of a similar property. The other properties on that street are 3 and 4 bed houses. Therefore, I don't know what the bank would value this property and I don't know if/when I can get my money back out. This is an issue as I need to raise the cash to invest in this property through private loans. I need to raise £64,500 to pay for the deposit, stamp duty etc.. Not knowing how the property would be valued by the banks, means that I am uncertain on when I can pay back my investors.
How does the bank value properties that have been split into blocks of flats?
Many thanks for you help.