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gary_e

How to accurately predict the GDV of a HMO

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I am a property developer and have recently completed 2 HMO conversions. The first one was a conversion of a house into a 6 room HMO with a total spend of £240k. It is very specialist and each room has an en-suite etc. The works included a side and rear extension and an L-Shape dormer in the loft creating 2 extra rooms. Unfortunately about £100k is stuck in the property as the spend was too much and the value not high off to pull my money back out. I am accepting of this and it still gives a good rental return. However, I find it very difficult to estimate the GDV of any future potential HMO conversions due to very little comparable sales evidence and the 'dark art' of valuing a HMO. I have had a number of valuations at the property with a range of figures. I have had a traditional 'bricks and mortar' valuation and an 'investment model' valuation. For example a Connells (bricks and mortar) survey valued the property at £495k whilst 2 specialist valuations gave a figure of £600k. It is very important that I am able to get out my investment money at the very least so that I can use it to finance the next project. I would be willing to get drawings completed and the works priced up and then get a chartered surveyor to independently value the property before committing to the purchase but all this would take several weeks and cost upwards of £2k. I would like to be able to just get a quick understanding on whether the deal stacks up (before I use an architect and surveyor) with the main focus on what value a lenders' surveyor is likely to put on the property when it comes to refinancing. Any experience and help shared would be much appreciated. I feel I am making hard work of this and it can be very frustrating. 

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Would love to know too. 

As I'm sure you are already doing, you've got to plan worst case (bricks and mortar comparables at similar Sqft). Commercial refinancing is a dark art and unless you have specifically changed use and difficult to prove it can be used in it's original use, it's hard to justify commercial valuations. 

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