12 Units | Sell For Profit Strategy
The development is located in the village of Great Mongeham which is located approximately one mile from the town centre of Deal in Kent, where there are a variety of independent shops with major supermarkets such as Marks and Spencer and Sainsbury’s also nearby. Deal is located 20 minutes from the A2 which links directly to Canterbury and London. Folkestone and the Channel Tunnel are also 20 minutes away.
The development site is situated approximately 2 miles away from Deal railway station which offers regular services into London taking approximately 1 hour and a half, making it an ideal commuter town. The site is also located close to the popular Deal Pier which is currently undergoing a £600,000 refurbishment to mark its 60th anniversary. The investment will include work to refurbish the iconic art sculpture and clock above the pier entrance.
With nearby amenities including independent wine bars, restaurants and a local farmers market on the first Saturday of each month, this area is popular with middle age professionals and families.
The Deal property market, over the last 5 years (as recorded by the House Price Index), shows prices have increased by 28.3% which represent an annualised increase of 5.7%. To break it down further, over the last 3 years there has been a 10.9% growth representing an annualised increase of 3.6%. This performance, along with a strong economic outlook, makes Deal an ideal area to invest in.
The proposed exit strategy is to sell the units on the open market, with sales expected to begin 6 months before the completion of the construction works. As it's a 12 month construction programme, the marketing on the new houses will begin in month 7. This approach should ideally see some reservations of units secured before construction has been completed. Said approach helps to repay the senior debt facility without going too much into the 6 month sales period allocation, thus meaning any interest savings will create further profit for the SPV.
The houses will be marketed and sold via local estate agents, with the target market being a mixture of owner occupiers, first time buyers and single let landlords.
Based on sold comparables we expect to be able to sell the properties for the following prices:
3 bed terrace houses - £360,000-£370,000, 3 bed semi detached houses - £440,000-£485,000 4 bed detached - £550,000-£565,000
These sale estimates have been supported by a development sales appraisal report from LSL Land & New Homes, which is an estate agent based in the local area. The appraisal can be downloaded from the Documents section above. You'll note their GDV estimate totals £5,310,000 which demonstrates our targeted GDV of £5,140,000 is conservative. Should we be successful in selling the units for more than the GDV we've targeted, this will mean more profit for the SPV.
Senior and mezzanine debt will be repaid first together with the post sales costs and corporation tax set out in the financials section below. Investors will then be repaid their 40% share of the net profit pro rata to their shareholding.
|Unit||Type||Area||Proposed Price||Sale Price||Uplift||Status|
|1||3 Bed End of Terrace||105.00m2||£350,000||£350,000||0.0%||Reserved|
|2||3 Bed Terraced||105.00m2||£350,000||£358,000||2.3%||Reserved|
|3||3 Bed Terraced||105.00m2||£350,000||£358,000||2.3%||Reserved|
|4||3 Bed End of Terrace||105.00m2||£365,000||£365,000||0.0%||Reserved|
|5||3 Bed Semi Detached||130.00m2||£440,000||£440,000||0.0%||Available|
|6||3 Bed Semi Detached||135.00m2||£450,000||£455,000||1.1%||Reserved|
|7||3 Bed Semi Detached||120.00m2||£420,000||£435,000||3.6%||Reserved|
|8||3 Bed Semi Detached||145.00m2||£465,000||£465,000||0.0%||Reserved|
|9||3 Bed Semi Detached||155.00m2||£475,000||£475,000||0.0%||Reserved|
|10||3 Bed Semi Detached||160.00m2||£485,000||£490,000||1.0%||Reserved|
|11||4 Bed Detached with Garage||173.00m2||£550,000||£610,000||10.9%||Reserved|
|12||4 Bed Detached with Garage||178.00m2||£565,000||£625,000||10.6%||Reserved|
The above table shows the original proposed price, forecasted as part of our investment memorandum, and the actual sales price. The uplift column identifies whether we sold the dwelling for more than originally forecasted. On average, for this particular development, we have achieved an uplift in sales values of 3.1%
The photos show the condition of the property before construction work commenced.
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