Sunderland SR4  

Leasehold interest in Commercial unit & 5 x 3 bedroom flats with rental income.

Investment opportunity for sale which the vendor needs to dispose of quickly due to timewasters pulling out at the last minute.
The present lease is between Sunderland City Council and the vendor.
Description of properties
There is 6 properties in total, 5 x 3 bedroom flats and 1 commercial property, which is currently used by the vendors property maintenance company and the vendor would like to carry on renting from the new owners subject to negotiation of rent payable. All flats have long term tenants that the vendor would advise keeping as all but 1 of these have the rents paid direct to him via direct debit or straight from housing benefit. The other benefit of keeping these existing tenants is you will not have to do any work on the flats for new tenants i.e. decorating and minor repairs.

3 flats and the commercial unit are in Grindon and 2 flats are in nearby Redhouse.
Rental Income
The current LHA rate for a 3 bedroom flat in Sunderland is circa 130 per week, which would generate an income of around 33,800 plus additional income from the commercial property (which is to be negotiated)
Currently have 4 tenants who are on LHA benefit and 1 working couple.  4 of these are received by direct debit and 1 cash payment each week
Tenants are currently on AST but the shortest period that any of the tenants have been in the property is 2 year, some of them have been in around 8-10 year.
Rent and other payments to council
Once the transfer is complete the total rent payable is circa 12,000 per annum. this includes all insurances, annual gas and electric safety certificate, structural and communal repairs and the roof. the landlord is
not responsible for any rates or council tax.
Terms of lease
Previously a 5 year lease which was automatically renewed for a further 5 years even though the vendor did not pay them any rent during this initial period. The vendor had previously instructed an agent to deal with the sale who made his own enquiries and was informed the council would have no problems with assigning a 10 year lease, possibly longer, with rent review every 5 years.
Freehold option
There is an option to buy the full block freehold but this was not beneficial to the vendor at the time as the mortgages would have been far more than the rent he currently pays.
Additional properties
There is an option to take over further empty properties that the council currently have on the market, these include one directly next door to the existing one on Galashiels Road, Gindon, that the vendor previously had but gave it up. in order to take over these you must have a commercial property rented off the council. In this case this will be the property which the vendor currently uses for his property maintenance company. As the council no longer have a department that rents out residential properties, these will be made available on a commercial agreement exactly like the one he is proposing to transfer to an investor. Each 3 bedroom flat is circa 4000, which would then produce a rental income of 6760 for you.
They were valued by Rook, Mathew Sayer who valued them and marketed the leasehold interest at 100,000 however this was when the vendor  was only receiving 26,000 per annum.
In order to complete a QUICK sale the vendor would be prepared to accept a less figure subject to negotiation.

In order to complete
All the council need in order to assign the lease over to you is a trade and financial reference, this can be done as easily as speaking with your bank manager over the phone and completing a faxed document. After a price has been agreed the vendor will write to say he has no objection to the sale to you. As the council are aware that this is on the market all of this will be done immediately.
The vendor would also have no objection transferring the rents over to you with immediate effect once a price has been agreed or a deposit has been paid.
If there is any other information you require please do not hesitate to contact and it will be obtained for you.