Case Study: Mistoria Group

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A private client approached the Mistoria Group in 2010 with grave concerns about both the physical and financial conditions of an investment property portfolio he had carefully built up over the years.

A private client approached the Mistoria Group in 2010 with grave concerns about both the physical and financial conditions of an investment property portfolio he had carefully built up over the years and was valued at £5million.

The landlord was extremely worried as his portfolio of Houses in Multiple Occupation (HMOs) was at serious risk of failing to comply with Statutory Licensing agreements, which would lead to severe financial penalties in addition to being removed from the register of Local Authority Approved Landlords. This action would have extensive negative repercussions to both the value of his investment portfolio and his future income streams.

Following an extensive consultation between Mistoria and the Landlord, it was discovered that the properties had been under the supervision of what had become a disorganised and poorly run
management company that had failed to provide the duty of care necessary to achieve the best results, whilst also allowing many of the properties to lapse into an unnecessary state of disrepair, which ultimately led to the portfolio underperforming as a direct consequence. Unfortunately, the previous management company couldn’t be held legally responsible for their actions as they had now become defunct and insolvent as a result.

A strategy was devised between the Mistoria Group and the client, whereby, the aim was to ultimately get the portfolio back on track, increase the property values and reinitiate the rental income streams. In order to do this, the first thing we needed to do was to undertake a full-assessment of the properties to discover the extent of the dilapidation, complete with structural surveys being carried out to assess the current condition of the portfolio (through Mistoria Surveys) and get them back to their original state, prior to renovating (Mistoria Renovations) and then furnishing them (Mistoria Furnishing) to standards that would surpass even the most stringent of Health &Safety Compliance tests and dramatically increase their marketability. This would lead to re-licensing, Local Authority Landlord Register Approval and permission being granted for the rental of the properties to recommence.

Whilst these activities were being undertaken, a complete lettings analysis was carried out by the professional estate agents to assess the rental potential, achievable incomes and subsequently the yields that should be getting realised and returned across the whole portfolio, although, the rent arrears at the time of taking over were in excess of £70, 000, yet through a lot of hard work by the whole Mistoria Team, MCC Accountants have now been able to reduce these arrears to only £4,000 and all the tenant deposits have now been registered in accordance to the tenancy deposit scheme.

Mistoria took on this considerable project with the following results:

• Following extensive renovation and refurbishment (£450,000), the properties were re-licensed, reinstated to the Local Authority Landlord Register and re-letting was commenced
• The updated and modernised portfolio’s value was increased by an impressive 20% (£1Million) through capital uplift and confirmed by an independent RICS re-evaluation and assessment report
• A complete re-letting and management programme was designed by our in-house team of highly experienced lettings agents in conjunction with the landlord’s wishes and occupancy rates were raised from 68% to 98%, providing a net increase in monthly income of over 40% for the landlord
• These improvements in turn, provided the client with a significant re-financing opportunity to release further capital to acquire additional Houses in Multiple Occupation (HMO) assets, which he did through the Mistoria Group, whilst also reducing the overall cost of the debt on the portfolio to a more competitive rate.

Disclaimer: The Mistoria Group endeavour to ensure that any information provided is accurate and correct at the time of use. However, it must be noted that these figures are representative only. The Mistoria Group cannot guarantee these figures will remain accurate and therefore will not be liable for any losses or damages incurred as a result of anyone relying on this information. The Mistoria Group reserve the right to amend or change any information provided at any time. We strongly recommend and advise that you seek independent financial advice from qualified professionals, in addition to undertaking your own extensive due diligence to ensure any potential property investments meet with your own needs and expectations prior to undertaking or signing any agreements. If you would like further information or if you would like us to speak to your adviser about any property products or services we offer, we will be more than happy to do so.

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