My First Commercial to Residential Conversion (Is It Worth It?)

In this video I explore the commercial to residential conversion potential of converting the top floor of this commercial retail property I recently purchased. I go through all the numbers to see if its worth converting the top floor only to residential use.

🏢 UpLevel Commercial Property Investing 🏢
UpLevel your property portfolio with Commercial Property. Learn how to find, research, analyse, buy and manage Commercial Property to maximise your cash flow and achieve financial freedom faster.

Add me on Instagram

Add Me on TikTok

Chapters:
00:00 Video starts
01:36 Property tour
06:13 Conversion thoughts
08:54 The numbers
11:27 Two flats worst, medium and best Cases
13:57 Refinancing - cash in deal
15:17 Key lessons

I give you a tour around the top floor which is the area that could be converted to residential. I explain some of the good and some of the bad, about converting it.

Bear in mind this is my first conversion so I am not confessing to be an expert at it, but did educate myself on the subject before buying it so I do believe I have followed best practice.

I attributed £100 per sqft for the conversion build costs.

When planning a conversion its best to engage an architect and you should include their fees into your costs. I use 11% of the conversion cost as a rule of thumb prior to quotes.

With anything it's always good practice to add in a contigency cost which I added in 10% for a contigency and would use a bridging loan to fiinance the commercial to residential conversion work.

I factored in a 9 month build time, along with stamp duty and legal costs. Fortunately there is no CIL applicable for this area. Check your local area for CIL charges which is a levy imposed by the local council for new development work. This typically costs around £100 sqm but vairous by local council.

When calculating GDV which is the gross development value I used 3 cases which were Worst, Medium and Best case scenarios with a view that the real costs (and profit!) should be in that range.

One the best reasons to look at commercial to residential is the potential for the increase in per sqft value. This is proven when you come to refinancing your development as its new value is based on the residential per sqft price. Refinancing will also allow you to get back your cash and profit from the deal so you can then go again on the next one.

Recommend Reading:


#propertyinvesting #commercialtoresidential #buytolet

[StephenDuncombetv]

I hope this gave you some insights into the costs associated with converting commerical to residential - let me know below YES or NO? Thanks for watching.

[natashagrays]

Thanks for your advice Stephen… I really appreciate it! Looking forward to the journey! Keep up the FAB videos-they are much appreciated! Thanks, Natasha

[daveukish]

Thanks Stephen for that great advice, I am looking in to the best ways to get into commercial property therefore I'm looking for more great advice like this, thanks again.

[Floatingnestsirius]

What did your actual numbers come out as. These were vague and fairly off the cuff. When it comes to what you actually paid is there a video on this.

[chrisbuller]

Great video Stephen, would you be happy to share a blank version of the spreadsheet?

[nameless]

Really good insights and break down of the costs. Thank you.

[eloisebevan]

Hi Stephen great video the run down of the numbers was very helpful! I have one question regarding these though, what is the loan for and how is the £2, 472 value calculated? Eloise 😊

[helenallen]

Thanks for Sharing Stephen, It is very helpful ! 👍

[mikgsal]

Great video thank you. I saw a similar one elsewhere but Grade II listed and very cheap is it one to avoid because its listed? Do you do any training on Zoom? Thanks

[maxboynett]

Hi Stephen, watching this a year late. Super helpful! Making me thing commercial might be the way to go. Have you managed to agree this with card factory? would be interested to follow the progress if so.

[Mac]

great videos, thank you. Is this a good time to invest in Commercial properties?

[michaeldark]

so what was the actual results? what further issues did you encounter.? does the result match your spreadsheet?

[veryviral]

Hi Stephen, great content! just what i was looking for, however, how did you arrive at the £134 price SQFT?

[natashagrays]

Hi Steven,
Thanks for this great video- I had watched it months ago but found new value in watching it again after your recommendation:-)
I have been advised that if I buy a commercial property (to use PD rights and convert to redo) as my 1st project, it will be more challenging to find a lender and higher rates for loans etc.. it will also be challenging to finance the deposit, stamp duty, architect and all other costs with my small budget. Would you advise doing a brrr with a vanilla buy to let before doing a commercial investment or an hmo?
Thanks, Natasha

[noble]

Can you do a video on commercial property you see in the right move app? It’s ambiguous, is it the business or property? Properties seem to cost 50k in Nottingham which seems unrealistic. I would like to start dipping my toes commercial projects, buy it in cash so I can go slowly through the process. What is the vanilla commercial property investment in the with a 200k budget? Thanks Stephen, love your channel

[warrengosling]

Excellent video 👌🏾most informative information I've found on developing

[adinaa]

Thank you for this, Stephen. How did you calculate the In the chart it shows 28.64% whilst if we add them (10%+0.85%+11%=21.85%) How did you obtain 26.673? Thank you

[ashleyspencer]

Great video did you get a capital allowance survey done, pretty much gives you two years free income. Vat I believe should also only be charges at 5% which is a nice bonus

[debbyshapiro]

Wow. What is easiest type of commercial property to convert to res?

[hakimvlogs]

By the way do you have final numbers on this? How it went?