CASE STUDY: 6 BED HMO, North East
Updated: Mar 17, 2019
So we have decided to do some case studies on some of our projects to date, and we asked our lovely followers on Instagram what they'd like to see first. The overwhelming vote was in favour of one of our Houses in Multiple Occupation, otherwise known as a HMO!
Now you may or may not be familiar with the concept of a HMO - it's a property which is let out on a room-by-room basis, rather than an entire house let. A property let as a 'large' HMO has to adhere to very stringent regulation, the minutiae of which vary from council to council. The property we are featuring in this case study was actually our very first investment property and it's a belter!
We would caveat this with some advice to a newbie portfolio builder - start with single-lets if you can; these HMO babes have super-sexy cashflow, but there's a lot of regulation to absorb and stay abreast of, and the more tenants you have, the more you have to manage!
We learnt some brilliant lessons on this project, we've included a small handful below, read on!
Stand out from the competition. Sell the lifestyle.
Our Letting Agent at the time told us to avoid this area as it was saturated, and rooms were hanging on the market unrented for long periods of time.
However the market was full of properties that looked like this...
We thought we could definitely do something to stand out. So we bought the property pictured above.
Here's how it ended up looking:
Gorgeously styled bedrooms, fresh communal areas, appealing en-suite bathrooms. In a sea of tired, mushroom-coloured rooms these rooms hit prospective tenants smack between the eyes.
In a saturated market this property was 100% let within a very short period of time and has been consistently occupied ever since.
Cheap isn't the end goal
We spoke with a number of builders before we started this project and the build quotation varied wildly from the cheapest being £9k, to the most expensive being £27.5k. The £9k quote was a young builder who was hit and miss on the communication. The more expensive quotation was for a much more experienced builder with a track record of stellar projects.
We ended up going with the £27.5k. On the first day of the build, 8 tradesmen were full steam ahead and 6 weeks later we delivered 6 beautiful rooms to the room-let market. Happy times. The cheap builder took on too much work and ended up disappearing for a while on some fellow investors, and massively going over deadlines...
Moral of the story - don't always go for the cheapest option. Bullet, dodged!
Do it right the first time
We re-carpeted, re-plastered, re-wired, re-painted, refurbed the kitchen, created brand new gorgeous en-suites and installed all the safety features required for our HMO license.
The only room we didn't really touch was a 'reasonable' family bathroom on the top floor. Nearly all of the ongoing maintenance we have had since the property went live have been to that bathroom - based on the spend to date, we may as well have just put in a new bathroom in the first place - would have saved a number of unnecessary headaches!
GIVE ME THE NUMBERS!
Let's be honest, none of the above matters if the numbers don't stack.
Here are the high level numbers:
Who would do that deal?? We'll have a few of them!
Got any questions on the above? Drop us a line to firstname.lastname@example.org or give us a call on 07546 820 941.