Buying a HMO..?

[Sterillium]

Just pondering...

I have a bit of cash to invest and I was planning to buy property to develop / flip. (Mostly because I have a fair bit of time, quite enjoy building things and renovated my own house a few years back with a 40% value increase).

However...

I've come across an existing, fully let, licensed HMO which is broken down into units. Currently it's returning at 9.5% - which is appealing.

I'm wondering if this is a bit too "in at the deep end" in terms of moving into the realms of landlording, but then I think there's a pretty steady stream of likely punters (several low cost units bunched together) and it's already up and running.

But then again, do I want the hassle of filtering through the lower end of the market every time I lose a tenant etc..? My plan for setting up a HMO or a single unit investment rental was always hinged on being EXTREMELY picky about who I brought in - as it would be letting out any of the rooms in my own home.

Just thinking aloud really.

Anyone got an opinion?

[dazwalsh]

Hmos have a bigger tenant turnover, plus like you say its scraping the barrel of the market so I would avoid one as my first Btl.

I have 1 hmo (did have 3) but they are a lot of hassle, you work harder for that higher yield.

[Sterillium]

dazwalsh said:

Hmos have a bigger tenant turnover, plus like you say its scraping the barrel of the market so I would avoid one as my first Btl.

I have 1 hmo (did have 3) but they are a lot of hassle, you work harder for that higher yield.

This is exactly as I imagined it would be...

To be honest, I do have the time and the nouse to put the effort in and manage it, I suppose I just need to prepare myself for a steady stream of potentially difficult low-end tenants who treat the place poorly, traded off against good returns and likely reduced "empty unit" times... Anything better would then be a bonus.

Although, I lived next to a HMO for years (massive old building) and it was full of DSS and benfits tenants and actually a huge proportion of them were really good neighbours, compared to the wealthy, well-to-do neighbours opposite who were utter aholes.

[nct001]

9.5 per cent return for an hmo is not amazing.

What is location and numbers?

[13m]

Sterillium said:

Just pondering...

I have a bit of cash to invest and I was planning to buy property to develop / flip. (Mostly because I have a fair bit of time, quite enjoy building things and renovated my own house a few years back with a 40% value increase).

However...

I've come across an existing, fully let, licensed HMO which is broken down into units. Currently it's returning at 9.5% - which is appealing.

I'm wondering if this is a bit too "in at the deep end" in terms of moving into the realms of landlording, but then I think there's a pretty steady stream of likely punters (several low cost units bunched together) and it's already up and running.

But then again, do I want the hassle of filtering through the lower end of the market every time I lose a tenant etc..? My plan for setting up a HMO or a single unit investment rental was always hinged on being EXTREMELY picky about who I brought in - as it would be letting out any of the rooms in my own home.

Just thinking aloud really.

Anyone got an opinion?

If it's a traditional HMO, i.e. rooms with shared facilities I don't think 9.5% is astounding. If it were flats in a house not fully converted, a S.257 HMO as they are known, 9.5% is good if they are of a decent standard.