7th April 2018
This week, I thought I would give you another example of a working HMO, which we are managing for one of our clients.
Our client has a house, located in London, zone 1. It had six bedrooms and was achieving a rent of £1269.23 per week. Now, on face value this was a great income for the property. However, after looking at the layout of the property we discovered that we could achieve a greater income from this property by turning it into an HMO.
This started with a conversation with the owner. Before we spoke to him, we had already done an income and expense projection, and had all the financial information lined up. The figures showed that we could potentially increase his income by around 25%. We met up with him and discussed our ideas and the projected figures; needless to say he was happy to procced.
We already knew the information regarding what changes were needed to the property for the conversion to an HMO, however, we contacted the council before the application was made and explained our intentions. This was done in order to create a working relationship with the council (it is best to have the council on side from day dot).
After a few basic changes at a cost of around £15K, and some additional costs for improvements, we were ready to open the door to the new HMO with licence pending (council paperwork can take its time).
We turned what was a nice family home with six bedrooms, into a seven bedroom HMO, with a weekly income of a little over £2,000 per week! This is even including a discount for the rooms, as the owner wanted them filled sooner rather than later.
Apart from the increased income on the property, other benefits include:
- When a room is empty there will be only a small dent in the monthly income, not a zero if this was one household
- The rooms move in on different days and times, so the rent will come in weekly, not in one bulk monthly rent
- There is potential to increase the rent every few months, when the room agreements renew
Now, if you would like to know if your property’s income could be increased, then please give me a call or drop me an email and we can have a discussion.