May 11th, 2010 
Paul Part 2
As you know we recently blogged about our first HMO experience. Myself and Shimon Rudich did a JV with a builder we know on the purchase of a 7 Bed HMO. Deatils of this are below in Part 1.
As we started to let the Property after the Builder had finished the refurb things initially were slow. However, as we started to go beyond the usual letting agents approach we stumbled upon a couple of great internet sites. We have been using these sites now regularly and they have resulted in some high qaulity motivated tenants. We now have 5 rooms let with viewings lined up for the remaining two. We used Easy Room Mate: http://uk.easyroommate.com/ and another site called Spare Room
Tenats post there details and you post yours. The advantages over say Newspaper advertising is that you can seek out the tenants using the excellent search facilities. You can the direct message people who you think are ideal for you. Excellent catchment places for good tenants.
Check them out and please also do share with everyone any great ideas or systems you have for locating tenants!
Part 1- An intro to our JV Venture
We are investors too here at M S Law. We talk the talk and do the do as it were!!
One of the current projects that myself and Shimon are doing at the moment is a HMO. Although we have several investment properties this is our first HMO. We’ve done it as a JV with a friend and builder we know. The builder refurbed the property -worth 25k – for free and will do the ongoing management and maintenance at cost price only. In return we agreed to share the equity and rental profits. It’s a 7 bed HMO and we let the fourth room this week. Three rooms have been let for £410 pcm and one for £370 (smaller room). A good start with three rooms left to go. Aquisition costs thus far have been 161k so it will produce a nice yeild when fully let with good equity in there too. Hands off for us too with the builder doing the day to day running.
First HMO expereince is a good one….so far!!!
Found some really excellent sites for tenant finding as we have been doing the letting process – fantastic infact. Will share them shortly in another blog entry as they are a great Landlord tool for finding quality tenants. If you have any great tips or resources please do share them too with everyone!
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Hi, saw your blog on HMO’s. We are sourcing specialists in the North East and specialise in HMO’s.
If we can help in any way please feel free to get in touch.
Best regards
Claire
Office: 0191 417 5750
Mobile: 07773309111
Hi, Thanks for the info on HMO’s. I am looking for BMV Property, Lease Option Leads and Joint Ventures in the South Wales Area. If this is something that might be of interest to you or any of your Business Clients then I hope you can connect.
Thanks.
ADRIAN.
http://www.PropertyBuyerCash.com
Hi Paul, can you post some guidelines on the legal implications of the new laws for HMO’s recently implemented in April. eg: In just simple terms: new planning laws, landlords responsibilities, anticipated cost effect etc. Many thanks Tim
Useful article re legal implications at Ezine Articles
http://ezinearticles.com/?HMO-Planning-Law-Changes—The-Real-Deal&id=4108891
Hope this is of assistance
Frank
Hi,
Interesting how you are approaching this. Sorry but I have a huge list of questions – pm me if you want. But as a fellow HMO investor you have piqued my interest and I am always keen to learn more/ better/ different ways of doing things!
- What yield do you expect to receive when fully let?
- 7 bedrooms at 161k seems very good value does that include refurb costs or are they on top?
- Did you buy a modern or old building? detached/ terraced? 3 storeys?
- Did you manage to get funding for this as a HMO?
- Did you get planning for this or was it existing? does it require a licence?
- How many beds was it orignally/ have you increased?
- How have you costed your churn rate? (HMO’s have higher turnover than single lets).
- How much have you allowed per person for bills etc?
Finally – I also run http://www.VirtualLetz.com which is a free website where landlords and tenants can deal direct. We have several tenants looking for accomodation so if you want to cut out the agent and deal direct check out http://www.VirtualLetz.com and look for your tenants today!
Thanks
Sam
Thanks for the contributions guys.
I will make some posts in the days to come about the legal implications of the changes to HMO legislation for you Tim.
Sam- Thanks for your contribution.
When fully let it should be bring in £32k per annum approx. this is workign on an average room rent of £390 x 7 rooms x 12 months.
The 161k inc thepurchase, refurb and furniture costs.
Its a victorian terraced house
TMW do HMO funding and we will refinance it with them ultimately or with Platform who are apparently preparing to re-open funding lines in the next few weeks. We borrowed the money from our contacts to fund the purchase and will then refinance to repay this.
We applied for a licence which we have received as the house is in a HMO area and was a HMO (of a poor standard) in earlier days before we bought.
It was originally a 7 bed and we have retained this. The rooms are all well proportioned so we haven’t tried to squeeze extra rooms in. Plus, i think 7 room is good size. i think there may be an optimum in amount of rooms in one house.
The churn rate will be interesting. We have made big efforts to let to professional tenants. Its slow at first to get people into an empty house , but after three lets it became easier. Im hoping the churn rate will be 1 vacancy per 6 months. The staggered tenancies should also hopefully allow us to fill each vacany before a second vacancy arises.
Thanks for the info re Virtual Letz.. Do tell us more – how does it work, how much does it cost and how does it compare to sites such as Easy Room mate and Spareroom. When you have posted here do copy and paste the link and place on your Facebook profile so we can try to get more contributors to view and join in.
thanks
Hi Paul,
Thanks for sharing. I am impressed with your potential 20% yield
161k inc. refurb etc is very good value indeed
Whereabouts in the country are you (if I am allowed to ask!)
How many bathrooms/ kitchens have you allowed for 7 rooms?
How much have you allowed per person with regards bills – gas, elec, water, council tax, tv licence? (I take it that is included in the rent?) have they also got broadband and sky? (I note you are targetting professionals).
When you say “slow” how many weeks/ months does that mean?
To tell you a bit more about me – I also own a high street letting agency (Gorgeous Homes) which looks after my properties nationwide. If I had not had the agency looking after my houses I do not believe I would’ve made it through the recession. I have wonderful staff who understand empty properties are expensive properties and tenants are customers who deserve a high level of service!
As a landlord myself, I see that landlords want to connect more with their tenants – deal direct, and cut out the agency. Times are tough and that means landlords are looking at other ways of letting their properties – hence http://www.virtualletz.com
I believe private landlords and tenants need more help to find each other. http://www.VirtualLetz.com is a free matchmaking service which allows tenants to post wanted ads and landlords to post property ads. It then automatically matches and emails you (auto-magic as we like to call it!)
It’s free to use but we also have added services such as advertising upgrades, can sign up tenants with AST, can organise EPCs, gas safe certificates etc.
Hope that gives you a bit more flavour!
Sam
thanks for the input Sam. I will check out Virtual Letz..
We provide Broadband but we’ve let it to the tenants if they want Sky. Bills are included in rent. I cant remeber what we allowed for this off hand. It had one kitchen which is a nice size and 2 bathrooms.
Its our first HMO so fingers crossed !!!!
Hi people,
Being a large portfolio owner I understand the need for low / no void periods. My current portfolio consists of around 275 rental units which include a varied range of properties from 1 bed cottages to 9 bed HMO’s as well as the high end luxury stuff. By default this means I constantly need to find a varied range of Tenants.
A website I would reccommend for finding all tenant types is http://www.freedom4landlords.co.uk it links to over 50 portal sites
regards Tony
I have an 8 bed house rented out to students. Every year the agent tells me that I am already asking for enough rent. I am currently charging £350 per room plus bills. I am interested to know if your rents of £390 and £410 include bills and where your HMO is situated. What sort of rent increase can I expect to achieve this year, given the shortage of rental accommodation.
Rents depend on areas and supply and demand so i cant give you an answer to this. The only thing i can suggest is that if you are unsure perhaps speak to a few more agents in the locality