Buying a property to convert into a HMO?

[DevonshireDumpling1]

There is a property just gone up for sale nearby (4 bed townhouse) in an area where there are a number of HMOs.

The property was most recently used as a rental property (landlord selling up) - I would be interested in buying this and converting it into a HMO with 6 bedrooms. 4 existing rooms and convert two reception rooms into bedrooms.

The property already has two family sized bathrooms and a large kitchen which I will just need to renovate (current K&B were installed in 2001) - so they really need updating now.

The property is marketed at £230k which I am happy to offer the asking price as this has been marketed so cheap to sell. Will need to spend about £50k all in all to do the renovation works and make the property HMO compliant.

Plan to rent the rooms out for £700 a month - £4,200 a month gross - with mortgage, bills and other expenses including employing a cleaner - then I will make a profit of approx £2k a month.

You do you 🤷🏻‍♀️

HMOs seem to be being put up for same a lot where I am but you know your local area...

Planning permission needed? EPC rating? Licencing requirements? Impact of Rental Reform Act?

Do your homework and proceed with caution.

Being a landlord is no longer for amatuers.

As someone that needs a 4 bed and cannot find one I honestly HATE people doing shit like this.

Their are literally ENDLESS 1 or 2 bed bungalow/flats and 2 or 3 beds houses on the market but affordable 4+ beds are virtually non existent... leave them for those that actually need them.

I am an experienced landlord of over 20 years.

I have (and never will) touch a hmo or convert a property into one.

There are much more legislations that need to be in place and it’s more rigid than a standard rental property. You have to be VERY hands -on, on call more so than a landlord of a standard rental. As HMOs are generally furnished. You will be responsible for replacing anything that goes faulty or damaged.

It goes without saying that you’ll be taking another house from the market that is already stretched. If it was me then I’d probably just keep it as a house but renovate it and let it out to a family. Depending on where you are located, a property of that size, you could rent out for up to £2k per month. Mortgage would roughly be about £600, you would have no utilities, just landlord insurance and then you’d need to create a ‘maintenance pot’ for essential works - electrical/plumbing.
You’d still make a profit for sure.

I know zero about this topic but clearly they're not popular. I have got two young adults who will be looking to leave home in the not too distant future, is this kind of property not ideal for young people in their situation who couldn't possibly afford to buy? Starting out and not wanting to settle in a certain area? Why are they any less valuable as tenants than a family?

In my area all applications for hmos have failed and all received multiple objections from locals. You could end up buying a property that you can’t convert so make sure the numbers stack up as a rental for the current number of bedrooms.

In my area only 10 percent of a street can have HMO properties so I would do some research before making an offer, also if converted two living rooms into bedrooms you would no longer have a communal living space which would be against regulations

Zero sympathy for anyone who wants to make profit out of packing as many people as possible into one house as if they were battery chickens.

There are more ethical ways to make a living...

This.

👆👆👆 this, paying £££ and they don't even have a communal living space

I have a property licensed as an HMO but which I rent to a group of sharers. From observation easier than the property next door which is rented by room. Fine if the random group of strangers get on. Hell if they don’t.

Mate, you're brave posting about HMOs on MN!
Just double-check that you're not in an Article 4 area—absolute PITA.
And see if you need to get a licence—another ripoff & double PITA.
Good luck!

Whilst HMOs serve a purpose most people would prefer to use a spareroom type option and have fewer housemates and more living space.

My DS lodged when he first left home. Lived with a professional guy , who owned it. Great arrangement and not battery chicken like.

You have to leave them a lounge and kitchen!