3 to 4 Bed HMO Conversion
HMO Project Summary
A property found through a local estate agent. It had been taken as a part exchange by a developer. As the developer was becoming more desperate to offload, I managed to get a sizable chunk off the asking price. However, the house needed a lot of modification in order for it to work properly as an HMO. Its ace attraction was it had 3rd bedroom in a large converted loft. This is very rare in my location, but it meant that I could turn this into a 4-bed, and it would give me a decent cashflow figure.
The main works were involved with removing a shower room on the ground floor and integrating the space into the kitchen / living area, creating a shared bathroom on the 1st floor and an en-suite in the loft. 2 chimney breasts were taken out. Unfortunately when the chimney breasts were removed some unexpected works were discovered. A major part of the 1st floor lath and plaster ceilings needed to be removed, and part of the flooring around the chimney breasts needed to be structurally strengthened. The mess was horrendous.
|Purchase Costs (stamp, legal, survey)||£3,000|
|Loan to Value||60%|
|Purchase Capital Employed||£|
The project sucked in a bit too much cash, but if I had to do it all again I would, as I don’t think I could have achieved the same cash-flow figure had I purchased something else.
|Planning Use Class Before|
|Planning Use Class After|
|Planning Acceptance Date|
The alterations required building regulations notices, these were done during the buying process and were approved prior to project commencement. The property is not in an Article 4 location and no license is required as it only has 4 bedrooms/tenants.
|Refurb Time Frame||£|
|Refurb Line 1||£|
|Refurb Line 2||£|
|Refurb Line 3||£|
|Refurb Line 4||£|
|Refurb Line 5||£|
|Refurb Line 6||£|
|Total Refurb Cost||£45,000|
An extensive update of the property was required, some minor structural works, a lot of re-plastering. New kitchen, a bathroom and an en-suite. I have designed the property to tick all of the boxes in terms of customer expectations and then some. I also designed the interior to withstand many years.
In order to simplify management, I specified a Masterkey system, so I have 1 key that opens all doors, an Inspire Internet heating control system that means the tenants can’t screw up the heating settings, easy to access isolation valves for wet facilities that enable quick and easy replacement of wet appliances and suites. For the tenants I specified a boosted wifi network that gives all rooms high-speed wifi, HDMI points to all wall mounted TV’s so that tenants can plug and play their own a/v devices, lots of storage, desks, integrated ambient and work lighting.
|Type of Licensing|
|Licensed # Units|
|Licensed # Occupants|
None… I like to keep things simple, and in my location there is no Article 4 and no licencing needed for a 4 bed HMO as long as there are no more than 4 individual tenants.
I pre-let this property so the day after photos were taken, all of the tenants moved in. I manage the property, which takes up very little of my time.
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|End Value (GDV)||£|
|Time To Remortgage|
|Capital Left In||£|
Cash Left In: £50,000
|Annual Gross Profit|
- Luck has something to do with it…
- Next one needs to be a 4-bed…