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I'm ready to buy my first HMO.
I wan to get all the bill payments onto a spreadsheet so i can work out exactly how much i will be earning per month per property.
After watching a video by Samual Leeds on youtube, he suggest that a £100,000 four bed house in the right area could rent out at £350 per room, so a total of £1400. He says approx once you've paid mortgage bills, management cost etc should should earn about 50% of this so around £700 per month.
Can somebody give me a break down of each bill and approx what it would be please. (this will help me so much)
Appreciate the help with this
Well if Samual Leeds says it, it must be true!
No matter where you go, there you are...
Lol ? ?, Samuel Leeds used to run non stop kids https://www.nonstopkids.co.uk/, where he used to entertain kids , so before getting carried away , do some research for deals which looks to be good to be true , check how many empty HMOs are there in that area. There is a very big thread on Samuel Leeds go through that first
Would give Grimsby a wide birth, Samuel himself bought two HMO's there and struggled to fill the rooms along with others he sold packaged deals to ;-) if you go down this route, Location, Location, Location!
Always good to hear from one of Samuels disciples :-)
Is there a website i can check to see the average bills on a property? Or does somebody have rough on hand knowledge of this?
Really need this information as bering a first time HMO property investor the mortgage rate will be higher than usual.
Mate first check how many empty HMOs are there, the rooms should be rented first before paying bills .
If you look on Zoopla at a property it gives you estimated Energy & Water, I would have thought £120/£180 Energy, Water £50/75 (more if metered), Sky Basic/Broadband/Phone Line £40/£50 if you budget £275 - £300 worst case, your energy will be higher through winter months. Council Tax and Cleaners on top too. If your're planning on using an agent to manage it for you, they will likely charge 15% £210 PCM out of your £1400 PCM.
Might I suggest you initially list all the costs that you can easily quantify yourself with a bit of basic research. These will be things like insurance, council tax, broadband, hmo licence, deposit protection fees, cleaners, water rates, and of course mortgage payments. We can't tell you what these will be because they're going to be specific to your property and location etc.
That will leave you with gas and electricity as the two big unknowns. As a rough rule of thumb you can anticipate these costs to be about twice as much as an ordinary household, so you could be looking at around £2000 per year?
Then you should include a contingency of say £500 per year for unknown minor maintenance issues.
Up to you if you include in the budget an allowance for voids. I don't know your market demand or how fussy you will be when it comes to tenant selection etc so difficult to advise.
Hope that helps, but you really need to do your own research if you want to be accurate.
Also check out if you would be able to get an HMO mortgage, no point in looking at repayments if you can't get one.
Thanks, i have checked this and all is fine. just not many lenders which mean paying higher interest rate to start off with.
Also don't forget the costs of setting it up. Furnishings, good order for kitchens, bathrooms and all the certs you need. Gas, elect etc. This will cost money if the house does not meet the regulations. Most houses do not as many will know, and i expect not even their own residential houses meet the regulations for renting pp the old Victorian and Edwardian ones around the country.