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  • HMO & Multi-Lets

    HMO mortgage - 1st time buyer/non homeowner

    Hi Everyone,

    This is my first post on PT, so first I would like to thank Vanessa for this site. It is a goldmine!!! You are doing such a fantastic job, and I learnt so much over the last few months! Great community as well.

    My goal: I want to buy my first HMO but 1) I didn't buy any BTL in the UK and 2) I don't own a home in the UK (I am French, leaving and working in London). My long term goal is to build a business in HMO and Commercial conversion. My +++: I work for an investment bank where I look after securitized products valuations with residential/commercial mortgages as collateral all over Europe including the UK so I know how to analyse deals, looking at risk, complex stuff with SPVs etc... but My - - - : I don't know anything about being a landlord and I have a lot to learn practically about real estate.

    Questions:

    1) Mortgage: Is there anyone who was in my situation and managed to get a mortgage for a HMO as a fist time buyer and non home owner? I got a quote via a broker with Kent Reliance and I am double checking this quote, but I would like to have a plan B. Do you know of any other lender who would take first time buyer?

    2) Commercial valuations: Is there anyone in this forum who is a commercial lender, I would love to get in touch and meet face to face to understand on what basis I could get a commercial valuation on an HMO. I think I have fair understanding of what the criteria are, having read all the post on this subject on PT and met many investors, but nothing replace a direct discussion.

    3) Alternatively I can buy cash the property and then leverage it once it is up and running. Anyone used this strategy before, and how long did you have to wait after the first tenant moved in to be able to leverage it?

    Thanks for your help,

    Mathieu

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    Just checking you have heard of Section 24 before answering any of the questions?

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    Also what about Individual Council Tax Banding!?

    This guy might be clever with finance but hasn't a clue about HMO

    He needs his own PPR and then invest in a bog standard rental property

    See how he gets on and then consider HMO

    Very few lenders will lend to him until he has some other LL track history

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    Hi Paul,

    Thanks for the feedback. I do know about this risk and how it could impact significantly the cash flows. I do have property in France but not in London where I live. Given the valuations in London, I am not keen to buy my PPR here. I'd rather invest elsewhere where yield are attractive and pay a rent in London.

    The reason for HMO is purely yield but I am aware of the additional regulation/planning required. I have been studying the subject for 6 months, but not done it.

    I agree experience is key for the lender. At the same time, being a single let LL is very different from HMO, and not necessarily the proof you would do well with a HMO. my LL for example if in breach of a few things which I won't detail here. It is not critical but he would not be able to evict me right away should he want to.

    What would you consider is a reasonable amount of time being a LL before moving to HMO?

    What LL association would you recommend I join?

    Thanks, Mathieu

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    If I was you I would have a chat with a PT poster Phil Stewardson who is an expert with HMO

    I'm sure he could give you a steer and maybe a few contacts to assist you.

    I know nothing about HMO

    I would not venture into one until I had a basic property letting under my belt

    You will find few lenders willing to lend to your current experience Level.

    Yield is all very well, but it is hard to achieve from not being a LL already.

    You might be lucky.

    But HMO are going through vulnerable situation at the moment and waiting for distressed LL subject to S24 to offload might be a wise move.

    There are just too many negatives at the moment associated with HMO'S.

    Wait for the Housing Act regulations to come

    There are many changes due out this year in the HMO world.

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    Hi Paul, thanks for the advice!

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    Yes I did. I would buy via a Limited Company


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