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I’m a landlord with one BTL property, and I’m now considering going into my first HMO purchase. I was wondering if anyone with experience can shed some light on some questions I have.
A side point is relating to finance I have around 140K in cash to invest and wondered what the best strategy would be 1. Buy with cash and pay for refurb on one HMO or split this into 2 HMO investments and get a specialist HMO mortgage?
Also if anyone can recommend any books or courses, I could look into that would be great.
Hi Mez,ARLA run an HMO course, the next one being in June. It covers a lot of ground.ARLA HMO training
Check if the area has an Article 4 direction and/or additional/selective licensing.
The council website should be able to tell you this.
I'd definitely split your money and get as many as possible. Your first step should be to talk to a letting agent. An HMO is not something you want to be self managing. Find out who is the best HMO landlord in your area of investment and pick their brains for all it's worth. They'll be able to recommend a good builder with HMO conversion skills.
When turning a house into an HMO in my area, a budget of around £7,500 per room gives a good idea of refurbishment costs. I've not yet come across any decent books on the subject.
It is extremely unlikely a council will have the resources to offer you any advice prior to purchase. Given the significant capital outlay in buying a property with the intention of converting it to an HMO, I would suggest seeking expect advice to avoid making any costly errors.
For example, you need to understand rules around HMO Article 4 directions, licensing, HMO room sizes, facilities, fire precautions, fire risk assessments, HHSRS, HMO Management Regulations, council tax implications of providing ensuites, etc, etc. I don't think you need a mentoring programme, but a few hours expert advice from an Independent EHO like myself can make all the difference. Either someone based locally or someone who can offer bespoke advice and support over the phone. I've provided this service for a number of clients now and think it provides excellent value and helps to ensure compliance. There are other people who offer similar services in other parts of the country.
With more regulations being introduced in 2017 and significant penalties for non-compliance, my advice is to make sure you understand all the issues before you get started.
Richard Tacagni MCIEH CEnvH
London Property Licensing
This information is intended as general advice and guidance. It is not legal advice and should not be taken or relied upon as such. No liability can be accepted for any reliance on the information published in this response. You may wish to obtain independent legal advice.
Finance: speak to good broker
Regulation: council + experienced HMO operators
Books: Nic Fox eg Complete HMO property sucess
Offer: lots of DD, viewings