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  • Buy-to-Let

    HMOs in the South or Single lets in the North

    Looking for some help with making a decision of HMOs in the South or Single lets in the North?

    Objective:

    • Cashflow = 15%+ Return on capital invested

    • Properties to be managed by an estate agent

    • 75% LTV held in a LTD company

    Situation:

    • I have a good pot for deposits that I’ve pulled out of my existing portfolio - 7 Single lets, currently in SW London and Bristol  

    • I work as a marketing consultant, which allows me the flexibility 1 day a week to focus specifically on these investments i.e. I can travel

    • I now live in a town called Saffron Walden in Essex, which sandwiched between London and Cambridge. This does make investment decisions more difficult

    Option 1 - HMOs locally - Cambridge or Harlow - Within 45 mins travel by car

    Pros = Closer to home, therefore easier to manage when things go wrong

    Cons = The yield on Single lets as an exit strategy is terrible, so needs to be HMOs to get any level of return. The initial investment is sizeable and due to the costs of the properties, I will be leaving a lot in the deal  

    Option 2 - Single lets further North - Nottingham, Sheffield or Doncaster - Within 2 hours 30 mins travel by car

    Pros = Less capital investment required, far easier to great a yield therefore only single lets required

    Cons = Further away to go through the process of purchase and to manage the making agent. Less chance chance of capital growth, but this isn’t my primary objective

    Option 3 Curveball - Norwich single lets - Within 1 hours 20 mins travel by car

    Pros and Cons - Not a spectacular yield, but better than I can achieve closer to where I live

    Any help of recommendations appreciated.

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    Property and Marketing combined.

    Follow me on @davidsonea

    Check out my experience at http://www.linkedin.com/in/davidsonea/

    I'll make it simple for you.

    If you're going to/willing to self manage, then HMO's in the SE.

    If not, single lets up north managed by a good agent.

    Let us know how you get on!

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    Thanks Adam. Yep, that's a good angle and I self-managed my London properties when I lived close by, albeit they were single lets. I think we could self manage from Cambridge, as would be under 30mins and yes, that reducing that cost would make the yield figure look far more attractive. My concern is how future-proofed this is going to be if I have future commitments elsewhere, especially when there is a far higher turnover of tenants in HMOs.

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    Property and Marketing combined.

    Follow me on @davidsonea

    Check out my experience at http://www.linkedin.com/in/davidsonea/

    I’d consider Bishop’s Stortford with its proximity to Stansted airport and reasonably local to Saffron Walden.
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    Hi there. As a landlord in Bishop’s Stortford I’m finding it harder to make HMOs work. 4 people and no licence doesn’t give the income for all the outgoings of HMOS and 5 people has meant tons of adaptions and expense to get the licence and quite frequent turnover of tenants due to the transient nature of the tenants (mostly cabin crew or airport staff). I’m looking to invest elsewhere also.
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    When 4 people doesn't make an HMO work then there's some issues there.

    Is it rents are too low, buy prices are too high, too much competition, or a combination of all those?

    How nice are your HMO's?

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    Is the area becoming saturated with HMOs?

    I suggested Bishop Stortford due to its proximity to Saffron Walden and Stansted, if the returns aren’t there then I’d possibly suggest looking at Cambridge but the area is expensive.
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    Interesting Sharronpeck. What's your average tenancy? Are there opportunities to work directly with the airlines, to keep filling the rooms?

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    Property and Marketing combined.

    Follow me on @davidsonea

    Check out my experience at http://www.linkedin.com/in/davidsonea/

    Thanks EssexLL. Yep, I have looked at Stortford, but the prices are v high here, due to proximity to London Liv st.  I think that Service Accommodation could work with all the contractors that are going to be working/expanding Stanstead, but haven't had very much experience of SA, other than being friends with some operators in Cambridge.

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    Property and Marketing combined.

    Follow me on @davidsonea

    Check out my experience at http://www.linkedin.com/in/davidsonea/

    Hi Ed,

    I am in a similar situation. I live in Stevenage and I am currently looking for where to invest in HMO. How did you do your tenant demand analysis for HMO?

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    from a post of mine on another thread

    "i looked recently at the numbers on increasing from 5 to 10, took the 5 cheapest houses on rightmove that id be happy buying on price and location on 75% ltv and it came out that £76k deposits would return me a further £20k per annum.

    thats profit after interest on morgage paid but no day to day running costs, repairs insurance gas certs etc,

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