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  • HMO & Multi-Lets

    How much is it worth to you?

    I now understand your question. We've been told our 6 bed HMO is worth more as a  business than a house.  But that's because it's been up and running a couple of years and we can prove income. We bought it a wreck and cheap. Spent about £60,000 on it.

    The one we are about to buy is also way below value and a wreck. We'll probably spend £30000 on it.

    When completed both are worth top value in the road as houses but we'd spent a lot less than their value.

    Hope this helps.

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    you dont say whether or not its in an article 4 area and if so if it is fully compliant with planning law (as well as licensing)?

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    ROI of 10% NET would be on the low side - I'd be looking for a min of 12% for the amount of effort and risk involved (putting other factors like cap appreciation aside).

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    I think people on here are quite motivated to do things themselves so you might not get a fair appraisal of whether this might work. Maybe a bit of feedback from estate agents you deal with. I once got in a conversation re: standard buy to lets as the estate agent thought there was a gap in buying & doing up on others' behalf.

    Whats your motivation in doing this though as I know you have houseshares? Would you not rather have all the return if you are doing all the work anyway?!

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    Interesting thoughts.

    For me it focuses heavily on finances vs quality of service.

    As a LL I view that the long term health (as opposed to "viability") of an HMO depends on the particular tenants, the management regime, as well as "guaranteed returns", and that these depend on the area, the market profile, and especially the agent.So I would need to know a lot more about the social / market context, the ethos of the agent, the design as to how Ts are going to be made content, and so on.

    If you are selling HMOs to remote investors, then these parts of the package matter if you have sensible inevstors.

    Wrt to the current varied posturings and pratfalls from politicians, I question whether we have any knowledge  We are on a coach with a driver who has been fed narcotics and is seeing the PRS through an opium dream. So risk management is the thing, and I would be wary of anything touching anything controlled by Govt eg Benefit HMOs.

    ML

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