HMO's are becoming popular with investors. Here's one HMO that's currently on the market for £700,000 and with a potential gross yield of over 9% could be an interesting opportunity for someone.
Previously on this blog we've focused on opportunities for individual residential lets, however this time I've spotted an interesting HMO or House of Multiple Occupation.
The above property is lot 161 at the Allsop Residential Auction tomorrow (28/5) at a guide price of £700,000.
When this property was last sold in 2007 as a four bedroom family house, it achieved £459,950. Five years later the owner put it on the market still as one home, for £515,000, now three years later it is an on the market for nearly £200,000 more.
However this property is no longer a four bedroom town house. Spread over four floors and with four bathrooms/ ensuites, this house is now an HMO with 9/ 10 bedrooms generating an annual income of £63,480.
That's a huge income particularly when you consider that in its original state it would command a rental value of around £2,250pcm or £27,000 per annum.
Based on the assumption (and it's a big one) that the property is sold for the guide price of £700,000 that would lead to a gross yield of 9.1%. Of course it's very unlikely to go for the guide price but even at £800,000 you'd still get a gross yield of 7.9%. Again, pretty good, particularly in Southgate.
Another potential plus point for ths property is that this property is offered with tenants in place with existing AST's. This option is becoming more popular with landlords as there is no void period, the property starts making money from day 1!
However, nothing is ever that simple and there can be increased risks when you take on somebody elses tenants - were they referenced? are there any arrears? any existing tensions between tenants? are there inventories? Have the deposits been protected? etc.
WIth HMO's there are also additional considerations over single household properties, including increased fire safety requirements and potentially licenses (please contact the office for further information), hopefully this HMO will already meet required standards but you'd need to check.
The HMO model has become very popular over recent years. With people buying their first homes much later in life, they are often renting for longer. One bedroom flats in Southgate cost in the region of £1,000pcm which is a lot of money, whereas a house share is likely to be around half the price, particularly when you consider Council Tax and bills which are generally inclusive in shared houses but not with one bedroom flats.
A well maintained and well equipped HMO in Leigh Hunt Drive is likely to be very attractive to professional sharers being so close to Southgate Tube Station and shops, so attracting and keeping good tenants should be very possible.
Oh, and property in Leigh Hunt Drive has increased in value by 4.93% or £19,619 in the past year.
Together with the rent, that's an income of around £83,000 for one year!
Could be worth a closer look.
Belvoir Lettings Enfield don’t sell property, we are lettings specialists, but we do guide people based on our experience as to what might make a good buy to let property investment in the Enfield, Haringey and Barnet areas. We don’t charge for this service but we would like to manage your property or help you find great tenants.