Houses of Multiple Occupation

An HMO is a property which is let to three or more tenants who share amenities and form two or more households. Households are defined thus: two friends sharing would be considered two households, whereas two relatives or two people living as a married couple would be considered one household. This can apply to both an entire house or flat, or one that has been converted into self-contained units. Under the Housing Act 2004, landlords of HMO’s must conform to certain safety requirements and provision of facilities. These are strictly applied, and failure to comply can mean heavy fines.

General HMO facts:-

• Return on Investment (ROI) typically higher than standard Buy-to-Let properties
• Yields can vary, but well managed HMO's should expect about 8% AER (Annual Expected Return) HMO Investment Opportunity

HMO Investment Opportunity

Our affiliates find property at a discounted rate, so there is equity in the deal from day one, and their top standard renovation process increases the capital value of the property. There are two major drivers in the deal:-

• Firstly, they position themselves strategically to achieve a good discount from the open market valuation. In many situations, this builds 20% equity into the deal on day one.
• Secondly, the renovation process creates a more valuable, rentable property. A buy-to-let mortgage is arranged for the purchase price, and a 25% deposit is put into the initial purchase.

The property is then renovated, and value is added as the property undergoes a full refurbishment programme. Each property is different so the specific works will vary, as will the cost. Once refurbished, an up-lift in the value of the property is expected to be in the region of around 10-15%. Again, this will differ from deal to deal.

The property is then re-mortgaged to its new increased, open market value and a percentage of this added value is released. There can also be ’No Money Left-In’ (NMLI) occasionally, but there is a spectrum of possibilities ranging from a ‘NMLI’ deal, through to a £10k-£25k left-in deal. With the most easily available mortgage products based on 75% Loan-to-Value (LTV) this makes a ‘NMLI’ deal a rare find indeed. Where 85% LTV is available, the spectrum shifts upwards by about £10k, so the range moves to ‘NMLI’ at the top end giving £5k-£15k left in.

The properties are located within walking distance from a university, but invariably also let to key workers from local facilities such as hospitals, schools and ministry buildings.

It’s a professional, repeatable strategy that doesn’t rely on capital growth in order to achieve returns on investment.

Standards

As an investor you obviously want to know the standards and parameters used by our clients for each division. Each of the divisions has dedicated management that are specialists in their given field. They continually measure against international standards to make sure the service provided is market leading.

Here are some of the headline criteria:

• 24 hour response times to investor questions.
• Full transparency across all aspects of each investment.
• Typically a minimum 20% discount on distressed properties.
• Walking distance from university.
• Completion in 6-8 weeks.
• 90% on-time, on-budget target.
• Add minimum of 1 bedroom.
• Minimum 90% occupancy rate (company-wide).
• 24 hour response time for call outs & maintenance.

Please fill out the contact form below if you are interested in this investment:-