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Converting Property to HMO (Plan)

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Converting Property to HMO (Plan)

edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
14 replies 8.9K views
MoneyMaxMoneyMax Forumite
127 posts
edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
Wondering if there is anyone on here who has experience of HMO's.

I have checked out the local market for it (Blackpool) and it it pretty good, lots of working singles and couples who cant afford to buy but dont want to live at home.

I also did a quick work out:

Set Up Costs:

£3000 approx

Monthly Profit after costs:

£700 (based on all 6 rooms rented @ £70 per week) :T

If anyione has any experience, please could you give me some guidance, I have contacted the council for info but it's the hidden advice and experience im after.

Thank you

Max
Be kind, for everyone you meet is fighting a hard battle
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Replies

  • soozsooz Forumite
    4.6K posts
    ✭✭✭✭
    In an HMO you pay the council tax. So remove that from your profit. Is the property already set up as an HMO? If not, allow for fire doors, hard wired smoke alarms, extra bathrooms, kitchen/s & possibly wash hand basins in every room. Allow 2 months of voids per room per year. I'd suggest a cleaner for communal areas. Faster turnover of tenants, falling out between tenants, cost of tv licences per room, communal electricity costs and more.

    How much will the same house let for not as an HMO?
  • How big is your deposit?

    How good is your credit rating?

    Can you even get a BTL mortgage?
    "One thing that is different, and has changed here, is the self-absorption, not just greed. Everybody is in a hurry now and there is a 'the rules don't apply to me' sort of thing." - Bill Bryson
  • MoneyMaxMoneyMax Forumite
    127 posts
    sooz wrote: »
    In an HMO you pay the council tax. So remove that from your profit. Is the property already set up as an HMO? If not, allow for fire doors, hard wired smoke alarms, extra bathrooms, kitchen/s & possibly wash hand basins in every room. Allow 2 months of voids per room per year. I'd suggest a cleaner for communal areas. Faster turnover of tenants, falling out between tenants, cost of tv licences per room, communal electricity costs and more.

    How much will the same house let for not as an HMO?

    Hi, I have included council tax, electricity, tv licence, mortgage etc.. in my costs. It has enough bathrooms for 10 tennants. Ive costed everything in for furniture, locks, fire safety etc... and local fire service do schemes and put in mains smoke alarms free of charge. :)

    It is let out at the moment at £650 per month which covers the mortgage with not much profit.
    Be kind, for everyone you meet is fighting a hard battle
  • MoneyMaxMoneyMax Forumite
    127 posts
    How big is your deposit?

    How good is your credit rating?

    Can you even get a BTL mortgage?


    Credit rating = Bad
    It's on a BTL mortgage as currently let out.
    No deposit needed as its already my house.
    Be kind, for everyone you meet is fighting a hard battle
  • mchalemchale Forumite
    1.9K posts
    Post 2 spot on advice
    ANURADHA KOIRALA ??? go on throw it in google.
  • MoneyMaxMoneyMax Forumite
    127 posts
    mchale wrote: »
    Post 2 spot on advice

    Yeah definately, Im still weighing up wether the profit will be worth the hassle!

    Its in the pipeline to convert next year, we will see!!!
    Be kind, for everyone you meet is fighting a hard battle
  • PasturesNewPasturesNew Forumite
    70.7K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    Signature:
    NRAM ARREARS - £1800 & BRITISH GAS - £400
    TAX CREDITS OVERPAYMENTS - £2000
    UNITED UTILITIES - £250 PAID!
    IVA - £6500 PAID F&F £3000!
    HALIFAX LOAN - £9500 UNDER 10K FINALLY!
    C/C - TBC (PARTNERS) & LOAN - TBC (PARTNERS)


    No chance.
  • mchalemchale Forumite
    1.9K posts
    Signature:
    NRAM ARREARS - £1800 & BRITISH GAS - £400
    TAX CREDITS OVERPAYMENTS - £2000
    UNITED UTILITIES - £250 PAID!
    IVA - £6500 PAID F&F £3000!
    HALIFAX LOAN - £9500 UNDER 10K FINALLY!
    C/C - TBC (PARTNERS) & LOAN - TBC (PARTNERS)


    No chance.


    OP is converting not buying.
    ANURADHA KOIRALA ??? go on throw it in google.
  • soozsooz Forumite
    4.6K posts
    ✭✭✭✭
    If you are already letting the property, then it's not such a mad plan :)

    £1800 ish PCM vs £650 is tempting

    but are you achieving full market value currently? Could your £3k budget be spent to better use tarting up the current property to make it more profitable?

    Hmos are a huge hassle. Profitable, but at what personal cost?

    Those who choose to rent bedsits are, generally speaking, more transient & on lower wages. They are more likely to be renting for the first time, don't know one end of a screwdriver from another, & want you to be more like a surrogate parent (when it suits!). Fancy being called at midnight due to a spider? No, I'm not joking.

    You might be lucky and find your rental is ideal for those with 2 properties wanting a weekday base for work.

    Check out your local marketto see what other quality hmos offer.
  • edited 14 July 2011 at 9:24AM
    MoneyMaxMoneyMax Forumite
    127 posts
    edited 14 July 2011 at 9:24AM
    Signature:
    NRAM ARREARS - £1800 & BRITISH GAS - £400
    TAX CREDITS OVERPAYMENTS - £2000
    UNITED UTILITIES - £250 PAID!
    IVA - £6500 PAID F&F £3000!
    HALIFAX LOAN - £9500 UNDER 10K FINALLY!
    C/C - TBC (PARTNERS) & LOAN - TBC (PARTNERS)


    No chance.

    Explain??? £700 profit per month = debts paid off quicker!!!!
    Be kind, for everyone you meet is fighting a hard battle
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