To HMO or not to HMO

Disjoint

I am redoing our house at the moment, and given the economy etc... Being self employed and getting £0.00 of furlough I had to look at finding a job - found one abroad.
Now I have a large family home that was to be our forever home to put for rent on the market (at the moment selling would be slightly suicidal). There are 5 bedrooms (West London zone 2) - at the moment I have 3 bathrooms but could potentially turn the toilet/storage area downstairs into a fourth bathroom...)
From those of you who have done that trade. Worth it? Do you get many vacancies? Regrets having done it? I'll probably increase income by 15 to 20% doing this. There is a hospital next door so thinking to get 5 key workers in there.
Any advice or general brainstorm would be great. The house is already HMO ready and would be easy to license for 5 people - as it was for me I was redoing it, it's beyond everything I have ever rented in London in terms of quality. New plumbing, electricity, fire safety, boiler, paints, kitchen, bathrooms... 

greatcrested

I'm no expert on HMOs so can only advise that you investigate thoroughly the relevant council's requirements and ensure the property meets these, or can easily/economically be upgraded.

On the face of it though it sounds like a plausible proposition given the location and potential market.

Use of the words 'our forever home' is a warning flag. Forget that. If you let it, especially as HMO, you must let that idea go. Are you still emotionally connected to the property.....?

Now read the stickies if you've not already:

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

Disjoint

greatcrested said:

I'm no expert on HMOs so can only advise that you investigate thoroughly the relevant council's requirements and ensure the property meets these, or can easily/economically be upgraded.

On the face of it though it sounds like a plausible proposition given the location and potential market.

Use of the words 'our forever home' is a warning flag. Forget that. If you let it, especially as HMO, you must let that idea go. Are you still emotionally connected to the property.....?

Now read the stickies if you've not already:

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

Ha yes - definitely attached to it, I've spent all day carrying over a ton of bricks today to help finish off the extension just today! But I won't be living in it due to current circumstances so it won't do much good. I won't be a new landlord as my wife runs properties for a few friends just no HMO. One tenant or a family is one person to manage, an HMO is 5 different individuals which is the part that slightly puts me off, albeit they can all be friends.

[Deleted User]

You have to account for the fact that your property will lose it's sparkle. It sounds too good to be rented out. 

[Deleted User]

From how you describe it, if there's any way possible, I would either rent it to one family or leave it empty.

[Deleted User]

Also there's another forum you could try where you may get a better response - Property Tribes.

Bossypants

Only do this if you have no emotional attachment to the place (esp irreplaceable stuff like original moulding and such) and are prepared to completely redecorate before coming back. Honestly it sounds like a bit of a shame to HMO a nice family home, but sometimes needs must, I suppose.

numbercruncher8

Is that income differential assuming full occupation?
Notwithstanding licensing there are always admin costs and depending on whether you go through an agent potentially more small jobs, maybe many more.

Unless you're lucky enough to have a HMO where everyone knows each other (seems unlikely to start but could gravitate towards that over time) there may be a quite high turnover of people unless some really compelling reason ie low rent, unbeatable location. Several reasons for that: people get jobs elsewhere, people find cheaper place, people bring a partner round all the time and make others unhappy, people move out with partner etc. Or perhaps the worst case, people get in financial distress and can't afford it. Being a key worker does not guarantee that they will not be stupid with money.

I would be very prudent in the assumptions and assume that one room will perpetually be empty.

Why would selling be so bad? I know the market in London overall has been showing declining prices for a while, but it is fact that desirable properties are affected less than undesirable ones. If it is really nice and there is demand you might find the price has not dropped at all.

Disjoint

@numbercruncher8 thank you very much, and everyone else for your answers. After talking to someone who does HMO in the area, they told me I would be an idiot to do an HMO when the condition it is in should get me a good single family that will be less of a destructive force and hassle.
In terms of selling, I feel like now is not the time - I will try to list it for rent and for sale at the same time when the work is finished, and will see what feedback I get. I incidentally just sold my old home just now, and the buyer tried to retrade me at -10%, I ended up settling for -2.5% on agreed sale price, but that was after much fighting. By the nature of my work I am extremely pessimist as to what is to come ahead for the economy, if I could sell at pre-covid price I wouldn't think twice about it! Much better to sell something in an immaculate condition rather than lose value through years of rental

dimbo61

I really don't get the too good for a HMO I could take you to see 3 stunning HMO,s today that any young professional or student would love to live in.
Depending on the area ( close to a hospital ) layout, number of bedrooms and bathrooms/ensuites you could have a successful rental business.
How big are the bedrooms 10m2 ?
Size of living area, number of bedrooms ? Outside space, parking, local rental market , HMO licence etc

coachman12

Disjoint said:

@numbercruncher8 thank you very much, and everyone else for your answers. After talking to someone who does HMO in the area, they told me I would be an idiot to do an HMO when the condition it is in should get me a good single family that will be less of a destructive force and hassle.
In terms of selling, I feel like now is not the time - I will try to list it for rent and for sale at the same time when the work is finished, and will see what feedback I get. I incidentally just sold my old home just now, and the buyer tried to retrade me at -10%, I ended up settling for -2.5% on agreed sale price, but that was after much fighting. By the nature of my work I am extremely pessimist as to what is to come ahead for the economy, if I could sell at pre-covid price I wouldn't think twice about it! Much better to sell something in an immaculate condition rather than lose value through years of rental

Having read the whole thread, I agree with your conclusions : too good to HMO, just right for large family let------whilst looking into the possibility of sale after works' completion( though personally I'd omit that thought for at least a year, by which time you may be back home ). Good luck with new job abroad-----hope it goes well but also that you can get job again in UK after all this insanity is over.