Are commercial valuations appropriate for higher yield HMOs?

Are commercial valuations appropriate for higher yield HMOs?

9:50 AM, 5th September 2022, About a month ago 4

Text Size

I’m hoping to sell my portfolio of 4 x HMOs in Aberdeen. 2 are 5-bedroom flats with a yield of around 8% depending on valuation, but the other 2 properties are larger (12 bed and 9 bed) and have higher yields of 14-15% – again depending on valuation.

Is a commercial valuation more appropriate for the bigger ones based on yield?

Also, can anyone recommend a Scottish broker who can sell tenanted properties?

Thank you

Karen



Comments

Graham Bowcock View Profile

11:57 AM, 5th September 2022, About a month ago

A yield valuation can be acceptable for large HMOs, but there are a lot of variables. We do them for banks. We need to know the costs included in the rent and the extent of owner management in assessing the yield. Included costs are a bit of an issue at the moment, for obvious reasons.

If a HMO is well set up - good leases, compliant and decent buildings then we have seen 14-15%. As with all valuations, the devil is in the detail. Betetr to be hear a hospital, university, or other source of mass employment.

Tom Kirkwood

12:37 PM, 5th September 2022, About a month ago

I’ve recently been remortgaging several high yielding HMO’s and all the valuers refuse to take the yield into account. They. Valued the properties purely based on the residential value.
Given the current impending downturn I’d be surprised if many valuers devoted from that cautious stance.

Karen

17:14 PM, 5th September 2022, About a month ago

Reply to the comment left by Graham Bowcock at 05/09/2022 - 11:57
Hi Graham
Thank you for your reply - that was extremely useful.
Regards
Karen

Karen

17:14 PM, 5th September 2022, About a month ago

Reply to the comment left by Tom Kirkwood at 05/09/2022 - 12:37
Hello Tom
Thanks for your reply.
Karen

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now