Best type of property to buy for a HMO?Make Text Bigger
I am looking to invest into the rental market and have been considering HMO’s. I was looking at a large 8 room 3 storey property, but to comply with the building regulations, fire escapes and licencing just seems far too complicated and expensive so I have decided to go for a smaller property.
Question is, which would be seen as a better investment strategy long term?
- A single four room property worth £200,000 gross annual income £19,760 (would need a mortgage)
- Two 2 x 2 room properties, each worth £100,000 gross income £19,760 (would need a mortgage)
- Alternatively I could purchase 1 x 2 room property outright with no mortgage. Max gross income £9360
The 4 bed would mean less setting up costs and overheads than the 2 x 2 room properties, therefore is it down to a simple calculation as to the % of cash left at the end of the year against cash put down or are there other benefits to having more properties even if that means higher mortgage payments/and/or overheads?
The 1 x 2 room property would give the worst net annual returns but no mortgage debt either!
Due to the varied properties on offer I am afraid I am going round in circles!
Any advice would be appreciated.
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