Devil is in the en-suite detail

by Dan Trivedi

11:10 AM, 13th July 2016
About 2 years ago

Devil is in the en-suite detail

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Devil is in the en-suite detail

ensuiteI recently posted within a Facebook forum about a great student house we’d just completed, which we converted a three bed ex local authority property into a five bed five en-suite house.ensuite

We’ve looked at the market and of course it is obvious that people want a their own bathroom and are thus prepared to pay more finding that the high end student market can dictate room rates which exceed that of some professional lets (within Norwich).

Over the past 18/24 months we’ve started to move to all en-suites, because the returns compared to the small extra cost in the refurbishment stage give a much better yield to overall cost.

For this project the purchase price was £190,000 with refurbishment costs coming to £26,000 creating an after works valuation of £285,000. The five bed en-suite student property is now being let for £2708 pcm including bills.

We also believe this high end market will increase and show the largest percentage increase in rents vs standard house shares by offering a product which is in short supply and a premium to the rest of the market.

Renting room by room with en-suites is preferable to without for the tenants and the landlord given the extra rent that can be charged. The room rate we expect is £125 per week inc bills.kitchen

However this not only attracted the high lend of the market, but we found group who wanted the en-suite rooms, but would take the house as a whole group, sign one AST and pay one payment per month.

Now I don’t clam to be the biggest HMO/student landlord, but I have several and have experienced both room by room and groups, and would take a group any day of the week. To achieve a rent equal to that of a room by room rate AND rent to a already formed group, means we get the highest rent and with none of the issues when renting by room.

The small added expense now for an en-suite room pays massive dividends in yield and management time resource for a long term investment.

The discussion came about from an inexperienced student landlord to why we would not just ask the students to share. In many of our older houses we do, however the market which we now attract tends to be easier to manager, pay higher rents and and means we have the most desirable option.

In conclusion, if HMOs are your direction in property investment, en-suites are a no brainier!

Contact Dan Trevidi

Dan is the CEO of Grace Charles property company Ltd


Comments

Neil Patterson

11:12 AM, 13th July 2016
About 2 years ago

In my opinion your own bathroom makes life twice as comfortable 🙂

Rob Crawford

11:51 AM, 13th July 2016
About 2 years ago

I try to maximise the number of showers, WC's etc but installing one in each bedroom is often impossible unless its a major refurb. Something to keep in mind when purchasing an HMO though as even students want their privacy/comforts.

Dan Trivedi

9:43 AM, 16th July 2016
About 2 years ago

Hi Rob - thanks for the comment.. Yes this option makes sense when we buy a property which is typically in the need of a full refurb.......
When we buy some of the more recently built houses (say 2007+) these need minimal funds invested for any refurb... So we would tend to leave these with shared bathrooms......
However if we are buying a typical 3 bed sem ex la which needs a complete overhaul, then the extra, small investment at this stage is well worth doing. Thanks

David Mensah

15:18 PM, 16th July 2016
About 2 years ago

I don't see how you can do a full refurb, going from 3 to 5 bedrooms, including 5 ensuites, for only £26,000. That's a pretty big job.

Dan Trivedi

18:25 PM, 16th July 2016
About 2 years ago

david, hi - thats our UsP ? we actually over spent slightly, we were expecting lower........ the key to it is(on top of the resiliance to save money on kitchens, bathrooms, tiles and flooring) the labour! We use our own guys and I project mange every refurb. We have typically 6/7 going on at anyone time so this allows us to use the same teams across multiple projects.... So easily done ?

Graham Bowcock

15:05 PM, 17th July 2016
About 2 years ago

Dear Dan

We regularly get to value HMOs for a high street bank and there is a big difference between the average and the best. In fairness there are very few really poor ones these days, the market is quite mature and landlords know the score on the regulations. You are right that the devil is in the detail and the best we see really treat their tenants as individuals and concentrate on what they want. There is usually underlying strong management of all aspects of HMO lettings with the better ones. En-suites are now more and more expected; a lot of campus accommodation now has them as well as the private sector.

There is competition for good tenants and this may increase if we have less overseas students post Brexit (some institutions are already reporting less overseas demand for course running beyond two years).

A nicely presented HMO which is well maintained with good facilities and good management will show a great deal of added value when you come to refinancing. You need to make a business proposition rather than just having an altered house.

Graham

matchmade

15:05 PM, 25th July 2016
About 2 years ago

How big are the bedrooms in these houses, and how large the ensuites? A standard 12 x 12 room is going to be pretty cramped with an ensuite bolted in.

Also, a five-bed five-ensuite former 3-bed council house sounds like it may have no communal space at all, just a kitchen. Are you confident this is going to pass the space requirements if Norwich introduces compulsory HMO licensing (if it hasn't already) or when the Valuation Office is invited by Norwich Council to treat these as 5 separate Band A properties for council tax purposes?

Dan Trivedi

15:09 PM, 25th July 2016
About 2 years ago

Hi Tony - thanks for the message we do try to add a kitchen dinner with an additional living space. This particular house has both ?
We work closely with the council and invited them to see the property pre and post refurb.
Thanks again

Joel Davis

16:26 PM, 25th July 2016
About 2 years ago

It certainly transforms yield in comparison to a standard family dwelling but I have a few questions.

When you come to sell, will it be harder because your market is limited to investors??

Also, most houses have a single soil pipe running to the drain and rooms on the other side of the house may be some distance. How did you overcome this to get so many WC's installed? Did you have to get another soil stack put into the drain and were there any issues with building control concerning the length and diameter of waste pipes/ plumning regs, etc?

Old Mrs Landlord

17:31 PM, 25th July 2016
About 2 years ago

Have I been misinformed? I was told that giving a room its own bathroom facilities rendered it self-contained and liable to a higher rate of council tax. Is it different for HMOs? This, if correct, I would class as the 'devil'.


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