HMO Liverpool advice please

Hi David

I am sorry to hear you are having difficulties with this property. A sensible and calculated approach should mean only having to adjust your (original) expectations that hopefully won't affect your position in the property significantly. I will caveat my advice by noting that I don't personally invest or operate in Liverpool, however I am familiar with the wider student and professional housing markets and co-own a successful R2R business operating across a number of other central and norther cities.

As a first piece advice I would recommend getting a full spread of advice/data on your property with regard to the immediate demand from students and young professionals. You must rely on local expertise to help determine whether or not doing any works is a sensible investment. This needs to be measured in the context of your personal circumstances too and the projected end value. I like to feel extremely confident and have the evidence available to support a plan of refurbishment. So in short, get as much advice as from local, credible agents as possible before making a decision.

Secondly, a R2R agreement is a feasible solution, but there are some important considerations. Firstly, any agreement needs the appropriate consents, so this must be taken into consideration as many lenders will not allow a lease. Also, an agreement that leaves you only at break even is exposure to unforeseen issues and interest rate rises, so I wouldn't advise this. This type of agreement needs to benefit both parties. Feel free to contact me if you would like me to further advise on this. You should be comfortable asking any perspective operator to present their credentials.

My parting thoughts would be that taking a hit of circa £40k is a significant loss, so I would explore every scenario in depth before considering this. Feel free to return any specific questions to me, although I'm about to board a plane so may have spotted availability for the coming few days.

Thanks
Andy

I would do c or a (in that order of preference)
If you did a: As mentioned above, you may be overestimating the amount you would lose if you sold - so you should get some valuations done. You win some and you lose some in this game. I have 'lost' about 40k a couple of times - but I have gained more, so it's swings and roundabouts. You might only take a hit of 20k for example and you'd get rid of a headache. It would be worth getting someone to zip through the house with a paint brush if you decide on this - even before getting the valuations done as estate agents are also influenced by how properties look superficially when they value.
If you did c: One tip is to get some nice posh roll-top baths and the nice retro towel-radiators (unless you're catering for the wrong clientele for this) - they don't have to cost much and they give a bit of a wow factor. 20k sounds a bit steep for the work necessary. Kitchens can be done for just a few thousand if you need a new one. A tip for a 6-bedder is to put two cookers side by side - looks then like a posh range cooker and means loads of gas/elec rings, which pleases the council.

Reply to the comment left by Dr Rosalind Beck at 16/09/2017 - 08:58
Good advice there Rosalind.

Just on the subject of having two cookers side by side, my local council (Hammersmith and Fulham) told me I had to place a minimum of 2 metres between each cooker, as they didn't want my six tenants to crowd around hot surfaces. That might be a bit 'elf and safety for some, but I just thought I should mention it here. Also, I've been told by more than one electrician that the electrical circuits in many kitchens aren't tough enough to cope with two cookers - this came after I had repeated trip-outs in the fuse board.

Just advice I've picked up, not correcting anyone!

Reply to the comment left by St. Jims at 16/09/2017 - 09:04
Thanks St Jims. Yes, it is worth checking on the leccy for this, as you say. Regarding the council, they differ so much don't they? In Cardiff this has been no problem.

Reply to the comment left by Yvonne Halliday at 15/09/2017 - 12:18
Hi Yvonne,
Thank you for your comment, Hampstead Road L6 8NG, not sure if the area has taken a slight dip due to the couple of boarded up properties or not.

David

Reply to the comment left by Dr Rosalind Beck at 16/09/2017 - 08:58
Thank you Rosalind for the tips.

Reply to the comment left by Andy Graham at 15/09/2017 - 19:59
Thank you Andy, after reading everyone's advice I'm going down route C, if it doesn't work out - well there's still A and B options open.

Reply to the comment left by St. Jims at 16/09/2017 - 09:04
My electrician always puts the cooker on a separate circuit when I refurb a kitchen

Must say David I wish I could buy a HMO for 145k and even spend another 30k to get £300 per room. In my area a six bed would cost nearly three quarters of a million. The only nitty gritty is whether it's in a resonable area for students or professionals. Surly with some research you could easily work that out.
I'm a landlord with a couple of large student HMO's and in my experience they make good tenants and always in my case, pay. I have never lost rent in all the forty years I have had them. I also have no void periods and let for 52 weeks letting in November for the following academic year.
My advice if you consider this route is to check the standards with Liverpool Council. For instance in my area you don't need two cookers but if you have five tenants and up to seven, a cooker and a oven microwave is accepted. Also with that number you need two sinks but if you supply one sink and a dishwasher that's accepted too.
Just to lastly say, I had for years a boarded up house next to one of my HMO's and it never affected me! (except I had to clear away all the junk mail in it's porch just before new tenants arrived)

Reply to the comment left by St. Jims at 15/09/2017 - 08:18
I do rent to rent, how the hell did I become a crook?
I work my spuds off to make them work and maintain a high standard.
What do you base your comment on?