Setting up an HMO from scratch by @HMOlandladyMake Text Bigger
So, I’m doing what I promised I’d never do – manage some else’s HMOs. Over the years I understood why lettings agents were sniffy about HMOs and the amount of time managing the house demanded in proportion to the 10% management fee. But I yielded after a friend decided to invest his inheritance and asked my advice.
I’ll look for any opportunity to go property searching, especially if I’m not the one buying. The first property was one I’d seen six months earlier on behalf of someone else and it had languished on the market as, seemingly, no one could see its potential: a maisonette with four bedrooms, newly fitted kitchen, new boiler, 2 toilets, a bathroom and huge sitting room on the market for £155,000. Considering a 2 bed flat in the same area will set you back £130,000 and a three bed house no less than £180,000 I reckoned it was a bargain.
The owner lived there with her daughters and granddaughters who appeared to spend much of the day watching TV, smoking, eating in situ and waiting for the laundry fairies to appear. The place was crammed with junk, dirty and we had to pick our way round the rooms looking the ceilings to get an idea of space. It was on with an agent who repeatedly blocked my attempts to view the property so I knocked on her door and asked to see it anyway and, luckily, she didn’t tell me to b****r off.
My friend immediately saw the potential I’d been talking about and we arranged a private sale. Unfortunately the valuation came back at £130,000 due to its condition so the vendor (being desperate to sell) lowered the price and the investor increased his stake – we got it for £145,000 with a month to complete.
Four weeks and a £20,000 refurbishment bill later and I’ve started to show round the first potential tenants. I’ve been transported back five years to when I started my own HMOs, but then I only had a paint brush, a baby in a pram and enough naivety to believe that all tenants are charming, law-abiding, rent paying, psychologically balanced people.
The investor lives out of town so I’ve managed, advised, schmoozed the Council (it’ll have to be licensed as it’s in a three storey building), bought the pots and pans, bathmats and airers, mattress protectors and curtains. I’ve scouted charity shops and the local auction for furniture and dug out some pieces I have spare in one of my HMOs. The best bit? I went to a household auction last Saturday but they were only selling 100 lots an hour and had over a 1000 to get through; feeling worse for wear I bid on a couple of bits, placed absentee bids for the rest and went home to bed. I didn’t hear anything from them so went along on the Monday morning to collect a plastic Scottie dog a friend fell in love with (no bidding competition there) and 2 x 1930s style brass library lamps procured from the Dorchester Hotel in London following their refurbishment. “That’s £600, madam” the cashier said. “Eh?” I gulped as I desperately racked my brain to check I had been suffering from a hangover on the auction morning and hadn’t still been merry. “Yes, you won the lot!”
I handed over my credit card, kissed goodbye to any forthcoming luxuries and phoned the investor: “Guess what! The good news is I got you some furniture for the HMO which used to adorn The Dorchester Hotel, but the bad news is I missed out on the crystal chandelier for the hallway. You owe me 600 quid”.
Next time….. photos of the finished rooms, the weird and wonderful people who responded to the ad and the man from Blast Productions sticking a camera in everyone’s face in a bid to understand HMO living for a forthcoming BBC documentary.
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