13:14 PM, 5th December 2012, About 10 years ago 2
My Eastbourne HMO project is almost at a close so I thought I’d bring you up to speed so you can see for yourself if running an HMO is suitable for you.
Nine out of ten rooms are let at an average of £86.66 per room per week. A total of £335k has been spent on their purchase and refurbishment; taking away the utility bills of £20.50 per room per week leaves £66.16 a week . With the 9 rooms let this represents a yield of 9% before mortgage payment and, when I sell the last room, a 10% yield.
Getting the properties up and running to near capacity has taken three months, but now the honeymoon period has worn off. The tenants, initially friendly but cautious of each other, are now starting to see their housemates’ shortcomings, different lifestyles are having an impact on how the washing machine is used (e.g. through the night) and the blokes are struggling to understand why it’s not nice to leave pee on the toilet seat.
I’ve let the rooms to an equal mix of immigrants willing to work all hours in care homes, temporary workers and a trainee doctor. Only around 50% of applicants came to view after making the appointments and there has been a 75% conversion rate – maybe the others didn’t like my “I’m on to you, sonny, if you so much as THINK of doing drugs, lie to me, not pay your rent on time”.
The investor appears to be happy, the tenants are keeping the houses looking beautiful despite the errant pee and discarded coffee cups so now I move onto housekeeping and maintaining harmony amongst another group of strangers…………..
The answer to the question I really wanted to know at the beginning of this project was “Is the local market saturated?”. We’re in Eastbourne, a small Victorian seaside town with little industry, lots of hotels and tea shops, commuting distance to Brighton and, if you don’t mind spending 3 hours a day on a train, London.
And the answer? “There’s a distinct lack of good quality rooms but the good tenants are being fiercely fought over. The LHA demand is huge for single men and women which has started me thinking about suitable accommodation options such as Bed and Breakfast, supported housing, etc.” Watch this space.
Read the rest of this story in my blogs HERE