Even though we were all on holiday, last week was a busy week. We finished one social HMO that is 5 beds and will generate £15,600 Net and started another one whilst we were thousands of miles out of the UK. Plus on last Friday we sold a 6 bed Social HMO. We owned this one for a bit short of 18 months. This HMO property generated net £18,000 per year. We have a colleague who has been selling these for us and pushed for a 10% net yield for his investor.
The week was full of challenges as Aedis who “was” a private company who inspected building works for the council closed their doors…took our money and did not do the final inspection. We called and emailed and strangely no answer. We got the answer on short notice and realised they closed” at no fault of their own” Absolutely disgraceful. But property is always full of challenges. Over the month of June we had been putting alot of low ball offers. We have now have 12 properties in legals hopefully to convey in the next 6 weeks.
Tomorrow will be beyond hectic as we have site inspections on our new 5 bed HMO property plus an inspection with the council on the finished one. Then Tuesday we are sourcing further properties. Later in the week, meeting 2 bankers to enhance our growth. Over the weekend met with an older (75 year old) property investor. He told me his experiences especially during the property recessions. He told me how he lost everything when he was starting out with 70% LTV loans on his properties. He got too extended and lost it. In our conversation we spoke about investing safely and using bank finance. As he saw properties drop 50% plus…his lesson he passed on was on LTVS of no more than 40% …possibly even 35%. To many this sounds ridiculous however anything can and will happen especially with the world flooded with debt.
In one of the new areas we are sourcing properties went to extremes in 2008 only to fall 50%. I would rather not saw where this is as we are looking to build a portfolio however Rightmove does not lie. We put in an offer on the property next door in which prices were dramatically higher.
Below are pictures of taking an almost perfectly nice house and transforming it into a 5 bed HMO. Why bother?
First we will have a 10 year lease come Dec 2019, no voids, no management..and great net cash flow.