Regardless of so many course sellers promising…No money….get all your money out etc….Banks are not that easy and think they are getting more and more difficult. Especially with the new rulings coming up in September.
As we prepare ready made turnkey HMO properties both Professional HMOs and Social Housing HMOS, we speak to many potential buyers. However, there is a huge disconnect from what these property investors think and what the banks seem to be doing. Firstly, I am not giving any financial advice but see what is happening. Banks seem to be lending only to experienced HMO landlords. We have seen buyers come to us with buy to let portfolios, proof of funds yet a particular bank will not lend them due to distance from the property or their experience.
More what we have seen, all depends on the bank….the relationship with the bank and obviously the credit worth of the property investor. We have had ridiculous situations. We recently sold a 5 bed ensuite generating 31,500. LLyolds valued the property at 193k and we sold at 195k. However a 4 bed ensuite not all that far away generating 23,500 was so completely undervalued by Paragon. This spooked our property investor and he could not decide what to do.
I think property investors must have money to work with or JV with others who have. I get at least 3 calls per day with I from London and I want to invest in a Professional HMO in Manchester. Can you help me? One of the questions I have is how much are they working with. I hear numbers like 40,000….25,000 and rarely 60,000. These want to be property investors must realize they need at least 30% of the purchase price…not including all the hoops that banks now make property investors jump through.
It is tough as many want to get into Professional HMOs or Social Housing HMOs as personally feel they are one of the best investments around. Bricks and mortars do not evaporate during a real estate crisis. Last year I was in Argentina with my family. One story that I heard over and over again was that the people who survived their Depression were those who had real estate. The currency crashed….yes property prices went down…due to liquidity….there were no sales….but their wealth was protected by owning rental property…