So many investors in UK property HMOs just look at the percentage returns. Wow,20 percent they think they can make. They do not realize how difficult management can be. Nor all types of unexpected costs.
Every investor has heard the saying “it’s all about the numbers” when investing in real estate. What about the numbers that you forget or underestimate? What about voids?
Most of our HMOs are on social housing in which we do not have any maintenance or management. These are great and they simple cash flow….however we do have Professional HMOs since we do not want to put all of our eggs in one basket ( actually two currently being developed and refurbished) and we have learned to take into account additional costs and expenses…We develop the Professional HMOs in great areas of Manchester. We have one in Worsely right near the train into city center and one in Swinton on main transportation routes into Manchester. Both are being done to a high standard in order to try to maximize our rents. More so both with have en suites. En suite tenants seem to stay longer and are easier to manage.
Professional HMO
The below are expenses we have added into our budgets. Our goal is to deliver profits and we do not want to disappoint our investors as well as we always want to be realistic.
Professional HMO Expenses we have learned about
Seasonal expenses ( Virtually consistant rain in Manchester)
Money held in reserve for unexpected boiler or roof issues
Council tax reassessment
Unexpected lender changes in terms of mortgage
Hiring wrong management company
Government tax changes and regulations ( We all learned that this past year)
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