HMO Financing and JV Oppurtunities UK Real Estate
The question always is…Many new investors ask…..How will I finance my HMO purchase?
Many new investors simply go out to the bank and get an interest only mortgage. They give a personal guarantee without putting much thought. All they can see is the money they think that they will make . They do not take into account the inevitable voids….management….or maintenance. They bought into the story of 20% yields plus. The key point is the net yields. Regardless those of us who have had our fingers burned know better. That is why I made this video. Property investing is not easy or a get rich quick. It is a business and a ton of hard work ( plus hard knocks).
I strongly suggest using low leverage and use capital repayment loans. I have seen the devastating effects when interest rates spiked in 1994 as well as the wipe out of Mercedes driving property investors in 2007-2008. The key is low leverage and using JV partners. There are many different ways of working with a JV partner. You must build trust, confidence and knowledge. The JV partner with the money can have the property in their name or put a charge on the property to protect their interests. The other party finds the deal and does the work.
Our family is the JV partner of 2 sets of property investors. We look to have a 16 HMOs that are up for sale at anyone time. We offer investors a NET return of 8-9% depending on the area. Parallel to this we all are keeping some of the HMOs for ourselves. We do a special niche of HMO for Social housing. We enter into 5 year contracts with the a major PLC for social housing. We do not have any voids….virtually no maintenance. We get 55 per week per room at most of our HMOs. This is a way to build wealth.
Sell some HMOs….Keep some HMOs …Use very little leverage….Look for like minded investors who have deep pockets who want to JV and grow with us…
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