How Profitable are Professional HMOs in Manchester?
Let’s answer this by the simple statement. Very!! Firstly let’s examine a 4 bed with ensuite for professional tenants. In the areas of Manchester in which we work on the low side a room 10 to 12 square meters rents from a low of 600 to 650 a month. Extrapolate this to the 4 beds on a gross basis you come up with 28,800. Figure in running costs of 25% of this amount thus you are left with approx 23,000 a year. The properties we are buying we are looking to buy below market value. We are buying 4 at the moment. They range from a low side of 91k up to 101k. Refurb is costing approx 70k. Add in legals and SDLT plus surprises we are between 170k -180k. On average we are attempting to achieve on a gross basis 16%. Where our model gets interesting is that we look to compound money faster by selling these and recycling to the next property. All the while the property is on the market to being sold we are collecting rents. This adds to our ROI. We attempt to sell on the low side of 12% up to 13.5% if we want a quicker sale.
Thus the following
Cost 170k
Rents assuming hold period minimum 6 months as well as taking into account time to fill
Rents minimum 10k
Sell at 12% 240,000k
Sell at 13% 221,000k
12%
Cost -170k
Rents +10k
Sales 240,000
Profit assumption 80k
13%
Cost -170k
Rents +10k
Sales 221,000
Profit assumption 61k
These are assumptions as the market can shift. Rents can fall. Interest rates can increase however we are very comfortable with this model as a BTL on some of our properties only rent for 700-750 a month. We feel if there is a strong recession professional hmos offer a cheaper way for people to live and somewhat recession proof.
#Ukproperty #renovation #hmoinvestment #property investments #property
http://BHinvestment.co.uk/
Email: info@Bhinvestment.co.uk
Instagram https://www.instagram.com/bhpropertyinvest
Recent Comments