How to Make £80,000 on Just One Professional HMO
I am not writing this post to brag as most of this was just luck. First luck that the area became an article 4 area and secondly unloved Salford became one of the most desired areas of Manchester to invest in.
Our model is buy, refurb, tenant, sell some and with the profits keep some. We had been focusing on Professional HMOs to refurb, tenant and sell on in order to keep long term social properties on 5-10 year contracts with no voids, no managment and virtually no maintenance.
This particular Professional HM0 we had a bit under 2 years. This professional HMO was located in Eccles. Unknown to us when we purchased it and refurbished it, that it would be located in an article 4 area. This is just part of what I mean luck. Article 4 means any new HMOs need planning permission which in many cases not granted. Thus the price of the HMO goes up in value. We purchased for 85k, refurb almost 50k into 4 end suites and collected rents in the low 20k for almost two years. We self managed as had some rough experiences with management agents who promised the world but did not deliver. We sold this property to a London investor in excess of 185k. We basically made approx 80k. However we did not go out and buy the next Range Rover as so many do. We bought more dilapated terraced houses in the NE to refurbish and tenant with social tenants on long contracts with no voids, no management and virtually no maintenance.
The key point I want to make is to recycle your money either from flips or from simply income into more cash flowing properties.
I speak to many people and ironically have many Hong Kong investors think they can manage a refurbishment from a far. I can tell you first hand there are always challenges and issues. The only way I can pull this off is having the right JV partners and the right builders. We have used the same father and son builders since 2014.