Waiting For a “GREAT” Property Deal on a HMO

Waiting For a “GREAT” Property Deal on a HMO

I had this statement…I am waiting for a GREAT property deal in order to refurbish and make a HMO. In theory, I agree however while someone might be waiting for that once in a life time deal….they are missing the picture of the power of cash flow. Myself and my JV partners currently have 13 CASH flowing HMOs and 3 in conveyance. We just sold one Social Housing HMO at approximately a NET 9% return for this London investor. Cash flowing HMOs are cash cows. An example of a cash cow is we have 2 Professional HMOs 5 bed en suties in Worsely, Manchester. They gross approx 30,000 plus minus per year. Another Professional HMO will be finished in about another 2 weeks. It will be a 4 bed and we are shooting to rent the rooms for 120-125 per week. In conjunction we have a group of hands off…no void…no management…and maintenance covered Social Housing HMOs.

My point…cash flow on HMOs and time make up for buying so called “Great deal or BMV deal”. Time has a way of healing mistakes and more importantly time has a way of creating cash flow albeit that the HMO properties are rented.

Another example is we met with a London based Hedge fund prior to Brexit. They loved what we were doing and the cash flow we are generating. However they wanted to “wait” till prices fell. Maybe in London property prices have fallen..but not in Manchester. Prices in Salford are moving upwards. There is very good reason they are moving upwards…One word for me, Affordability! You can have a nice house in Salford lets say for a fraction of the price of London. More so prices are moving due to a housing shortage, media center and immense job growth.

A discussion I have with my JV partners is always when looking at Professional HMOs, what is more important cash flow…..or trying to steal a deal….Several months of holding a property makes up the difference when buying….

Let me know what you think…