Which is Better to Buy & Rehab or Purchase Turnkey Real Estate Properties?

I just got off the phone with a potential investor for one our ready made Professional HMOs and had this exact conversation..

Which is Better to Buy & Rehab or Purchase Turnkeys?

I told this London based investor obviously we are making a profit for our time and energy in providing him this Professional HMO. Furthermore I expressed we specialize in finding below market deals and we are dealing with all the headaches of refurbishment. I told him about the countless phone calls to United Utilities to make sure there is enough water pressure as well as dealing with constant issues that come up. Dealing with the internet company scheduling appointments….or all the time spent furnishing the HMO to make it look like a home that someone would feel comfortable in rather simply a professional HMO. More so I expressed the time and effort expended with all the viewings. All of this is time and energy. More so it takes time to learn all these things…plus all the mistakes along the way.

Truthfully if they have the time and lived in Manchester, had the experience in rehab…then maybe they should dive in and do all the work….albeit I am sure they would make many mistakes along the way( even I have with my 20 plus years in real estate). We are always learning. More so…humbling making mistakes.

Truly it is a great question if one should do their own HMO or buy a ready made one.

It’s such a great question! I think the only true answer to the question is it depends on ones personal situation and experience. What are your goals, what are your interests in an investment, what skills do you have, and what’s your risk tolerance? More generally, what is most important to you? Everyone is going to have a different answer as well as different budget. I would add…Any time you do something yourself, you have the greatest chances of having the nicest quality of whatever it is you are working on. You are probably going to buy the nicer property, you are probably going to rehab it to a slightly (or more) higher standard, and it’s probably in a slightly nicer area. Unless you are a really experienced investor and only care about numbers, then maybe you don’t put so much love into the process. But typically, doing everything yourself tends to happen in nicer locations with nicer properties and prettier rehabs. Probably, you will spend much more than you really budgeted for.

Contrarily because it is our business sourcing…refurbishing and tenanting Professional & Social Housing HMOs are costs are less. We systematize issue.

Systematizing saves time and money… 

More so if you do the refurb yourself….Not too unrelated to quality, you are in control of everything (hence getting that better quality albeit probably overpaying for it thus lowering your yields). You make the decisions, you make the choices, you have a hand in everything, and there’s a really good chance that you are sleeping pretty well at night because you are in control. Control means responsibility. Control means time. We are in and out ( tenanted)& cash flowing a property from a low side of 1 month of 6 days a weeks from 8am to 6pm to 2 months. Personally I have seen refurbishments go own for 6 months to even over a year with weekend warrior newbie investors.

Time is money again.

Bottom line…

If you’ve never refurbished a HMO before, you have to rely on a contractor’s expertise, and that can be dangerous and expensive if you have the wrong builder. How about if you aren’t skilled in finding good distressed properties, you have to figure out how to do that. How do you know if the property you are buying is a good candidate and how do you know which areas to purchase? Potential layers of expertise you may need when you are doing everything on your own are: finding good distressed properties, negotiating, creative financing, rehabbing, and landlording. I would easily consider some of those to be advanced skills that are not inherent right off the bat.

You choose…This is the reason we prepare ready made, tenanted Professional & Social Housing HMOs in good areas of Manchester in which are achieving strong rental yields and hopefully some appreciation.