Updated: Apr 19, 2020
There is no doubt that HMO’s give a fantastic ROI (Return on Investment) providing the property is desirable and managed effectively. Our business model does just that, whilst you sit back and let us do the hard work. Are you interested in learning how we have ensured that one of our clients achieves an 11.9% ROI on their HMO? If so, please read on.
First and foremost, what is a HMO?
A house in multiple occupation (HMO) is a property rented by at least 3 people who are not from 1 ‘household’ (for example a family) but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.
Before we introduce our 8 Step Investment Guide and associated case study, there are a few points to consider.
Choosing the right area is the most important aspect of investing in any property, not just a HMO. If there is not a demand for your product it will not let, and vacant rooms equals no income.
Our location in Southampton benefits greatly from two universities, a large hospital, the docks, and several Corporate headquarters that brings with it a sizeable demand for property.
With this in mind, I would like to introduce our case study.
Sandhurst Road, Polygon, Southampton
6 Bedroom HMO
In need of extensive refurbishment works
Achieving rent of £2,320 pcm
Purchased for £295,000 (end of May 2019)
6 Bedroom HMO
Refurbished throughout including new furniture, white goods & sundries
Achieving rent of £3,350 pcm
Revalued for mortgage purposes at £400,000 (October 2019)
35% increase in value of property
Net ROI of 11.9%
The 8 Step Investment Guide
We are pleased to share the process of how a similar result to our case study above can be achieved. Below are the 8 steps we follow to turn clients’ money into a strong tangible investment.
Step 1 - Speak with your trusted financial adviser:
The key to putting together the best possible investment is understanding your budget and ensuring the finances are in place before we start. Your financial adviser will always have your best interests at heart, and our close working relationship with them will allow for precise communication and planning.
Step 2 - Meet with our team:
We like to build a strong rapport with our clients, so step two is about building that bridge and making sure you have a full understanding of what we do and what you are investing in. Trust and understanding from the outset is an essential element to the success of the investment.
Step 3 - Viewing properties:
Once you have all the information you require and are serious about moving forward then it is time to start searching for the right property. We will source various options and arrange a day for you to come and view with us. This also gives you an opportunity to see some of our finished projects, hopefully giving you a more physical understanding of what our joint goals are.
Step 4 - Project proposal & negotiations:
When we know what property or properties you want to put in offers for, we will provide you with a detailed project proposal. This proposal will outline a programme of works, costs, and timescales. We expect a refurbishment process to take around 3 months, but this can differ based on property size and scale of works required.
The project proposal allows us to run the numbers alongside your financial adviser enabling you to make an informed decision as to whether the investment works for you. Subject to your agreement, we start the negotiation process with the estate agent. We deal with all of this on your behalf with the aim being to get you the best possible purchase price.
Step 5 - The buying process:
As experienced estate agents we manage the whole sales process, overseeing the house through to exchange and completion, which under normal circumstances can take between 8 to 12 weeks
Step 6 - The transformation:
On the day of completion, we pick up the keys for you and your refurbishment begins!
EDI’s Construction department has a vast amount of experience in HMO refurbishments, giving you piece of mind that all requirements will be met to satisfy building control, the Council HMO department and any laws or legislation associated with the project.
Working with the EDI finishing department the property is designed in such a way that it maximises on space and accessibility, ensuring we achieve the highest possible rent per room.
Step 7 - Finishing & Furnishing:
This is where it all comes together - the finishing touches of your property’s transformation. Our skilled finishing and furnishing team use the latest interior design techniques to get your property ready for marketing.
Step 8 - Marketing and letting your property:
This is where your ROI becomes a reality. Once the property is finished, it will be marketed on all the major property platforms, as well as presented to our existing pool of applicants. Having successfully let and managed many properties over the years our aim is to find you the best, most reliable and suitable tenants possible to ensure we maximise your ROI and protect it for the future. We fully manage the let of your property, including all tenant liaison, money handling, maintenance, and bills.
The partnership between EDI and Edison Green aims to provide an all-inclusive solution to your property investment. If you want to find out more about investing in HMO's or about our businesses, please get in contact on 023 8112 0213.
Alternatively, you can visit our websites.