Ensuites in HMOs
Should you put ensuites in HMO’s? Samuel wrote negatively about ensuites in HMOs in his book a few years ago but since then the market has changed. He admits that the demand for such HMOs is sky high and the supply is too. That means you need to do things as a landlord, to help you stand out from the crowd. As with any investment, you should have done your proper due diligence before signing on any dotted line. You need to be asking local experts such as estate agents and property managers about the potential uplift in value. Ascertain what the ROI is going to be and understand the risk involved. If you are still not sure after receiving advice, you can try renting the rooms out as they are for 6 months and then assess the situation. After 6 months, you can decide to put ensuites in based on the profitability to date.
Another question which is asked in this episode is a more simple one. The viewer asked about the fundamentals of doing a no money down deal and pulling money out. What does that mean? If you already know, you can skip this part of the video or brush up on your knowledge. For those who aren’t familiar, you start by buying a house below market value or buying it at a regular price and pushing the value up. Let’s say, for example, there is Japanese knotweed growing in the garden and you decide to get rid of it for £10,000. You could potentially push the value of the property up by around £50,000 in some places. Then, you get a new mortgage based on the new value and use that to pay for all the expenditure so far. That’s the core of BRRR.
Got questions? Compose them in the comments section below the video so Samuel has a chance to answer them next Sunday!