Should you stick to an existing HMO?
If you’re unsure on which way to go, read more on how to make that decision…

Hello – we’re here again with another fantastic short and sweet video and blog.

This week’s short and sweet is looking at a question from Corbyn about whether you should take on an existing HMO or take on a house and convert it to an HMO…

“Getting planning permission and HMO Article Four areas, the general advice is to steer clear and to market to existing landlords. But it appears that some people have successfully gained planning and converted from C3 to C4”

So, there are a few things to consider here.

Does the property need planning?

Now, if you need planning it can be a very lengthy process. You need to understand your local area and the likelihood of you getting the planning.

Also, what's going to happen in the meantime while you go through that long process?

In our area, you need to get planning to convert from a C3 to C4 - so to go from house to HMO. Therefore, we don't do that for our interim properties.

We market and only work with existing HMO properties. But as you say, there's lots of people converting houses to HMO’s and typically that'll be in areas where they don't require planning.

In this case, you would bring the property up to the HMO Licensing Standard, the licensing team would give it a stamp of approval and away you go.

How do you decide which way to go?

The best way to decide if it’s worthwhile doing is to use the deal analysis. On some occasions the landlord might be prepared to pay for those changes or pay 50%.

Often the benefit of taking on a house is that in some areas the rent will be lower as a single house than it would be as nature mode - there's more upside for you and you'll still be able to give the property owner a great rent as well.

So you just need to decide who is making the investment upfront, which you can negotiate with the landlord and then go ahead and either the landlord does the work or you organise the work and he pays – so there are different ways you can work this out.

Does the deal stack up?

The number one thing to really pay attention to is whether the deal stacks up with the additional investment from the HMO and any money you need to pay to make the deal work.

And if the deal still works, you can go ahead and go from a house to HMO and if the deal doesn't work, you can walk away.

So, the answer to this is it depends on your area. If your area requires planning to convert to HMO, then typically that process is too long for most rent to renters to want to get involved.

But if it doesn't involve planning, then why not go ahead if the deal stacks up.

We've put the deal analysis out there for free for you to use. You can find the links in the free online training and in our Kickstarter coaching course – links below.

If you want more detailed analysis of all your deals, then one of the things which we do on the course is you can submit all your analysis beforehand and we'll go through the deal with you and give you feedback so we can ensure every deal is going to be profitable for you.

I hope that’s answered the question and as always, if you have any more you can comment on the video and I’ll get back to you.

See you soon and bye for now,

Stephanie & Nicky

xx

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