R2R strategy

[ArjunB]

Hi all,

I was wondering whether I could rent 3+ bedroom properties in my area (east London) & then turn them into HMOs? In particular, would I be able to do this by renting them out from the landlord & then giving them to an HMO lettings agency for them to fully mange it? Assuming that the property has an HMO licence & the landlord agrees to me doing this, what are the potential pitfalls of doing this?

Thank you!

[Conrad_Paton]

Hi

To clarify do you want convert a 3 bed to an HMO or R2R deal an existing HMO? Sorry your question implies both??

My answer assumes that you have secured a R2R deal on a licensed and compliant HMO:

Will you generate enough cash flow from the occupancy of the HMO rooms to pay the Landlord, the utility bills, other running costs, maintenance, agents fees, accountancy and tax to make it worth your while?

If your occupancy is lower than expected or you have tenant issues and/or late or missing rent payments, can you survive until these have been addressed?

What happens to the tenants at the end of your R2R period? Do they stay or will the property be returned to the Landlord vacant?

Again, if vacant how do you propose to achieve this, if tenants do not wish to leave? 

There's probably more aswell

Conrad

 

[ArjunB]

On 2/11/2020 at 8:05 PM, conrad_paton said:

Hi

To clarify do you want convert a 3 bed to an HMO or R2R deal an existing HMO? Sorry your question implies both??

My answer assumes that you have secured a R2R deal on a licensed and compliant HMO:

Will you generate enough cash flow from the occupancy of the HMO rooms to pay the Landlord, the utility bills, other running costs, maintenance, agents fees, accountancy and tax to make it worth your while?

If your occupancy is lower than expected or you have tenant issues and/or late or missing rent payments, can you survive until these have been addressed?

What happens to the tenants at the end of your R2R period? Do they stay or will the property be returned to the Landlord vacant?

Again, if vacant how do you propose to achieve this, if tenants do not wish to leave? 

There's probably more aswell

Conrad

 

Thanks for your reply Conrad.

Sorry about the confusion - to be clear, I saw a property that is available for rent as a single let on Rightmove. I was wondering whether it would be possible for me to rent this from the owner (as a company) & convert it into an HMO (assuming the property has the appropriate HMO licence) & then rent it out on a room-by-room basis?

Regarding cashflow - I'd do my own calculations & projections as to whether it would work from a financial perspective. I'd make very sure that it works before jumping into the deal!

My question was whether this R2R deal is possible? Renting a single let, turning it into an HMO & then renting it out as such? Except for the financials, what the the headwinds of me doing this?

Thank you!

[dennis hughes]

8 hours ago, arjunb said:

convert it into an HMO (assuming the property has the appropriate HMO licence)

Wlll, there's a headwind right there. If it has a licence you won't be converting it, if it doesn't, you need to research the stance taken by the local authority to yet more HMOs.