Student/Professional HMO - South Wales

[Rob787]

Hi

I have been investing/managing single BTL's for 10+ years in South Wales and am considering moving in to investing in HMO's possibly in the same area.  I'm looking at both student and professional HMO opportunities and have a number of related questions but my main 2 are:

1. What do people perceive to be the short/medium term outlook for the student HMO market? (What is current/future demand like? Has anyone got experience they could share with me of the market in South Wales?)
2. What areas close to South Wales are potentially strong professional HMO areas? (Again, if anyone would be willing to share their experience of this market with me then that would be great).

For background purposes, I live in South Wales and attended university here therefore have very good geographical and property focused knowledge of the area, but apart from my own research have none regarding HMO's.

As a side point, I would be happy to discuss/receive general advice regarding HMO investment outside of South Wales (as I'm not 100% set on this area), all info would be greatly appreciated. Thanks in advance.

[tchughes]

Hi Rob,

I do student HMOs but mostly in North Wales. Ive been doing it for 11 years. Have also done normal AST and a few other things.

Buying where you know is a massive advantage in my eyes. I see outside investors buying in areas that I wouldnt as there not quite the favoured student areas.

Personally I much prefer students to what people refer to as "professionals" for many reasons, to many to list really. But top level, letting on academic basis means predictable cashflow and having them empty for two months of the year to do maintenance. If youve got decent HMOs (I dont mean instagramable like those that need investment do), just good enough that you would stay in yourself, like middle of the market. You'll find it mostly the parent paying the rent without any issue.

I have a spreadsheet for calculating cashflow on HMOs somewhere. Drop me a message with your email and I can send it you.

[Rob787]

Thanks tchughes. A spreadsheet would be a great help.

I agree with your main reason for preferring students, as far as I can see this is the greatest benefit of a student vs professional let (even if the potential yield is slightly lower). It’s more than made up for in lower void periods. And would definitely be my preference.

The main thing holding me back currently is the short term effect of COVID on the universities and potential travel of international students, I think long term will be ok. Have you seen much difference this academic year to last? Any tenants pulling out? Or issues finding tenants?

[tchughes]

On 10/26/2020 at 8:42 AM, rob787 said:

Thanks tchughes. A spreadsheet would be a great help.

I agree with your main reason for preferring students, as far as I can see this is the greatest benefit of a student vs professional let (even if the potential yield is slightly lower). It’s more than made up for in lower void periods. And would definitely be my preference.

The main thing holding me back currently is the short term effect of COVID on the universities and potential travel of international students, I think long term will be ok. Have you seen much difference this academic year to last? Any tenants pulling out? Or issues finding tenants?

Hi, I'll email the spreadsheet shortly.

I thought I was going to lose my saving this year paying the overheads. I assumed like a lot did that paying rent on a student house would be low priority for parents & students would go home.

BUT, Ive had the opposite problem. Tenants that normally leave by the end of June wanting to stay longer and the tenants that where due to move in September requesting to move in early. One thing everyone forgot is at 20 years old the last place you want to be stuck for months on end is at home with your parents! So Ive had higher occupancy and some scheduling to sort out.

I dont think my story is typical though. Those with international students, lower quality house and also not as proactive as myself have had issues.

Even with my story above I had tenants email me to try get out of rent because of corona. One house wrote me a formal letter saying they wanted to stay longer BUT didn’t want to pay rent! Not couldnt, didnt want to. Hahaaa A load of stuff about government mortgage holiday and had to pass that to tenants and stuff. I explained the reality to them and all payments where made. hahaa Dealing with young first time in the world tenants is something you learn to manage with experience.