This week on Ask Rob & Rob, the guys are answering two very different questions on the topic of HMOs.
The first question comes in from another Rob who’s got in touch for some feedback on a potential HMO in Stoke-on-Trent. The property is fully tenanted and has five double bedrooms, all with en-suite bathrooms.
On the face of it, the property seems like a pretty good deal. The monthly gross rental income is £3,870 on a purchase price of £335,000 – that’s a gross yield of over 13%!
However, his concern is the bricks and mortar valuation. The property was purchased for £95,000 at the back end of 2015 as an office with a much smaller HMO above.
Rob is finding it hard to believe that the refurb price would have cost more than around £130,000 – £150,000 considering house prices have probably only risen by about 15% over the last 4 years. His other concern is the lack of local comparables for him to do a true bricks and mortar valuation.
He’s worried that the property is overvalued as a stand alone asset. So what would Rob & Rob do in this situation?
Our second question comes in from Mahlia who’s looking to purchase more HMO properties in Manchester and Leeds, but has been put off by article four which requires planning permission to change residential property to a HMOs.
Should this be a real concern or should she still proceed with the aim of getting planning permission?
Rob D’s response is pretty clear on this one. Tune in to have a listen.
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