Updating post from Reddit.
Hi,
So I am trying to work out if a plan is feesible.
I currently live at my own home. It's a fairly large terraced property, with 5 bedrooms, with a further 4 room basement and potential for two more reasonably sized rooms to be fitted in the attic. Though this would need to have significant renovation carried out to bring those rooms to standard.
I work a near minimum wage job for about £30k takehome a year, with little savings at the moment, but own the house fully, so there is no mortgage on the property. The property is just outside of Cardiff, within 5 minute walking distance to the trains for connections to Manchester/London and Cardiff. It's within a few minutes walking distance to the local hospitals, too.
There are a few local HMO's that have recently been renovated to a nice standard and are renting out 7-12 rooms for around the £650-£750 PCM.
Roughly looking at it, converting the property to a high standard, both attic and basement, I'd be able to fit 11 ensuite rooms into the property, I could fit more, but then I'd have to cut rooms in half, and I feel there is a nice amount of moving space within the current rooms. I dislike the landlords that cut a small bedroom up to its minimum legal size to fit in as many people in the house as possible without a care for their space. That's not what I want.
I feel like I may be jumping in the deep end, and have lots to learn. But does this sound like a wise thing to go ahead and try to set up? From the basic figures, 11 rooms at a fairly priced £650 with all bills included would net £7150 a month.
I am aware that I have to...
With the costs that are generally involved in HMO's would there be much profit left based on the outgoings.? Are there other outgoings that would take sizeable chunks of income away on a monthly basis?
Are there any other tips or things to consider before delving into this further?
Ta!
Have you considered a MUFB (Multi-Unit Freehold Block) instead? As you outline, HMO requires licensing, high tenant turnover, a pain with shared facilities, etc.
A MUFB is a 'self-contained' version of that, featuring small kitchenettes and bathrooms. It is much more desirable and creates much less headache with shared utilities. If you are renovating, you can also separate the power to bill each individually, which removes a pain point.
You can also do a blend of the two.
It really does depend on the property and the possible layouts, but i'd much rather have a MUFB and if i was a tenant i'd much rather have my own space even if small.
Join a landlord group like the rla. They have many support groups that can help with further discussion.
Everything you say is doable but it’s not just the conversion it’s the setup and running of the business which may be harder.
For anything above 6 beds you need full planning permission.
Not a landlord but as a tenant I would say your figure will probably be a bit optimistic. The basement flat smells so London and they are substantially cheaper even in London. Briefly scroll through the listing, you can find rent for a ok standard 1bed starting around £750 pcm near city centre, 650 for an en suite outside the city seems a bit steep.
Given you have no mortgage you will definitely make money once you're beyond the startup costs. But it will likely feel like having a second full-time job, and there's also the loss of your own privacy if you intend to stay living at the property too.