INVESTOR ALERT: 6.6% yield on a Medway HMO conversion in Rochester

If you’ve been reading my Medway property blog, you know it’s important to maximise rental yield with good prospects for capital growth. This lovely 6 bedroom home came to my attention after I had an enquiry from an investor in London. It is on Rochester High Street and is on the market for £450,000, with potential yields of up to 6.6%.


You can view this property here.

This terraced house could be converted into a Home of Multiple Occupation (HMO); that would need to be licensed as it is 3 storeys and would house up to ten people. On the first floor, although there are no pictures, the property should be ready to rent with two bedrooms sharing a bathroom and another ensuite. These all match the minimum room sizes under Medway HMO guidance. On the second floor some work would need doing to remove the ensuite and make the bathroom accessible to all tenants.

Furthermore, all the rooms would have to be converted to HMO standards with interlinked smoke alarms, heat detectors, carbon monoxide alarms and thumb lock fire doors. Planning permission would be needed from Medway Council, which is likely to be granted as long as the regulations are conformed to.

So at conservative estimates, 3 double occupancy rooms would bring in £500 per room and the 3 singles £450 a month. Gross monthly rental income would therefore be £2,850. Properties in this area are very desirable. I know from managing a property on St Margarets Banks that there is an abundance of free parking on the adjacent road and the central location next to Rochester station means rooms are let in under a week or so. Even so, factor in 6 weeks void periods per year and this could still bring in £30,250 per year. With expected renovation costs of £10,000 a gross yield of 6.57% is to be expected. This does not take into account expected stamp duty charges and associated costs of any purchase.

So with a decent rental yield, what about capital growth? These ME1 1 postcode properties are rare to come by with only 6 being sold on this street in the last 7 years. This property was last sold for £293,000 in January 2013, so if it sells for its current market price of £450,000 that is 53% growth in 2 years- very good if you ask me.

So if you have the funds to invest in this buy-to-let it could make you a very good return. As I posted the other week here Rochester has been the second best performer in the country for rental growth in 2015.

If you liked this article, subscribe to the Medway Property blog for the latest on Medway property prices and buy-to-let deals. If you wanted to have a chat about investing in Medway give me a call. My number is 07944 72676, or you can email me at hasan@bullfinchproperties.co.uk.

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