12.3% yield on five-bed HMO conversion in Gillingham

Hello readers. I’ve been having a lot of people phone and email me recently from reading my blogs at Medway Property News, where I’ve been blogging for almost 2 years now, or people are finding one of my articles on LinkedIn and contacting me there (feel free to add me). I’m meeting one investor on Friday where I will give him a tour of Medway to show him where’s hot and where’s not, and also showing around a couple of refurbishments that I’m currently involved with.

Anyway, I’m posting today about a property that has only come onto the market on Monday. It is on East St in Gillingham, and is offered at offers over £180k. We are currently taking over management of a four-bed HMO on this very road which will have 3 en-suites and 1 off-suite (where a room has its own bathroom). Although building work is due to complete in November, we are already arranging viewings!

6957_RAI170546_IMG_01_0000_max_656x437

http://www.rightmove.co.uk/property-for-sale/property-61712842.html

Here is the property above, with the Rightmove link. You can see the floorplan below.

6957_RAI170546_FLP_14_0000_max_600x600

In the current market, there are a lot of people doing HMOs, so I would recommend differentiating yourself by providing all en-suites. For example, if you made all the rooms here into ensuite (including the reception room), you would have 5 en-suite rooms that in current market conditions should fetch between £525-550 each. With a 2 week void period per room, per year, which I find average across the area, you would have a yearly income of £30,187-31,625.

Although providing en-suites could prove tricky (and expensive), I believe the upfront investment would be worth it in the long run.

The kitchen/diner is just over 11m2, however you would need 17m2 for a shared living/dining area.  I think you could get creative here by removing the bathroom and lean to, to create a nice living area with sofa and TV. This would become very attractive to tenants. A spare WC would remain for the living area.

This property would also do very well with the student market.

So lets look at the costs here.

Purchase price: £180,000.

Stamp duty: £6,500.

Refurbishment: £50-70,000.

Legals: £1k.

So, at the top end, the spend could be £256,500. However, with an income of £31,625 the gross yield could be a whacking 12.3%!

If you are interested, please contact the selling agent, as we are not selling this property. In fact we don’t sell property at all, we are a HMO-specialist letting agency. This means you can be assured I will give you the advice you require. Feel free to call me on 07944 726676, or you can email me at hasan@bullfinchproperties.co.uk

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