We spend a lot of time looking at houses to convert into HMOs in Bedford and Northampton. So often we find properties that have great space. Huge rooms. Large hallways. Beautiful character features. But they're just not economical to convert into HMO.
One example is a lovely old house in Northampton. It's been on the market for over 12 months, but the vendor is not interested in selling for a price that works for an HMO investor. So does that mean it's dead?
Not necessarily. The other model worthwhile exploring here is serviced apartments.
You often see the buzzword serviced accommodation used in property investment circles and let's be clear, there's some overlap, but it's not the same model. With serviced apartments we're talking about creating multiple studio apartments that run in a self catered hotel format.
In these properties you will have guests and not tenants. You will market online with booking.com not Spareroom. You will pay business rates and not council tax. You charge people's credit cards for damages, you don't wrangle with the DPS. It's a very different model.
Done well it can be highly profitable. But it has to be run as a business. It's not as simple as a BTL, or an HMO.
It requires much more specialised expertise.
We're currently building the business case for converting a large HMO in Bedford into serviced apartments. Our conservative forecast shows an increase in net profit from £40k per annum, to over £200k using this strategy.