The property should be suitable for HMO conversion and should be in high yield area
1. Molds and Water Damages
Almost all the properties are completely ripped off from inside to convert it into HMO so how property looks is not a factor you consider before buying your HMO investment property. Water-related damages on the other hand indicate that the property does require extra major repairs which is not covered in general HMO conversion cost. Look out for ceilings that seem to have fresh random paint or the black areas which are randomly concentrated in one patch. Some sellers will try to hide molds and stains on the ceiling by painting the marred areas instead of remediating the problem correctly. They will also try other tactics like air fresheners to cover up bad smells from rotten wood and mold. Examine underneath the drawers, kitchen countertops, sinks, and bathrooms for signs of water damage or molds. You would be amaze how a small gutter pipe leakage can mold the whole wall of the property which would then need a thorough treatment.
2. Limited Viewing, Both Interiors and External
Property sellers or the estate agent should allow you to see a house on sale with no limitation of time. If you see them rushing through your viewing or giving you less time then be alert they might be trying to hide something. Such restrictions indicate underlying issues, and the seller does not want them exposed before the deal is closed. In that case, Before purchasing a property get the home buyer survey done. You can find the surveyor here
3. Absence of Planning Permission for the Work Already Done
Leaving aside conservation areas or listed buildings few of the renovation/extensions do not require permits, like remodeling the kitchen or changing internal layout (Which does call for building control). Nevertheless, examine to ensure the earlier job done on the property is carried out professionally and correctly. Make sure to ask for planning permission for any major structural modifications done on the property.
Remember there are lot of planning applications grants which comes with the permitted development rights revoked which means you won’t be able to convert the property into HMO
4. Location, Location, Location
Rental Yields, Tube station, parking, HMO demand, HMO density, Ease of maintenance, sound, Area there are so many factors originating from “location” which could decide if your HMO investment was a success or a failure. While you can improve your HMO property to match the standards you want, you can’t fix the any of the above mentioned factors of the place it is located. Be sure to ask if the property is located in a flood zone. This should caution you of a very high insurance as you are now adding two risk to the insurers, HMO and the flood zone.
5. The Property Has Been On Sale for a Long Time
It’s good to check on the rightmove about the duration that the property has stayed on the market. Run down houses which are below market value sell very fast (In hours, maximum days). Thus, if you find a property sitting in the market for a longer time, seek to know the reason. If others have viewed and examined the property, why haven’t they bought it? Perhaps it’s overpriced, or there are legal disputes or a structural flow. It would be best first to establish the cause before you make a purchase.
While the issues above are a wake-up call to a HMO property investors, they are not a deal-breaker. However, they are indisputable factors that can add risk to your potential investment. Moreover, fixing them is neither cheap nor easy. Therefore, gather all your information, educate yourself on the area and property and then you can make an informed decision on whether it is good investment or alternatively call us and let us help you with your ideal HMO investment.
