HMO (House of Multiple Occupancy)

What is an HMO?

Where the living accommodation is occupied by three or more persons, who do not form a single household (i.e. a relationship by blood, marriage or cohabitation). One of the main reasons Investors get involved in Property Investing, is to make a return on their Investment, and ideally a passive income. A passive income is very attractive for everyone - who doesn't want to be making an income for no effort on their part?!

This can come about from Investing in property, where the rent received outweighs the running and finance costs. One of the property vehicles that can give the biggest positive cash flow are houses of multiple occupancy (HMO’s).

Example Properties:

Property A:    Basingstoke Road, Reading, RG2 0EL Purchase Price £150,000
Specification  5 Bedroom terrace - New kitchen, New bathroom, Re-plastered throughout, Re-wired / New CH / DPC / New plumbing, New UPVC windows throughout

This property has undergone a total refurbishment and is supplied fully let. The property provides 8 bedrooms and meets all current HMO regulations.

Example of Figures
Rental Income = £15,600 pa
35% Deposit = £52,500
Sourcing Fee = £1500 + VAT
Legal and finance costs - approx £1500
Loan = £97,500
Mortgage @ 5% = £ 5364 pa
Net Income = £ 10,725 pa
% Return = 20%

This is a huge return on your Investment! Around a 20% cash on cash return on your Investment!

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