As you may well know, I specialise in managing HMO’s in the Huntingdon to Peterborough corridor.
I spotted a house in Huntingdon last September and have followed its progress all the way through since then. I first viewed it when I attempted to buy it, as I have a Single Let of my own around the corner on the same street. The reason I couldn’t buy it was because it was a cash sale only, as it was a repossession. As most buyers need a mortgage, it has fallen in price by 18% over the past 6 months.
Then only a couple of weeks ago an Estate Agent friend from London who represents individuals who want to invest in the Huntingdon area approached me about it. It was already a 6 bed HMO. Although, this time round, when it re-opens, it will have to be licenced!
Meanwhile, another investor from north of Cambridgeshire phoned me yesterday saying he had bought it. He asked me if I would be interested in managing it as he lives almost an hour’s drive away. Of course I said yes!
Situated on a respectable working class estate in Huntingdon, it has 6 bedrooms, a downstairs cloakroom, a bathroom and an en-suite to master. It is very near the industrial areas of St Peter’s Road and Tower Fields Leisure Park. Perfect for the warehouse, shop and factory workers to easily get there on foot, by bicycle or car.
In need of about £30k work doing to it, it can rent at around £2400pcm. Bills, management fees and insurance would be around £738pcm. Add 15% of gross rent for voids and maintenance and tax every month (£360) comes to £1098. This leaves £1302.00 net profit for Landlord. However assuming he had a mortgage for say, £600.00 (variable), that would leave £702.00pcm. Based on the sold price, that is an 18% gross yield! Net yields are 11% without including management fee. They are 9.8% including management fee, and around 5.3% including the mortgage. Not too shabby for the Huntingdon area.
However, do be aware this buyer will be on a 9.8% yield, as they are a cash buyer. They are not HMO specialists, therefore they need to factor in my management fee! They do not have to pay a mortgage. But they still have had to find the cash from one of their other resources. They have done their research thoroughly and have got themselves a great bargain. A fully “dressed” (including kerb appeal) house of this calibre is capable of fetching up to 25% more than they paid for it in the Huntingdon area.