Sep

HMO Liverpool advice please

admin

Dear All

16 months ago I bought a 6 bedroom HMO in Liverpool for 145k (105k interest only mortgage with Paragon, 5 year fix); I live in Somerset so it’s managed for me. I’m 54 and planning to retire in a couple of years.

Unfortunately, the expected tenants didn’t materialize, (or at least not enough of them) so I looked at another management company. The 2nd company tell me its location is good, as are the room sizes, but it’s in need of “doing up” i.e. new floors, new bathrooms, (only 2 at present ), new furniture new kitchen and decorated throughout – around 20k. I recently visited the property and noticed a couple of properties nearby which were boarded up, that wasn’t the case when I bought it.

I seem to have 4 choices:

A) Sell and loose maybe 40k- perhaps more.
Its my only property in my company so could sell it and the company together. At least it is a clean break with a city I probably shouldn’t have invested in, (I lack local knowledge). I’d stop worrying about it and focus on the successful properties in my small portfolio.

B) Rent to rent.
This would cover my mortgage but nothing else, worried that the person I lease it to may not look after the property, do the necessary smoke alarm checks etc, at worst case end up leasing to someone who ignores legal requirements and perhaps I end up in court!

C) Spend 20k-30k doing as the 2nd management company suggested, rooms would let out at £300 per month (maybe).
Might work but perhaps I could be putting good money after bad and end up selling at a bigger lose in a couple of years.

D) Invest 110k
A project manager has recommended I spend 110k upgrading the 6 bedrooms so that they are all on suite. I think it would probably rent out at £430 a room, however I don’t want to over extend myself and the profit is a little tight –total monthly costs £1,600, total projected income £2,580. In these figures I’ve assumed each room rents out 100% of the time! After re-mortgaging the total amount of my money in the project is £100k.

Any advice would be brilliant – I’m now having the odd sleepless night worrying about this property!

David

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