I thought I'd use today's blog post to tell you a bit more about what I'm doing in 'The North'. I went to University in West Yorkshire and so know it well (first rule of property investing - know your area well or at the very least partner with someone who does).
We've all heard of the great returns you can make with student properties but we're also seeing a rise in popularity of HMO's (Homes of Multiple Occupation) for professionals too. It's a great stop gap for people who want to move out of the family home but can't quite yet afford to buy or rent a flat of their own. It is now both of these markets which I am catering for in Yorkshire with some fantastic returns for both myself and investors.
Along with a business partner who lives in Yorkshire, I am in the process of buying two large HMO's. Both are joint ventures with investors and so I have detailed the figures of one of them below...
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7 bed HMO with a 1 bed self contained flat
Purchase price: £215,000 (I know - a bit different to Teddington prices)!
Deposit and fees: £65,000
This is being funded by an investor on a long term basis. I am paying him 1% per month (£650 in cash every month!) for a minimum of 5 years. Better than what he'd get in the bank, eh?! :o)
Remainder of purchase price is funded by a mortgage at an interest rate of 4% above base.
The total costs for the property on a monthly basis including interest on the bank loan, interest on the investor loan, utilities, management fee and insurance equates to around £2,000. That may seem like a lot except when you consider that the total gross income from the property is £34,750! (This is based on an occupancy rate of 50 weeks of the year to allow for small voids - it is now standard for students to sign tenancy agreements of a full 12 months and so you, as landlords, now don't miss out on a chunk of income for the year).
Each of the 7 HMO bedrooms are already rented at £85pw and the 1 bed self contained unit at £100pw. This property is 0.1 miles from a University and so will rent every day of the week to students.
So....
£34,750 gross annual income divided by 12 months of the year gives a gross monthly income of £2,895.83.
Total costs each month, as stated previously, are £2000
That leaves me a personal profit of around £895 each and every month and I own the property 100% without using any of my own money - not bad in my book! I also have a very happy investor as they are getting a fantastic return on their money over a long period of time.
If you'd like to know more about this then please do get in touch. I'm always more than happy to chat about property investing!
Rebecca
http://www.rebeccasmithpropertyservices.co.uk/
rebecca@rebeccasmithpropertyservices.co.uk
020 8398 9333
