If you are thinking of investing in a house to let you may want to consider purchasing a house of multiple occupancy (HMO). In the right area, you could see a 12-15% return on investment, compared to an average of 7% return on a standard buy to let property.
The North West, particularly Liverpool, is becoming a choice location for such investments.
A recent report from the Mistoria Group notes that although the initial investment on a HMO is usually higher than a standard buy to let house, the returns have been considerably higher over the past five years. Mish Liyanage, Managing Director of The Mistoria Group, claims that buying in the right location and market in the North West, much higher yields will be seen compared to a standard buy-to-let in the Midlands or South East. If you are looking to supplement your monthly income, a HMO provides a secure and excellent performing passive investment. Caution is needed, as is good research, since return on investments can vary drastically by postcode.
If a HMO is close to a University they will usually have a higher return due to the ability to ask for higher rents in these more desirable locations. Students and young professionals will pay the higher rent for a HMO if they are close to their school or work. To further the attractiveness of investing in a HMO in Liverpool and Salford, Article 4 is not in operation, allowing conversion of a family home into a HMO of up to six unrelated people without needing planning permission.
Liyanage explained: For example, investors can acquire a high quality, three bed HMO which houses three students, from £120,000 upwards in Liverpool. The return on investment is very attractive too, with 13 per cent (8 per cent cash rental and 5 per cent capital growth). The gross rent on the property will exceed £1,235 pcm, as each room is rented out. Larger rooms, open plan living and kitchen areas, ensuites, TVs, unlimited broadband, premium kitchen appliances and furnishings are the type of features that help to generate a high yielding HMO.
