4 Vs 6 bedroom HMO

[@darrensullivan6173]

Thinking of doing a 4 person HMO in a 2 bed property. Had several viewings all the tenants are turning up in 1’s and 2’s saying they are bringing in family members in as well. Not sure if they are family though - a sub letting risk!

[@EmilioMiguel]

what about a 5 bed HMO though? Great video by the way - I've watched all of them on your channel today. I have also fininshed my first 3 to 4 bed HMO conversion in Bham, currently around 2 weeks away from completion of the refurb.

[@TheSajHussain]

It's really all about the ROCE (Return On Capital Employed). Let me know if you need any help. My HMO agency manages hundreds of rooms in Birmingham.

[@hindustanicricket]

How do you find out if you live in an article 4 area. In some cases just half the city come under article 4. But how do you find this out.?

[@TheSajHussain]

Hi Dinesh, the planning department at the local authority will hold this information. E.g. here is the information for Birmingham www.birmingham.gov.uk/downloads/file/3233/large_scale_article_4_area_map

[@Danyal-t1v]

6 Bedroom HMO will always work the numbers are just too tight for a 4 bed

[@TheSajHussain]

My preference is 6 bedrooms. It can be done under permitted development, so no additional planning permission required if there is no Article 4 Directive in the area. However, 4 bedrooms can work in some areas depending on the purchase price of the house the the rent you can achieve per room.

[@rayhankareem6360]

The way you explain is complicated. But i got it

[@TheSajHussain]

Thank you for the feedback Rayhan.

[@MrRobertomendola]

Thanks for the video, always find this topic very interesting and food for thought! The mortgage sounds quite high if it is a interest only. or are you referring to a repayment mortgage? Kind regards.

[@TheSajHussain]

I would use interest only in these deals. The numbers in the video are random to demonstrate the principle

[@EmilioMiguel]

What's the reasoning behind using an interest only mortgage Saj?

[@TheSajHussain]

@@EmilioMiguel All of the interest can be off-set as an expense in your accounts. However, capital payments cannot be off-set. There are also some tax changes happening that you should be aware of (Section 24).

[@EmilioMiguel]

Saj Hussain ah I see - sounds like a conversation with my broker. Thanks Saj