Monday, 9 March 2015

Professional Sharer HMO Opportunity Close to Sunderland Royal Hospital (10.3% Gross Yield)

I was speaking to an investor last week who was exploring the potential of offering very high standard shared accommodation to professionals in Sunderland. I advised that this wasn't a well established market in Sunderland but I knew that it worked well elsewhere...and the trick would be to get the right property in the right area...


This property in Chatsworth Street (SR4) has just come onto the market and it could be the type of property that could work for this sort of let, being very close to Sunderland Royal Hospital

It's a 3 bedroom, 2 reception room property with a family bathroom plus downstairs shower - this means it has the potential for 3 sharers each to have a good size double room (using the rear downstairs reception room as a bedroom) and crucially it has the bathroom plus shower 

Click here for details http://www.zoopla.co.uk/for-sale/details/36168104

The condition of the property is such that if being let to a family it would be just about OK - in need of a bit of titivation and a lick of paint but certainly not an expensive task and then it would bring in £550 - £595pcm

Letting to the professional sharer market would require investment to bring it to a much higher standard - you are looking to appeal to a discerning and successful 20 or 30-something who would rather spend £400 per month on a room in a great shared house than £400 on a poky 1 bedroom flat

On top of that you'd need to furnish it to a good standard - no off the shelf generic 'Landlord Pack' furniture packages here and then you'd need to provide all the bells and whistles in terms of generous broadband package, Sky, weekly cleaner etc

The figures are very ballpark and unscientific but bear with me on this - if you worked on 3 tenants paying the £400 per month as above that would bring in £1200pcm - with this sort of let you'd need to do it 'Bills Included' but let's not complicate the figures with that - the aim of Bills Included is to bring it in at cost (with capped liability from a fair usage clause) so that shouldn't affect returns if done correctly

Whilst the decoration, kitchen and bathroom are OK-ish the aren't to the standard this type of let would require, then you need to furnish it to a very good standard throughout so I would add a further £30k on top of the £109, 950 asking price, bringing it in at £139,950

Based on £1200pcm rent (not including bills) it will return 10.3% Gross Yield - it may be that this could be turned round for less or the rent could be stretched up a little, both leading to much greater Yields, but as always I've tried to work on a worst case scenario

Clearly this is not going to be the type of investment for everyone but I do know that it works very well in other areas and having dipped our toe into this market in Sunderland I also know that it has great potential for pioneering investors

For more information about this property or to have a chat about letting to the Professional Sharer market in Sunderland give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

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