All Posts by Matthew Moody

Ask The South Africans About Property Investing – They’re Eyeing Up The UK

By Matthew Moody | Property Investing

Well, it seems that not everybody is phased by the current crisis apparently facing the UK property market.

Property investing has always been a global business and a recent study by a South African property investing company believes that the UK may be one of the best places to buy.

According to the firm, over a third of all property transactions in London were to foreign internationals in the last quarter.

With demand outstripping supply, anybody taking a medium to long-term view can make a good investment in the UK property market.

Don’t say I didn’t tell you 12 months from now…

Top Tips For HMO Property Investment

By Matthew Moody | Property Investing

In today’s market, getting the right property investment is even more important than ever – and getting the right HMO property investment has become more difficult of late with many changes happening in the market place.

Over the last six months, we’ve seen the removal of:

• daylight bridging
• 90%, 85% and 80% loan-to-value buy-to-let mortgages
• the biggest buy-to-let lender, Mortgage Express
• dozens of smaller lenders have left, been amalgamated or withdrawn
• lower rental stress
• flexible lending
• lower credit ratings
• higher interest rates from the lenders

But its not all doom and gloom.  At the same time, we’ve also seen:

• more and more and more deals coming through everyday
• 20% below-market value is the new 35% below-market value
• more estate agents wanting to work with investors
• rental rates increasing
• the Bank of England base rate drop to 4.5% (and possible more on the way)

So, what can you do in this climate to make sure you have the best possible HMO investment?

1. Ensure that you do your test-research first to determine demand.  You do not want to buying in a so-so area because the next 12-24 months will be tough for a lot of people.
2. Ensure that you buy in the right location in your chosen area.  There is nothing more disheartening than finding out that people do not wish to live where you’ve bought your house.  Most houses will rent BUT make sure yours will for the rent you need to make a decent living.
3. Ensure that you get a DIP done as soon as possible for the best product out there – products seem to be changing daily and who knows what else will happen to the lenders before we emerge out the other side.  Usually (but not guaranteed) getting a DIP will at least secure the rate and LTV for a period of time for you.
4. Ensure that you stick to no more than £50,000 per bedroom and ideally £35,000 to £45,000 stacks a whole lot better in the current climate.
5. Go for the largest HMO that you dare with the least number of stories and most number of bedrooms.  Reason being that 2 storey properties do not currently have to be licenced in most councils and the more bedrooms you have, the more monthly cashflow you will make.
6. Use every means possible to find that deal; don’t just rely on one source of leads.  You can use estate agents, the internet, newspapers, lead sourcers, finders, property clubs, professionals, leafleting etc. 
7. Remember, this is one of the best times to buy right now so don’t be afraid to make a silly offer.  With 75% LTV being the maximum you can get, you need to be offering 35-40% below-market value with expectations of getting the deal through at 25 to 35% below-market-value.
8. Find out who other property investors who are still buying are using for their brokers and solicitors and if you can, use them.  Their teams may be more expensive but you are more likely to get the deal through.
9. Get your financing sorted out as soon as you can.  Don’t leave any creative financing to the last minute as it may fall down.  Make sure that you start talking to a service provider sooner rather than later and get your funds secure.
10. Do not underestimate your expenses.  Use my £100 per tenant MINIMUM for a professional let and take £10 off a month for the other market sectors.  It pays to be more cautious with this than optimistic as any uplift in profit will be a welcome surprise rather than a nasty one!

Its a buyers market right now and those investors who are out there stacking deals every day will find some that do stack up. 

If you haven’t already signed up for my exclusive 10-part ecourse on building your own HMO business making massive cashflow, then put your name and email address in the box at the top right-now!  I guarantee that you will learn some valuable tactics that you can put to use in your own business.

What Type of Fire Alarm Should I Get For My HMO?

By Matthew Moody | Property Investing

Its a question I often get asked and to be honest, it depends on the type of HMO you have.

The main guidelines I would give you are:

Under 2-storey and less than 5 people – a normal smoke detector in hall and landings on both floors plus a heat detector in the kitchen together with fire blankets and fire extinquishers.

Over 2-storeys and more than 5 people – a Grade A LD2 system that meets BS5839 Park 6 standard with fire blankets and fire extinquishers.

What is a Grade A LD2 system – well I’ve leave it to my friends over at Wire-Free Protection to give you the jist in a non-technical easy-to-read format.

http://www.w-fp.co.uk/blog/hmos-houses-in-multiple-occupation/

Suffice to say; always shop around for fire quotes and get at least 5 – you’ll be surprised at the difference in price.  I generally pay less than £3,500 but have had quotes for up to £7,500.  A little birdie has put me in contact with a new supplier who claims to be able to install for less than £1,500 so I’m investigating and will let you know once I know more.

How Long Have HMO’s Been Around?

By Matthew Moody | HMOs

I came across a fascinating article at the weekend about the change in household living habits over the last 300 years and it got me thinking about how our modern interpretation and societal prejudices has changed our perception of HMO’s for good. 

A box of ones own  ably written by the BBC and featured in Dundee University’s Design Blog, the article talks about how our modern concept of “family” living has changed over the centuries.

Back in the 18th century, it was common for a man and wife, together with children, lodgers, housekeepers, other employed staff and relations to the owners living in the one house.  A kind of super-HMO I guess in so far as these were often large houses with multiple rooms, living quarters and people occupying them.

But this wasn’t uncommon and these types of HMO’s existed across the country!  People who worked together would often live together supporting each other in their working and private lives.

Move this forward to the Dickensian-image of the greedy landlord renting out hovels to poor working class people by the room or the nosy landlady snooping around the rooms of her lodgers, and your all too familiar picture and perception of a modern day house of multiple occupany starts to appear.

Its a shame that people can’t see HMO’s for what they are – an affordable fun way of renting for young and old professionals with a built-in community of people that can help and support you along the way.

Does Your HMO Require An EPC?

By Matthew Moody | Property Investing

Since October 1st, it has been made illegal to rent a property without an Energy Performance Certificate. 

The reasoning behind this is that it allows tenants to choose between properties and it clearly marks how energy efficent the property is.  The EPC will last for 10 years and has to be given to a tenant before they decide to rent a property from you. 

Personally, I don’t think having an EPC will make any difference to a tenants decision to choose one property over another.  It may if the energy gains are so different but unless they are choosing between an 18th century cottage and a new build house – its highly unlikely.

So, if you have a HMO; do you need to have an EPC?

The straightforward answer is NO, the more complex answer is SOMETIMES.

Following legal advice, Communities and Local Government decided that EPC’s are not required for bedsit-type HMO’s.  They only apply to self-contained properties and renting a room does not count as a self-contained properties.

So, where you have a HMO where the occupiers are sharing facilities such as communal areas and have a shared entrance, you do not need to have an EPC. 

Where the SOMETIMES comes in is if you have a bedsit where the tenants pay for their own utilities via card or coin meters.  Likewise, student properties or others which are let on joint tenances for the whole of the property will require an EPC.

The full information is found at www.communities.gov.uk/publications/planningandbuilding/epclandlordguide

If you don’t have a HMO; then you will need to get an EPC.  For a full and comprehensive review of what is required, I’d recommend that you pop over to House Finder who have written an excellent article on this subject:

http://www.housefinderuk.com/index.php?option=com_myblog&show=energy-performance-certificates-epcs-to-become-compulsory-for-landlords.html&Itemid=48

_{Image: www.freeimages.co.uk}

Is Your Council Trying To Enforce HMO Regulations On You?

By Matthew Moody | HMO Regulations

Seems like councils are cracking down everywhere on “rogue” landlords.

Day after day, I get alerts of this council and that council “cracking down” on the landlord community.

Whilst I applaud and uphold the need to meet health and safety standards, it does seem that HMO landlords appear to be getting a bad name from a few rogues who cannot be bothered to implement the required regulations.

My top tips for meeting the required regulations are:

• ensure that what is being asked of you is fair and still valid (ie there is no need for washhand basins in every bedroom now; this was revoked last October)
• ensure that you get at least three quotes for work that needs doing – and in the case of electricians, make sure they have NIEC or Part P qualifications
• if cashflow is an issue, work with the council and fire departments to schedule the work in a timely manner that meets the immediate urgent requirements but allows you enough time to find the funds for all the work (after all, most landlords don’t have a spare £5,000 available to just put in a fire alarm system, fire doors and the like)
• be reasonable, work with the councils and fire departments and you will find that they are just people doing their jobs and relationships developed now will serve you well in the future

I would always recommend speaking to the local housing team or HMO officers before you buy in an area to make sure you understand what is happening, what their expectations are and to start putting names to faces as soon as possible.

That way, its not going to be you that the councils are cracking down on.