HMO Sourcing-How the process works from start to finish?
THE BUYING STAGE
- We present the financial figures showing how much it will be to purchase, convert and the rent that can be achieved on your selected property. We aim for any HMO Property that we source to be refinanced (if desired) to allow the purchase price and development costs to be mostly taken back out through the up lift in the property’s value after the development. Most of the time expect to leave in between 10-25% of your initial capital investment. Our aim is for any HMO property that we source to be “LITTLE MONEY LEFT” after the development.
- Before we can source a property we must see proof of funds to confirm any investor is in a position to buy. We do this to confirm an investor is a “Serious Investor”.
- There is a waiting list due to the interest that we are currently receiving. The reservation fee that will be required is £1,000 which will be deducted from the final development and project management fee.
- We can recommend a mortgage advisor to you at this stage if you need to speak about finance options if you are not a cash buyer.
- Once you have confirmed you are happy with the property we have presented to you, we will put an offer in on your behalf which hopefully will be accepted. We work closely alongside Estate Agents in the area and due to them knowing that we have investors waiting for properties that are suitable to convert to professional HMO’s, they often present the properties to us first before they go onto the open market.
- We both sign contracts agreeing that NGU Property Refurbishments will project manage the conversion into a HMO.
- The property completes and you are now the legal owner.
CONVERSION INTO A HMO
- NGU Property Refurbishments re-confirms the initial development costs to convert the property into a HMO and confirms the time frames for the completion of the development. This is produced in a document called “a property condition report costing” and is signed by you to confirm that you agree with the terms and conditions of the HMO project development.
- A HMO project development takes 14 weeks from start to finish (12 weeks to develop the property, 1 week to snag and the remaining week to furnish).
- We have specialist HMO tradesmen that only work on this side of the business. To make sure HMO developments go to plan, we need a minimum of 30 days’ notice to fit any new HMO development project into our current schedule of work.
- NGU Property Refurbishments require a 50% upfront payment for any development works on any vacant property.
- A further 25% payment will be required once 75% of the development work has been paid out for.
- The remaining 25% payment must be paid upon completion.
- If any additional budgets are agreed once work has started an additional 50% upfront payment will also be required for this additional development work.
TENANT FIND AND FULL MANAGEMENT
- We will advertise your new HMO on all of the relevant websites to get it rented quickly with quality tenants. Advertising for your property begins at week 12, giving us 2 clear weeks to find you tenants before the development is finished.
- All rooms will be “staged” to provide professional photographs to attract the best working tenants on the market.
- We will credit check all new tenants and verify their employment details and sign them up to a 6 month short hold tenancy agreement.
- An inventory will be provided of the communal areas which will be updated annually.
- A furniture inventory will be made of the communal areas which will be updated annually.
- A separate inventory will be performed on individual rooms when a new tenancy agreement begins.
- NGU Homelettings details will be provided to your new tenants so we can collect the rent and organise any relevant maintenance when it occurs.
- Your property will then be inspected every three months by a member of the NGU Homelettings team. This inspection will be an informal visit and feedback will be provided verbally. An NGU representative will also collect any money that is received from the washer and dryer use (£1 per washer use and £2 per dryer use).
- Your HMO property will have the communal areas cleaned every 2 weeks and the tenants will have the option of having their own room cleaned for an additional £5 extra per week on their rent.
- Every 6 months a formal property inspection can be organised to confirm its condition (we highly recommend this) and then we will organise an annual inspection thereafter.
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