Ten Percent Plus Buy to Let Yields in Cambridge For HMO Investors

Investing in a property and letting it as a multi room let can offer a great return on the capital employed. Unfortunately if such a project is not managed professionally it can also expose the investor to significant penalties

Cambridge, United Kingdom (prHWY.com) July 20, 2012 - Cambridge, Cambridgeshire, UK, July 11, 2012 -- Investing in a property and letting it as a multi room let can offer a great return on the capital employed. Unfortunately if such a project is not managed professionally it can also expose the investor to significant penalties, fines and even a custodial sentence.

Properties occupied in this manner are known as 'houses in multiple occupation' (HMO's). Depending upon the local council regulations some will need licensing. All HMO's will need licensing if they have 3 or more stories (including basement, shops or loft conversions) housing 5 or more persons forming 2 or more households.

Even though there are additional issues involved investors should not be put off by licensing or the investment needed to ensure properties are safe and warm. They should however seek professional advice. Terry Lucking an experienced Cambridge lettings agent is pleased to help investors understand what is required to select, prepare, market and manage a multi let investment professionally and safely.

Demand for well presented professionally managed rooms in Cambridge is very high. It is not confined to solely to students who want to rent rooms. The key is selecting a property that will work as an HMO. This is not so easy and requires some experience in the HMO market and also of the specific location being considered .

As more investors enter this market the competition for the best tenants is growing. Providing tenants with a great living experience is essential in Terry's opinion. To find the right property Terry often visits 20 properties before finding the one where the floor plan allows for sufficient space for the changes that need to be made and the accommodation to be offered.

If done correctly the rewards for the property investor can be extremely worthwhile as this real example of a property Terry was involved in shows.

Ashvale Cambridge HMO Property

14.7% Return on Capital Employed based on a 25% deposit
Net income pre tax £14k
Gross capital used £94.7k

8.3% Return on Capital Employed based on a cash purchase
Net income pre tax £22.5k
Gross capital used £272k

What Is Involved in Setting Up An HMO?
A fire risk assessment will look at fire alarm, fire containment and easy keyless clear passage escape. In most smaller HMO's an interlinked mains powered fire detector system will be sufficient for notifying tenants if there is a fire. Fire doors with intumescant smoke seals and mechanical closers will be required for all bedroom and kitchen doors to contain a fire. All bedroom and external door locks must be keyless exit type.

Control of all common areas of a multi room HMO is the landlord's responsibility not the tenants. This includes the hall, stairs, landing, kitchen, bath/shower rooms and the garden.

It is the landlord's duty to ensure there are clear rules relating to the tenants use of the common areas. A landlord must check the property frequently to ensure these rules are not being ignored. Terry recommends including these rules in the tenancy agreement and having a notice in the kitchen as a reminder.

It is also the landlord's responsibility to keep the common areas clean and free of food hazards. Again rules should be added in the tenancy agreement. Terry recommends a landlord or a cleaning contractor visits at least once each month and to ensure all common areas and surfaces are kept clean.

Terry Lucking of Belvoir Lettings Agency Cambridge recommends investors to take advice from a qualified, independent source only. Terry believes anyone or business benefiting from the sale or introduction of a property to an investor is not able to offer unbiased advice as they are being influenced by other factors and not putting your interests first. For example most people would only buy a holiday from a travel agent who is a member of ABTA. Terry recommends propspective landlords to only instruct a letting agent who is a member of ARLA.

For more information contact Belvoir Lettings one of the leading letting agents in Cambridge. Terry Lucking offers free advice and free property visits to all investors who are considering buying in Cambridge.

Contact :
Terry Lucking
Belvoir Lettings Agency
143 Victoria Road,
Cambridge,
Cambridgeshire, CB4 3BU
01223 352225
terry.lucking@belvoirlettings.com
http://www.belvoirlettings.com/Cambridge

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Tag Words: tenancy agreement, agency, households, penalties, property

Categories: Industrial

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