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Tuesday, February 15, 2011

HMO let vs single occupancy

I've spoken before about my mates partners new student letting venture.

I was chatting with him last week in the pub about how it was all going.

Apparently, the first lot of student tenants that moved in Autumn 2010 are all moving out.  Poor old Jan is now frantically running around to try and get in a new lot of post grad students.

Now Jan did well getting a shared house of tenants and achieve a 8.5% yield.  But this just highlights the big downside to any multiple let.  It's that much harder to manage.

Before meeting my mate for a pint I stopped off to see a long term tenant (over 7 years at the last count) about a damp issue.  Masten is in the middle of decorating MY property.  Brilliant just what you want when your tenant takes effective ownership of YOUR property.  I might not be achieving the heady heights of an 8.5% yield.  At current market values it's probably nearer 6%.  However, I value my free time and my sanity too much to try and manage 5 short term tenancies.

If you do think about a multiple tenancy.  It would make sense if you have only a few properties and want to sweat your property assets.  I would say that you should be looking for at least a 25% premium on a single tenancy.

Each landlord needs to work out what type of business will suit their circumstances and their own individual personal and financial goals. A critical consideration in all of this is time so remember to factor that into your equation!

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