One of the best ways to develop your knowledge and skills when it comes to investing in HMOs is to learn from other people who have already accomplished what you want to do. And that’s why case studies are such a powerful learning tool!
Personally, I want all of the details on the most incredible projects to help me understand how I could replicate them. In The HMO Roadmap, we’ve put so much time and effort into asking our community to create inspiring and detailed case studies so that our members can learn from them.
Read about seven incredible case studies that I hand-picked to inspire you and help you build a better HMO business below or listen to the full episode on The HMO Podcast.
1. An £85K Net Rent R2R Deal By Dan Green
The first case study is for a rent-to-rent deal with extremely low capital investment. In this case study, Dan shared the details of eight-bedroom, six-bathroom student property. It was tired, had been poorly managed, and the landlord was struggling to rent it out.
Dan took it on a rent-to-rent contract and spent only £3,500 on refurbishments. After all costs, including repayment to the landlord of £2,000 per month, he’s netting £1,400 every month. The net contract value is expected to wash out around an impressive £85,000.
What’s even more spectacular is how good Dan made the property look. He was selective on what he spent money on, including some decorating, refurbishing, and new flooring, but it completely transformed the property. He was also savvy with using photography and marketing combined with a good sales process to fill rooms quickly.
This is a great example of how powerful the rent-to-rent model can be even with a small budget. In the case study, Dan goes into detail about how he acquired the deal and refurbished the property and the breakdown of his overheads. You’ll particularly enjoy reading this case study if you’re interested in rent-to-rent!
2. How MW Property Investors Completed Their HMO Amidst The Pandemic With A 22% ROCE
This project was developed during the COVID-19 pandemic by mentees of mine, Liam and Molly. This one will be relatable to a lot of people because they did a complete stripped back to brick refurbishment while they both had full-time corporate jobs.
Liam and Molly did a lot of the work themselves. It’s how so many of us get started in HMO property investment, being on-site and putting in those graveyard shifts. This case study really highlights what you need to do to undertake a refurbishment of this scale and the sacrifices you often need to make.
They spent about £50,000 on the refurbishment, which will blow your mind when you see what they were able to do. Liam and Molly ended up with an incredible five-bedroom property with a handful of ensuites. It’s one of my favourite projects I’ve ever seen!
At the back end, they’ve earned a 22% return on capital employed and nearly £14,000 in net cash flow per year. It’s a wicked case study for anybody who is at that stage where they have some capital to invest but are lacking time and aren’t quite sure what’s involved in a project of this scale.
3. A Show-Stopping Commercial To 9-Bed Professional HMO By Emma Stubbings
The third case study is Emma’s nine-bedroom professional HMO. She is one of the most experienced people in the HMO industry and is doing things about as good as anyone in the UK. She was also a member of last year’s HMO Mastermind.
It’s difficult for me to convey just how much of a show-stopper this project was. With monochrome and incredibly luxurious design, it almost looks like a boutique hotel. The purchase price was a whopping £875,000, and the refurbishment cost £387,000.
This is not your average property and refurb. Emma knows property like the back of her hand and really understands her numbers. With this property, she earns £4,000 in net cash flow per month. That’s more than most people would need to retire on in one deal!
Within the case study, Emma talks us through the problems she encountered, particularly on-site and with planning. This one is for anybody who really wants to be inspired at the highest level of HMOs and what you can do, and it also challenges the convention that HMOs don’t work where property prices are very expensive.
4. 53% ROCE On This Stunning 7-bed Professional HMO By Richard And Susan Puchner
This case study really revolves around raising private finance in difficult circumstances. Richard and Susan are South African. They’ve invested in property there, and they came over to the UK and started investing here. There were challenges as they are non-doms.
When they found a deal, they then needed to raise private finance for it. This proved to be quite challenging for a number of reasons due to their non-dom status, and COVID-19 got in the way of a number of things as well. But they ended up going into a Joint Venture (JV) agreement.
It’s much more difficult to make a JV work in practice than it is in principle, particularly with a non-dom status and without a track record in doing deals like that before. So, in this case study, they share how they focused on building relationships with investors and creating a solid business plan with a particular emphasis on building their brand.
So, if you’re interested in raising private finance, this is a good case study to inspire you and help you think about how you could do this and find people to JV with.
5. 187% ROCE On This Remarkable 6-Bed Professional HMO by BeeVee Property
The fifth case study is from two of my favourite people in the property industry, Bee and Vicky. They were also members of the HMO Mastermind last year. This case study is of a unicorn deal with a whopping 187% return on capital employed!
The property formerly had four bedrooms and was really grotty, but they turned it into an incredible six-bedroom, mostly ensuite HMO. This is really the kind of deal we all want to do, and while these deals are few and far between, Bee and Vicky talk about how they found this one.
This was an off-market deal found through a sourcer. Often sourcers get a bad rep, but here’s a good example if you do your due diligence and work with the right people, they can help you find incredible HMO deals.
With this project, they used a commercial valuation to extract everything at the back end, which really turned it into that unicorn deal. However, it didn’t all go swimmingly well from the beginning. In the case study, Bee and Vicky share the process of developing this project, what challenges they faced, and how they overcame them so that you can learn from them!
6. 32% ROCE On This Amazing 5-Bed Student HMO by James Coupland
This case study is for an amazing five-bedroom student property that James developed in Hull. He bought this property for only £47,000. There are very few properties at this price that work as HMOs. James also spent about £50,000 on refurbishments, more than the entire cost of the property!
A particularly interesting part of the case study is that James shares how he very nearly got it all wrong. He bought the property before he understood Article 4 directions and planning permission.
At some point after buying the property, he realised he needed to get planning permission to actually use it as a HMO. He went through that process, and it went to appeal. In the end, he got permission, and the project is fantastic. At the back end, he’s earning £1,500 net per month, and he recycled some cash out of the deal too.
In this case study, he talks about how close he was to not getting permission. It really highlights the importance of understanding planning and article 4 directions and the likelihoods and risks involved in buying properties without planning permission.
7. An 8-bed Professional HMO Revalued At £920k By Roland Symonds
The final case study I want to highlight is a particularly interesting project by Roland. It’s such a clever project, and he absolutely nails the spec, revaluations, getting equity back out, and recycling cash, which is exactly what so many of us want to do.
The purchase price for this property was £430,000. Including refurbishments costs, the total cost was £650,000, and the revaluation of the property came to a mind-blowing £920,000. Roland added £275,000 in equity, and he also makes a net monthly income of just under £3,000!
His background is in finance, so he gives us loads of context on the numbers, leveraging commercial valuations, and getting things to stack up in the case study. So much of the requirement of the deal to stack up was dependent on this commercial valuation.
Roland is very analytical, so, if you want to find out how you add £275,000 worth of value to a property through commercial valuations, check out this case study!
Isn’t it great to see HMO projects that are on opposite ends of the spectrum working for investors across the country?
Case studies can help us really understand how other investors have made certain deals work. I’ve been investing in HMOs for over a decade, and I’ve taken ideas from these projects and put them into my own business!
Inside The HMO Roadmap, we have more than 25 case studies, and we’re adding more every single month. If you’re not already a member but you want to access these case studies, sign up today! I guarantee that you will be inspired and that it will help take your business to a completely new level.
About the Author:
Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind and Smart Property, a specialist HMO property investment and management company. He writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!