Photo by Elite Dwellings

Most people think they need to create as many bedrooms as possible within their HMO to maximise its value and rental income but, that is not always the case. Through good design and efficient layouts, the value of a property can be increased dramatically without changing the number of rooms inside of it.

In one of our most recent projects, we took an existing 10-bedroom HMO and increased its rental income by 74% and its GDV by 56% without adding any extra bedrooms and we are going to show you how.

Project X was an existing 10-bedroom HMO inside the Leeds Article 4 area which was in desperate need of some TLC. It had not been let for the next academic year and its HMO licence was due to expire at the end of the current tenancy period. All these points meant that it was an undesirable asset for hands off investors looking to buy ongoing concerns which created an opportunity for us to purchase the property below market value.

 

 

As well as the problems mentioned above, the property had a very inefficient layout. Out of the 10-bedrooms, one had an en-suite with the other nine rooms sharing three bathrooms and a separate WC. Nine bedrooms sharing three bathrooms is not a good ratio as you don’t want this to be more than two bedrooms per bathroom. 

Would you believe me if I also told you that the bedroom with an en-suite was empty as it was so badly compromised no-one wanted to live in it?

Being architects we can assess floor plans quickly and spot opportunities to improve them and this instance was no different. The property is split over four floors, and it was the ground and first floors that had the most potential.

 

 

As you can see, the communal space occupied the entirety of the ground floor with the kitchen and living room being separated from each other. Whilst the dining room was access from the kitchen, the small gap made it feel like a separate room as well.

On the first floor, the two bedrooms to the front were an awful shape with the zig-zag wall installed to meet minimum space standards whilst also working with the existing windows. At the rear was the en-suite bedroom that was badly compromised and in the middle was the oddest bathroom you have ever seen.

 

 

On the ground floor we took down a structural wall to create a large open plan living space to the front of the property. Nowadays, tenants want to live in open plan spaces where they can socialise whilst cooking and entertaining. We then converted the existing kitchen and dining area into two bedrooms and changed the WC into a bathroom.

By moving two bedrooms downstairs, it allowed us to combine the two awful-shaped bedrooms on the first floor into a second open plan communal space. We rationalised the bathrooms at the back to make one generous sized bedroom and a usable shared bathroom for the house.

This meant that the house now consisted of the same number of bedrooms (10) and five bathrooms (we added another one in the basement) meaning we had hit the ideal ratio.

The result as you know was an increased rental income of £2,523 PCM (74%) and an increased GDV of £270,000 (56%) from a property that didn’t increase in size and didn’t add any additional bathrooms.

On top of all that, by creating two communal areas, we have future-proofed the property as it can be split into a 6-bedroom and a 4-bedroom HMO if required. As the property is for students, this will help with letting the house as smaller groups of four and six are easier to find than groups of ten.

 

About the Author:

Mary and Andrew are architects, designers, and, most importantly, HMO investors. They combine their knowledge of HMO investing with their 20+ years of experience in architecture to help investors maximise the potential in their projects through layout optimisation and high-end design. Learn more about Mary and Andrew here.