Landlords Co-Living Development

5 Ways to Buy a Turnkey HMO in Liverpool or Wirral

Buying ready-made turn-key HMOs has become increasingly popular over the past 5-years as more and more investors have entered the market. In Liverpool, HMOs are regularly changing hands and now more than ever. To make sure you don’t get caught out, we’ve outlined the different ways to buy turn-key HMOs in Liverpool or Wirral and what to look out for.

1. Use a Conventional Estate Agent

Sometimes you’ll see Liverpool HMOs appear on portals being sold by conventional estate agents. You probably didn’t approach them specifically, but they just happen to be advertising a property that you want.

These agents may be very adept and knowledgeable in the world of HMOs but a large proportion of them will not be. This is not to say that they won’t do a good job. They might have the best progressions team on the planet, but they might also be clueless about things like Article 4, CLEUD and HMO Licenses. These are critical parts of the due diligence process.

If you’re buying an HMO from a conventional agent who doesn’t typically deal with them, ask a good local HMO Managing Agent to cast an eye over it for you. They won’t do your full due diligence for you but will be able to critique the asset and make you aware of any flaws.

2. Use an HMO Re-Sale Specialist

HMO re-sale specialists are estate agents who specifically sell HMOs. They may sell other investment properties too, but their core business is built on selling HMOs.

There is not enough turnkey HMO stock for these companies to work exclusively in Liverpool or Wirral and so you will find that they usually operate nationally. This could mean a lack of local knowledge but if they’re good at what they do they should know the good and bad areas of each respective city.

They will be more experienced than Liverpool and Wirral’s conventional estate agents in assessing the true value of a turnkey HMO and will not be easily misled by a vendor’s unrealistic valuation. For example, the room rates of a brand-new turnkey HMO may be inflated because of the untarnished product. Fast forward 5 years and the wear and tear on the property might have taken 15% off the rent roll. Good HMO re-sale agents will understand this and take it into account when valuing.

3. Have the Property Developed For You

If there’s nothing that works for you on the open market, there are property developers out there who can do all the legwork for you. Effectively you will still be delivered a turnkey HMO at the end of the process but only after paying fees for someone to find and develop the property for you.

At Portus Lets we can recommend good properties across Liverpool and Wirral that will be suitable for HMO conversion. We can then manage the refurbishment for you and on completion will tenant and manage the property.

The benefit of having a good Liverpool HMO Managing Agent involved in the acquisition and refurbishment is that it reduces the room for error. We know the areas and have already tested the demand with the properties that we manage. More information on how we can help here.

4. Use a Deal Packager/Sourcer

Deal packager, or Deal Sourcer, is property jargon for an individual who will find a property that they believe to be a good investment. They will assess the property’s potential and sell it to you, on behalf of the vendor for a fee.

There was a mass exodus of deal sourcers around 2020 when it became really difficult to find good property deals. Recently, more people have started offering this service again in Liverpool and Wirral.

It’s rare that deal sourcers will be selling turn-key HMOs because their black book of landlords will usually be looking for things that they can add immediate value to. However, these are individuals who are immersed in the property industry and will be well-connected to a number of landlords and developers. If you speak to and deal sourcers in Liverpool or Wirral, mention very specifically what you are looking for and, even if they don’t have it available at the time, they can keep an eye out and ask around for you.

5. Buy at Auction

From rising interest rates to unfavourable taxation on mortgage payments, there is widely reported economic hostility for HMO landlords that is causing them to exit the market in droves. Some HMO landlords in Liverpool and Wirral may not be in a hurry to sell but others may just want to cut their losses quickly. For those landlords, an auction will be their preferred method of sale.

There are hundreds of reasons why people sell at auction, and though scepticism is healthy, an HMO being sold at auction doesn’t necessarily mean it’s a bad deal. Granted, it is unlikely to be a perfect HMO that’s always been fully let, but nor is it guaranteed to be a poor investment that a good agent can’t turn around

From experience, we find that a lot (but not all) of the Liverpool and Wirral HMOs that end up in auction have underperformed because of poor management. If you buy a property at auction, sticking with the same agent will usually yield the same results. We recommend speaking to a reputable, HMO-specific agent to assess the acquisition for you and give you some guidance on what improvement might need to be made.

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