HMO Business Investment - Yes or No

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    HMO Business Investment - Yes or No

    1st post so treat me gently lol

    I have £300k to invest in a business and my wife and I were looking at Guest House / Hotels.

    While looking at one trading Hotel, it was suggested that it could be operated as the existing Hotel (turnover £200k, ANP £80k) or as a HMO (subject to licence).

    It has 17 en-suite bedrooms and 2 empty rooms suitable to be converted to a kitchen. It has a large communal area too.

    It also has 3 self-contained flats which could be let on ASTs or holiday lets (the latter would be less hassle with contracts etc I think).

    So, what are your thoughts?

    The 17 bedrooms at £80/week would bring in £60k at 85% occupancy plus around £15k from the apartments = £75k annually.

    The business is £625k freehold.

    Obviously I would need to cover the £325k mortgage payments, business rates (£8k payable) and utilities plus repair/maintenance.

    Do you think the sums add up as a HMO?

    The hotel ANP is £80k - but running a hotel involves lots of housekeeping staff, reception staff, guests coming and going almost daily and all the time to push and manage the business 24/7 - I'm thinking that the HMO route would be less demanding (yes, I accept there is still a lot of work)

    What do you think? Any help is appreciated.

    Sorry - to add........advice simply on the economics of it is welcome;

    £625,000 purchase
    £75,000 income @ 85% occupancy
    Mortgage of £325,000

    If you have no previous experience operating HMO business , don't jump into it.

    You should stay at different B&B each weekend and gain somebodyelse's working experience.


      With the greatest respect the property you have outlined is presently way above your pay grade in terms of experience. Lending on such a large potential HMO falls outside the sphere of the majority of lenders operating in this niche and those that might consider it have a specific requirement of evidence of owning , albeit not specificallyHMO’s , residential property investments.

      Sometimes HMO are not the gilded option for investment as one would believe , they are indeed costly to operate and maintain and the market demand for such depends on locality and the type of tenant you would be targeting.

      Caution should be exercised on this venture.


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