If you have been reading my blog from the start, you will know that a few months ago, I put in an offer for a rather large but outdated property whilst I was still testing the theory of HMOs. I didn't know whether our 'new' approach to rental income would pay off and there I was making an offer on number 2 HMO before number 1 was up and running. (HMO= House of Multiple Occupation). * And yes I did rather have to grovel when I got home and explain myself rather humbly and detail EXACTLY what this opportunity meant! (All was well though when DH saw the property - he became as excited as me)!
Just to recap then, number 1 HMO was a two bed terrace which we converted into a 4 bed by way of using the downstairs living room as bedroom number 3, and then having a wall built in the through kitchen/diner to create bedroom number 4. All rooms were decorated in neutral colours, and new carpets laid. Wardrobes were built-in and new furniture purchased (my favourite bit)! Apart from the necessary gas and electrical safety checks, and some deep cleaning, I did nothing more (oh yes and we installed broadband wifi too). The house already had a central heating system and double glazing. The kitchen and bathroom were fine, and the back yard was paved and maintenance free.
So, with number 1 HMO now up and running and rented out nicely, we are just about to complete on number 2. A few things have held up the exchange of contracts - most notably our deposit, which is coming from the re-mortgage of another house (not an HMO). Once that comes through (hopefully later this week) and the money is with the solicitor, we shall have the keys to what I hope will be a fantastic income-producing property.
The new house is a large three-bed double bayed terrace house with oak coloured double glazing. Hm... not exactly my choice but in a good condition and expensive to re-fit. So that's staying. However, the obsession with wood doesn't end there. Panelling, tongue and groove, cladding, beams - you name it, this house has it. I sometimes wonder whether the previous owners once holidayed in Sweden and decided to take the sauna theme home. To Crewe. Yes well, it takes all sorts I suppose ... So there are some wooden extras which will be removed, although I will try to paint and otherwise disguise that which can be hidden.
Downstairs has two large reception rooms (each forming another bedroom) and the piece de resistance is an attached workshop at the back of the house which will hopefully be bedroom 6. There is a downstairs toilet which will need to be reconfigured to form a downstairs bathroom, and a large kitchen, which we hope to transform into a kitchen /diner. The upstairs has a large shower room, which needs little attention, and the plan is to install two new ensuites to the larger of the bedrooms upstairs. It also needs gas central heating, possible re-wiring and certainly re-decorating throughout (or I'll be dreaming of pine cladding for the rest of my life).
The cash to do it up is coming from the re-mortgage and as usual it's a little nail biting! I have written a financial plan and cashflow forecast, and with the experience of number 1 under my belt, I am much more prepared for the process and the unexpected occurrences that are inevitable. I am feeling pleased, excited and a little nervous about this house. It has cost us £93,500 to buy which is an absolute bargain, but I reckon we'll be spending nearly £20,000 to get it to the standard we need to rent each room out successfully.
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| The jewel in the crown |
The rental income looks highly promising though and this house has the potential to be the best income-producing property we own. - we just need to keep our nerve. The key I believe is to keep our eye on the ball at all times, manage the cashflow, manage the contractors, and ensure that the project doesn't drift. Will I be crowned the property queen? Perhaps - if I can make this one the jewel in the crown ... which I sense, nay, predict might. just might be the case.
* See my entry for 23rd August: 'I just couldn't resist it'
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