HMO flips - Richard Nicholls Property Shrewsbury

HMO flips

We’re working with an increasing number of HMO developers who then sell their finished HMO to our cash buyers - I’m valuing around 5-10 of these a week currently and the demand is there too to sustain the sales.
Key points:
Q: When do you need to let us know about your HMO flip?
A: We work with developers currently up to 12 months in advance of the HMO being finished, giving advice on potential sale prices, likely buyer types and feedback on the layout/style of the project.
Q: When do we engage with potential buyers for the HMO
conversion sale?
A: The optimum time is around 4-6 weeks away from completion on site where we can whet the appetite of the potential buyers but not delay them too long so they lose interest. The ideal scenario is that we secure a ‘subject to’ offer as the build is bearing finish and get a committed buyer lined up at this point. We visit an do a ‘coming soon’ video and release more information incrementally as the builders are finishing.
Q: Do you need to furnish and tenant the property?
A: Yes - treat your HMO flip as if you were keeping it. We’re selling the ‘business’ to a cash buyer who is paying for the quality build, the furniture, the AST and also a good managing agent must be in place.
Q: Who will your likely buyer be?
A: In most cases, the buyer will be either from South East England or overseas and they are the type of buyers who want good returns from HMOs but do not want to deal with developing or finding tenants etc. At the moment, our most active market is Hong Kong and I am visiting large groups of buyers in July 2021 when we spend 4 days in Hong Kong cementing our relationships further.
Q: Who flips on HMOs?
A: We have existing relationships with developers who fall into one of two categories - they are either solely focusing on flipping and creating quality HMOs for resale or they are portfolio landlords who see the benefit of the extra funds that can be obtained from a straight sale at a ‘yield price’ rather than refinancing. Develop 3, keep 2, sell 1 is quite common and a good way to keep the money moving.
Q: Which locations work?
A: We have existing relationships and a track record in North West/North Wales, East and West Midlands, Yorkshire and the South East/South Coast but there are areas in demand such as South Wales, North East and the Home Counties - as long as the property conversion is of good quality, is mindful of the target tenant base and their pricing expectations and there is a good managing agent in place, we can value it and secure a buyer if the price is right.
Location: Shrewsbury, UK

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