Since 2021, CPC Finance and Savoys Group have been offering the Game Changer. This all-in-one package that means if you have no previous experience with Houses of Multiple Occupancy (HMOs) or have funds but no spare time, you can become the owner of a newly converted, financed HMO. Earlier this year, we introduced Savoys North, which is ideal for first-time property investors or experienced investors who are new to HMOs, with a lower deposit than the Savoys projects in the South.
Savoys North Partner, Adriana Cafasso said, “Savoys North offers a compelling model for property investors in the North of England, both novice and experienced. With a lower deposit than the Savoys projects in the South, you can transform standard residential properties into high-yielding HMOs. This approach not only maximises space utilisation but also significantly boosts rental income and property value. It’s an efficient strategy to accelerate your portfolio growth and achieve impressive returns in the UK property market.”
Here are two case studies of example Savoys North projects.
Case 1: Full Conversion – from family home to HMO
Savoys North presented the investor with the opportunity to convert a 3-bedroom mid-terraced single residential property into a 6-bedroom HMO under Permitted Development rights. This strategy aimed to maximise the property’s potential and create a high-yielding investment.
On behalf of the client, Savoys North purchased the property for £135,000 and identified that an additional £90,000 is required for the conversion works. The conversion process will involve reconfiguring the existing layout to create additional bedrooms and communal spaces. The initial short term loan valuation confirmed a Gross Development Value (GDV) of £315,000 and that on completion of the works, the property’s annual rental income will be £39,000.
Case 2: Breathing new life into an existing HMO
The investor took advantage of an opportunity presented by Savoys North to modernise an existing but run-down 8-bed HMO in an Article 4 area. The strategy here was to fully upgrade the property, focusing on adding value through improved facilities and a higher standard of accommodation.
Savoys North sourced the property on behalf of the client for £299,000, with an additional £60,000 required from the investor for renovation works. The renovation will focus on adding ensuite bathroom facilities for each room, modernising the communal areas, and improving the overall aesthetic and functionality of the property. The valuation confirmed the GDV of £490,000, with an anticipated post-works rental income of £58,240 per year.
Investment strategy insights
Both cases highlight the potential of value-add strategies in the HMO market. By working with Savoys to identify properties with untapped potential and investing in strategic improvements, investors can significantly increase rental income and property value.
An important aspect of these investments is the ability to recoup the full investment upon completion of works. In both cases, the increase in property value allowed the investors to release their entire initial investment through refinancing. This strategy, often referred to as the B.R.R.R. method (Buy, Refurbish, Rent, Refinance), enables investors to potentially use the same capital for multiple projects, accelerating portfolio growth.
These examples underscore the flexibility available to property investors. Whether converting a standard residential property or upgrading an existing HMO, there are opportunities to create significant value and generate attractive rental yields. The choice between these strategies often depends on factors such as local market conditions, planning restrictions, and the investor’s personal goals and expertise.
The HMO market continues to offer opportunities for property investors in the UK. Whether through full conversions or strategic upgrades, there is potential for significant returns. However, success in this sector requires careful planning, a solid understanding of local regulations, and access to appropriate financing solutions.
If you would like to talk to us about your next HMO project in the North of England, get in touch by calling 01923 655 441 or emailing investors@cpcfinance.co.uk.