HMO Room Rents - how do you break down rental costs or dont you bother ?

[Phlash]

They could rent them for free if they wished

Most of these companies are backed by investors - Not by a single entity like Tesco.

Their Investors require returns and they have to deliver - They may not have as much choice about margins as you hypothesise.

[hech123]

To be honest I disagree. Most the large blocks I have seen are built by goliath companies that have super huge portfolios of companies. In fact I can safely say that every single block in the City I live in is built by a company that has a portfolio in the tens of millions, possibly the hundreds.

As for your earlier statement about unite dropping prices, does this not illustrate exactly the point I am making? Impact housing association are also dropping prices. I view this market as similar to commercial when all the goliaths moved in, prices got squeezed very far.

This did not mean other people stopped making money in commercial but the market got a lot tougher and a lot of people lost money. If a pension company is happy with a 4-5% return this is fine but for us mere mortals who are using finance this was a risky investment.

Areas will be different. I think the type of student pods you are talking about are possibly where individual investors are buying them? I may be wrong. The reason these are being sold off is because some of the more shrewd goliaths have realised the way the market is turning and are selling off these types of properties to dumb investors who do not understand the market.

You have pretty much confirmed what I was trying to illustrate which is that the big companies will drop there prices. No obviously I do not think they would let them for free, this was an extreme example but sitting around thinking they will leave them empty is a crazy idea.

Looking at the figures it seems the market is saturated, it does not take a genius to look at a market where there are 50% voids and realise this is a bad market. I am sorry for people as I have had a huge amount of come backs over this, it is obvious people are heavily invested in it.

As I have said earlier many people will continue to do well and most people who have commented do seem to know this market very well and know what they are doing, I am just pointing something out. If you told me the local housing association was running at 50% occupancy my alarm bells would be ringing and ringing very very loudly.

[hech123]

Oh and as for demand driving prices down this is completely wrong, demand drives prices up. Over supply and lack of demand drives prices down.

[mind the gap]

You have pretty much confirmed what I was trying to illustrate which is that the big companies will drop there prices. No obviously I do not think they would let them for free, this was an extreme example but sitting around thinking they will leave them empty is a crazy idea.

So why did you say it?!

It is not an example of anything, simply an untrue statement.

They may indeed have to drop their prices, but that is not the same as giving something away.

[hech123]

Mind the gap, there is a possibility they would let them for free and they could do if they wanted to, thats why I said it. In all likelihood they will not have to as you see they have reduced them 50%, maybe they will reduce them 70-80% I do not know, but I do know it will be hard competing against them.

I am currently in a similar war, there are 500 ex-shipyard flats near me and another 180 near by, I own 20 of them which I purchased for £15,000 per flat a number of years ago. The other 500 have been empty for 4-5 years but are now being sold off to investors from down south, prices ranging from £25-£45k.

This is in a town of 80,000 in a fairly poor area. Now my flats stand me at very little as I have collected a lot of rent in. There is very little demand for these flats and things are going to get very competetive. If I need to I will pay people to move into my flats, I would let them for next to nothing just to keep people in them and heat on in the building etc... I really do not care as they stand me at virtually nothing and I do not want the council tax burden.

I see the big companies viewing the student blcoks they have pretty similar. Obviously I will try and get what I can for them but the people currently purchasing are going to find it very very difficult to compete with me as I do not need a return.

The blocks I see of student acc near me is owned primarily by massive companies that are turning over millions. In addition they can not change the market they are in as these buildings are pretty much purpose built and only have planning as student accomodation so I only see them reducing rates lower and lower, this in a market where students are not increasing looks bad to me but as I said good workers will always do well and find a way to make it work.

[mind the gap]

So you made an unwise investment in the boom years and are now having to cut your losses by letting anyone you can find live rent free in your property simply to stop them being vandalised/going damp?

That is not a sensible business strategy.

[hech123]

No I purchased at £15k per unit and have currently had my money back more or less. I currently get about £5000 per month and hopefully this will continue but if I have to reduce I will. Many investors are buying in now at £40k plus but do not understand the market, similar to a lot of people going into student accomodation

[hech123]

With the greatest respect, that is hogwash.

Solar cells (photovoltaic cells) are not the same as solar panels, for a start. The latter are less productive in colder climates and do not form part of this country's green energy programme.

Solar cells yield continue to provide a better return than most other long term investments. We are getting 17% on ours ( installed just before the feed in tariff was reduced), but even now you can get 10%.

Even last summer, the wettest on record, they produced near enough their target output. And as for durability, there are no moving parts and the Centre for Alternative Technology has been using them for well over 20 years.

I shall view your comments with the same scepticism with which you obliged me to view your pronouncements on student housing...

Wow Amazing that you still have not twigged on to the fact I was right about HMO student lets. My local papers page 3 today - headline 'Student numbers drop by 18%'. Look on the landlordzone board - 'Investment in Student let's reach new high's even numbers are dropping' - Yes I told you all months ago and it is happening right in front of your eyes.

[mind the gap]

Wow Amazing that you still have not twigged on to the fact I was right about HMO student lets. My local papers page 3 today - headline 'Student numbers drop by 18%'. Look on the landlordzone board - 'Investment in Student let's reach new high's even numbers are dropping' - Yes I told you all months ago and it is happening right in front of your eyes.

Er...your local paper's page 3, eh?

You have convinced me! I retract!

Not.

Please get your facts straight before spouting them at us.

There may be some reductions in student numbers in some universities but an increase in student numbers in colleges of education and for students gaining top A level grades:

http://www.bbc.co.uk/news/education-16836504

So your local university may lose student places but your local college of further ed. will probably gain. Keep up!

[QuestForFreedom]

Nice ding dong BTW!