Veteran investor Jim Haliburton, a retired West Midlands law lecturer who started his property investment business when he took early retirement, has now built a portfolio of around 150 HMO (House in Multiple Occupation) properties housing over 850 tenants.
Styling himself “The HMO Daddy’ Mr Haliburton has developed an investment and property management model that works for him, and he runs courses to help others do the same.
The model won’t work for everyone and it won’t work in all locations. HMOs are anathema to owner residents, so unless you’re investing in areas of a certain demographic, you will create yourself a whole load of hassle according to Mr Haliburton, that’s if you even manage to get planning permission for your HMO, which you must do.
Featured in a recent Daily Telegraph article titled “Here’s how I get 35pc yields on buy-to-let” Jim Haliburton always makes the process sound easy peasy, which of course, to some extent, it is to him with his years of experience.
There’s no doubt that if you get the right property in the right location HMOs can be highly profitable but challenging, given the type of tenants that are attracted to bed-sit land. Mr Haliburton has a management team and a team of refurbishers which are kept constantly busy.
He has a no nonsense approach to making an investment property profitable, working to a strict formula that he knows will work for him. And he is the darling of the local authorities for the areas he works in as he houses many of those tenants which would otherwise have been the preserve and to some extent the burden of social housing.
He covers a range of tenants from working and professionals to the bed-sit land Housing Benefit tenants, the latter being more than a challenge to manage. At times he is a cross between landlord and social worker and is surprisingly chartable to his vulnerable tenants, many of whom have severe personal issues.
Helped by the decline in social housing in certain parts of the country, where there is healthy tenant demand and plentiful cheap housing stock, Mr Haliburton says the only way to make “serious” returns is to carve-up suitable properties into studios or bedsits, and the process can be repeated again and again.
Mr Halliburton has authored a book on the subject and has appeared in TV documentaries, generating some controversy about his no-nonsense approach to managing tenancies and making a profit from his HMO properties.
All of Mr Haliburton’s 150 properties are in the West Midlands in centres such as West Bromwich, Dudley and Wolverhampton, which he knows very well.
He told the Daily Telegraph:
“I can’t talk for other parts of the UK,” but “The property market in this country is like many different countries put together. But in my area, HMO is booming. The tenant demand isn’t drying up at all.
“And prices are low. You can feel a new energy in the market but prices haven’t yet shifted. There’s still over-supply.”
Mr Haliburton’s favourite buy is a three-bed family home which he splits into six or seven bed HMOs with the individual rooms let to separate tenants. He is also converting some former commercial property, as an example, an old pub which he bought for £80,000 is split into 14 studios at a cost of an additional £120,000. Each lets for £100 per week, bringing in £6,100 per month, over £70,000 per annum – a yield of 35%.
But Mr Haliburton warns that the work is not easy: with 840 tenants around 500 are unemployed and on a various forms of benefit. Chasing money “sometimes from tenants who drink or have other issues” is ongoing, some won’t pay rent “as a matter of course”.
Sometimes he gets tenants to agree to pay rent via a credit union, and with others the rent is paid direct by the local authority.
An increasing interest of Haliburton’s is his growing training business, and given his lecturing background he is highly suited to help those who want to enter the same business. But preparing would-be HMO landlords to engage with potentially difficult tenants is not always easy he says.
“It’s not the lack of knowledge that stops people from this type of buy-to-let,” he told the Daily Telegraph, “Its fear of the tenants. Some people just aren’t confident enough or don’t want to have those kinds of encounters.”
Mr Haliburton now employs over 40 staff to help him run his large portfolio of HMOs, but he advises others should stick to a smaller number of HMOs. “You’ll make the most money if you can keep it your own business, maybe stopping at ten properties. You have to be prepared to unblock toilets and so on, but you’ll make more money.”
Image: Rising Damp the sitcom
Video Courtesy, The Daily Telegraph
— LandlordZONE (@LandlordZONE) March 25, 2015