HMO#2&3

NHG · 26th Nov, 2017

jefn89 said: ↑

Hi NHG, first of all congrats, sounds like you've done and are doing well. Few questions on this:

1) How did you fund this i.e. get a loan? Being a mortgage broker anything unusual can make it difficult to get a loan over the line although perhaps it's more a unique opportunity rather than unusual property

2) Best way to learn more about this i.e. do courses, read books etc?
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1. I already owned a few properties in Sydney pre 2012, so have equity.

2. Trial-and-error. I had 3 HMOs prior to doing Ian Ugartes course, that stated, his course adds a lot pf value, moreso the contacts you make there. He more than filled in a few blanks.

This is not a super simple strategy, there's a huge learning curve.

jefn89 · 26th Nov, 2017

NHG said: ↑

1. I already owned a few properties in Sydney pre 2012, so have equity.

2. Trial-and-error. I had 3 HMOs prior to doing Ian Ugartes course, that stated, his course adds a lot pf value, moreso the contacts you make there. He more than filled in a few blanks.

This is not a super simple strategy, there's a huge learning curve.
Click to expand...

Thanks NHG, great to hear that it wasn't all about the magic or that there's no silver bullet, makes it that much more realistic! You head to any of the Sydney PC meetups?

If so will catch you there!

Jef

Josh Menkens · 31st Jan, 2019

Hi,
Im from the Uk i've been living in Sydney for the past month. HMO Rental strategy is something that I was familiar with back home. Ive been asking around to find out the legality on this method over here in Sydney.

Would you be able to shed some more information on this matter. Im 22 and looking for a pointer in the right direction.

Thanks
Josh

NHG said: ↑

HMO = House of Multiple Occupancy (Sub-letting)

Hi,

So thought I'd share a deal I made about 5 months ago.
Over the last year i've been questioning how to best invest moving forward with the changing climate. This has lead to the next step in an incredible journey meeting some incredibly savvy and mostly quite young investors.

A large emphasis in my portfolio now is multi-res. Boarding houses / backpacker hostels / caravan parks / unit blocks / room-by-room letting. This is a broad overview of the market I have found my niche in, a niche which has many niches of its own.

So deal.
Note: This is an unusual house which provides a yield well above the norm.

Sydney based.
Put lease on 2 properties side by side.
Rent $2,250/week.
Sub-lease $4,900/week.
Expenses $500/week including claiming cost of furniture over 2 years.

Profit: $2,150/week.

Cost of entry, after all expenses, vacancy etc. $60k. I have clawed back a majority of that amount already.

$2,150*52 = $111,800
Cash on cash = 1.863
ROI = 86%

I have permission from the owners and insurances to cover any liability. They are set up in trust structures which are paying into a trust set up as a 'consultancy' so that in 2 years the bank will use it as an income as normal.

An typical HMO should net about $20k IMO (approximately 25-30%). They require some hands on management. I am currently in negotiations to bring a full time manager, however they are asking for 15% management fees. A couple of other friends who are in this space and I are looking at hiring our own management team to reduce costs.

There have been a lot of mis-steps in the journey. I will post about the first HMO which yielded considerably less in another forum and will answer questions if any come up.
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HMO#2&3

NHG Well-Known Member

jefn89 Well-Known Member

Josh Menkens New Member

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HMO#2&3

NHG Well-Known Member

jefn89 Well-Known Member

Josh Menkens New Member

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