Posted by tungstenmg Last updated 28th October 2019 reading time
As an investors it can be difficult seeing over the hurdles such as costs.
You may often feel that you fall short on success, especially if you have a limited budget.
In our thought-provoking article, we take a look at the 2 best ways to resolve this, which include
applying calculations to ensure the deal works
talking to current HMO investors about your outgoings
Applying calculations to ensure the deal works
If you take on any educational courses regarding property you will be shown and maybe given deal analysis spreadsheet. These are proven formulas that cover all aspects involved in purchasing a property such as the legal costs, stamp duty, refurb costs, management fees. It will allow you to place in your deal specific quantities and the end figure will allow you to make a subjective decision to buy or not to buy.
Having a mathematical formula available it takes away any thoughts that may sway you towards a purchase that is not a good business deal. When a decision is written in black and white in paper (or on a screen!) it makes a decision easier.
The critical element to this process is using a spreadsheet from a rusted source and with all business decisions you must do your due diligence on the course of the document. When TMG started we were give a deal analysis document from our mentor who is part of a very successful HMO company and part of the training company so they had some very good credentials.
Talking to current HMO investors about your outgoings
A common theme in the TMG posts is the importance of networking and learning from your peers. You will be very surprised by the openness of the property community and if you were to place a question into a Facebook group the amount of quality and in-depth feedback is staggering. This tight knit knowledgeable community will allow you to pull together costs that you have not had to consider before but are vital to your deal analysis calculations.
Without knowing the outgoings throughout a project or those that you can expect to pay on a monthly basis once the project is finished could be a huge and costly mistake. You need to ensure that your end goal is always in your mind from the beginning such as your end rent which is determined by your target tenant minus the outgoings (management fees, WiFi, utility bills, cleaner, Council Tax) needs to equate to a sum that you are comfortable with. This will differ from person to person but you need to ensure the maths works for you before you commit to a deal.
Feeling a little stuck in the mud?
It’s essential to get yourself in the right frame of mind to start achieving the results you want. Once you are aware of these common drains on your time and results, it becomes so much easier to overcome them.
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