hmo & multi let quick start seminar april 2012 with paul...

Multi Let Quick Start Seminar CONFIDENTIAL

Copyright Simon Zutshi & Paul Preston 2012 ©

HMO & Multi Let Quick Start

Seminar

April 2012

With Paul Preston



Disclaimer Terms and Conditions 1. Disclaimer and waiver of claims

a. Investing in property is a speculative method of investment and so you could lose money. The material taught by property investors network is educational in nature. The intent of the course / seminar is to educate participants about property investment and related areas.

b. The information in this workbook and the audio visual content of the seminar is for educational purposes. No recommendations of particular investments of any kind are made. If particular properties are mentioned, they are only cited for educational and illustrative purposes.

c. By participating in this event you have released property investors network and all those working with them for any and all liability resulting from your actions based on the course / seminar material. All course / seminar content examples & information are not to be construed as any recommendation, solicitation, prediction or advice for your actions in and dealing with property investments, as this seminar is strictly educational. You cannot hold property investors network or any people working with them responsible for any subsequent personal activity within the area of property investment.

2. Confidentiality Agreement

a. All content, workbooks, materials and systems taught in these lectures, whether written or verbal are copyright material of Simon Zutshi and Paul Preston.

b. You are not permitted to copy, make available or divulge to any unauthorized party, in any way, any of the materials, notes, strategies or teachings of these lectures, whether for financial gain or not. Having signed the disclaimer if you should allow any of these materials to be made available to any unauthorized party then you will be liable to consequential legal action.

c. No photocopying, audio, video, photographic recordings of Simon Zutshi’s and/or Paul Preston’s seminars or previews, or any of the copyrighted materials provided are allowed without the consent, prior-approved knowledge and arrangement of property investors network.

3. Unconditional Guarantee

By participation in any property investors network seminar, you are agreeing to abide by all of the Terms and Conditions listed above.



Ideas / Learnings / Actions

No. Action By 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32



Questions No. Question Page 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30



The HMO Guy .com

Paul Preston

The HMO Guy

HMO &

Multi-Let Quick Start

Birmingham

28th April 2012

The HMO Guy .com

What to expect from today:

• What is an HMO?

• Learn what’s possible with HMOs and Multi-Lets

• How to make £1,000 profit per property per month

• The 4 HMO Market Sectors

• Maximising income on all types of property

• What, Why and How – All the Fundamentals

• The legals, the planning, the licensing and the regs

• Funding and getting properties for FREE

• The 7 Steps HMO Success

• Cash flow secrets

• Understanding your WHY, Setting Goals and Personal Action Plan

The HMO Guy .com

The 7 Steps to Success

1 The Fundamentals – What and WHY

2 Research

3 Select the Right Properties

4 Acquisition and Funding

5 Marketing and Positioning

6 Viewing and Letting

7 Management and Systems



The Fundamentals – What and WHY

The HMO Guy .com

So exactly ‘what is’ an HMO?

Do I need planning permission?

Do I need a License?

HMO stands for ___________________________________________ A property is an HMO if it has ____ or more tenants, forming _____ or more households. Such an HMO (of 3-6 sharers) has a clear identity in law (in terms of planning and class / category of use) is a ________________ (HMO).

A normal residential property is a ______________ (dwelling house).

So are all Shared Houses HMO’s?

______________________________________ Notes:



Planning Background

Basically up until 30th September 2010, planning permission was required for an HMO where there was a “material change in use”. From 1st October 2010, this requirement was removed for all HMOs in England and a change in use for HMOs up to six persons became a ‘permitted development’, subject to a local authority not issuing a direction for a specific area, such that the permitted development does not apply to that area. Such direction is known as an Article 4 Direction.

In summary:

• Two sharers is NOT an HMO.

• In most areas of the country, since 1st October 2010, change of use to a Class C4 HMO with ‘up to’ six sharers IS permitted development, so you would NOT need planning permission.

• However, if an Article 4 Direction is in place by the local council in that area, it is NOT a permitted development, and planning permission would be required.

• Above six sharers, irrespective of Article 4, the property is not a Class C4, it is in the class Sui Generis and will generally require planning permission.

• Bottom line: Check with your local council.

If you’re in a permitted development area, you can do up to six sharers without having to get permission.

If you are in an Article 4 area, this DOES NOT mean you can’t do HMO’s….it just means you have to apply for planning permission.

NB: Further Reading see Appendix

Notes:



Licensing. Do you need a license? IMPORTANT DISTINCTION: __________________ is different / separate to _________________ ‘Different’ and ‘separate’ in terms of legislation and in terms of Council departments. Two types of Licensing: __________________ licensing and __________________ licensing. Broadly speaking: You WILL need a license if you rent a property to ____ or more tenants on ____ or more stories. In some areas of the country, _________________ licensing may be in place for HMO’s, irrespective of the number of tenants and / or number of stories. Bottom line: check with your local council. NB: Further Reading see Appendix



QUIZ: 1) I rent a 3 bedroom house to Bill and Ben. They are friends. One of their friends moves in and they agree to split the rent and bills 3 ways. Is this an HMO? If so, do I need planning permission and do I need a license? 2) I have a property with 6 rooms on 2 stories. Do I need planning permission to use it as an HMO and do I need a license? 3) ….I convert the loft into another room. Does anything change? 4) I have a property that is 6 bedrooms on 3 stories. Demand is low and I can only ever rent 4 rooms. Do I need planning permission and a license?



The HMO Guy .com

Start with the end in mind!

What’s your reason WHY?

What’s the reason WHY you want the money?....what will it enable you to do?

Write this down

The HMO Guy .com

Exercise:

How much money do you need for:

a) Basic Survival

b) Financial Freedom

c) Financial Abundance

d) Lifestyle of your Dreams



The HMO Guy .com

HMO / Multi Let Model

Purchase: £150k

Rent (5 x £385) £1,925 pcm

Mortgage @ 5% - £500

Agents / Set up Fee -

Tenant Fee + £166

Bills - £400

2 void mths p/a - £62

Maintenance - £42

Total £1,087 pcm

The HMO Guy .com

1 Bed Flat

Purchase £68.5kMarket Rent - £450Mortgage - £233Service / Ins - £50Agent - £54Set-up - £161 void - £20Maintenance - £40

Single Let Profit £37 pm

2 x 2 bed LHA Rate £1,250

Multi-Let Profit £907 pm

The HMO Guy .com

Total BTL Clashflow= £12 pm / £144 pa

HMO / Multi-Let ModelRent £3,400 (6 rooms, 2 Studios) Mortgage (5%) - £540Bills - £600Tenant Setup + £2662 mths Void - £67Maintenance - £50

Total HMO Cashflow= £2,409 / £28,908 pa



The HMO Guy .com

Market Value £750kPurchase Price £400kInstant Equity £350k25% Deposit ZeroMoney in Zero

18 rooms £400+ £7,200Tenant Set Up + £600Mortgage (4%) - £1,000Bills - £1,000Maint / Mgt - £500

Profit £5,300 pm/ £63,600 pa60+ enquiries in first week

from 1 advert on the internet

The HMO Guy .com

The HMO Guy .com

It’s not ‘just’ MASSIVE Cash Flow

…it’s ALSO MASSIVE Return on Investment (ROI)



The HMO Guy .com

Research



The HMO Guy .com

Select the Right Properties……and work the Floor Plans!

Multi Let Quick Start Seminar

Copyright Simon Zutshi & Paul Pre

Floor Plan Exercise

Private Tenants

Single £250 pcm Double £350 pcm Studio £500 pcm 1 Bed Flat £550 pcm Total Bills £400 pcm

Multi Let Quick Start Seminar


Floor Plan Exercise

LHA Rates

Shared rate £300 pcm 1 Room rate £500 pcm 2 Room rate £625 pcm 3 Room rate £725 pcm

Bills NA

CONFIDENTIAL

£300 pcm £500 pcm £625 pcm £725 pcm



The HMO Guy .com

Acquisition and Funding



Acquisition and Funding Ctd…



The HMO Guy .com

Marketing and Positioning



www.EasyRoomMate.co.uk

www.SpareRoom.co.uk

www.Gumtree.co.uk



The HMO Guy .com

Viewing and Letting



The HMO Guy .com

Management and Systems



Self Manage Vs Letting Agent Reasons to Self-Manage:

Reasons to use a Letting Agent:

How to pick a letting agent

� Are they currently looking after HMOs? If yes, how long? � What are there current HMO occupancy and arrears rates?

� Where are they based in location to your HMO?

� What does the local Private Sector housing officer think of them?

� Do they all do it or do they have a dedicated person/team. � References from landlords and viewings from some of their HMOs.



What you will need to Self Manage Item Necessity Desirable Work Mobile phone Y Smart Phone (ie Iphone) Y Vehicle Y Answer Service / Virtual Receptionist Y Computer with Internet access Y Master Key system Y Odd Job (Wo)man Y Main contractor Y Sub Contractor (Gas, elec etc) Y Great Marketing Strategy Y Great Selection & Vetting Systems Y



The HMO Guy .com

Cash Flow Secrets!



Cash Flow Secrets Ctd…



Strategy – The RIGHT Strategy for YOU

The HMO Guy .com

Strategy, Goals and Action Plan

List as many ways to get hold of a great cash flowi ng HMO: 1) ____________________________________________ 2) ____________________________________________ 3) ____________________________________________ 4) ____________________________________________ 5) ____________________________________________ 6) ____________________________________________ 7) ____________________________________________ 8) ____________________________________________ 9) ____________________________________________ 10) ___________________________________________



When setting your goals, be SMART-C: S ________________________ M ________________________ A ________________________ R ________________________ T ________________________ C ________________________ As a result of today, list your top 5 goals: 1) ____________________________________________ 2) ____________________________________________ 3) ____________________________________________ 4) ____________________________________________ 5) ____________________________________________



Personal Action Plan

No. Action By 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32



The HMO Guy .com

Just Do It



Appendix Further Reading Definition of an HMO, Planning and Licensing There are several types of HMO. The definition of HMO is contained in sections 254 and 257 the Housing Act 2004.

An HMO can be a whole building or a part of a building. For example, a block of flats might not be an HMO, but one of the flats within the block could be an HMO.

It is perhaps surprising how many buildings or parts of buildings are now HMOs, however not so many at the moment require a licence. It is perhaps easier to start with what is not an HMO. Properties that are not / cannot be an HMO are contained in Schedule 14 of the Housing Act 2004.

The most important exclusion is two persons sharing a house or flat is not an HMO.

The next important one is that a building occupied by an owner has limited exclusion. The owner’s household (direct family) is excluded plus another 2 persons are excluded. Example: If you owned and occupied a house and had 3 other non-family members living there, then the property would be an HMO. However, if you only had 2 lodgers (for example), it would not be an HMO.

Other exclusions include buildings managed by public sector bodies, buildings operated by universities etc. and buildings occupied by religious communities.

What is an HMO?

A simple non legal definition is that a house (or flat) is an HMO if there are three or more unrelated occupiers. There is also another type of HMO under section 257 Housing Act 2004 which provides for certain converted blocks of flats to be an HMO.

‘Related’ is specifically defined in the regulations but a quick summary is that they must be family members so brother, sister, cousin, husband/wife (or unmarried co-habiting) etc.

What Changed?

Basically up until 30th September 2010, planning permission was required for an HMO (not section 257 HMOs) where there was a “material change in use”. From 1st October 2010, this requirement was removed for all HMOs in England and a change in use for HMOs up to six persons became a ‘permitted development’, subject to a local authority not issuing a direction for a specific area, such that the permitted development does not apply to that area. Such direction is known as an Article 4 Direction.



What are use classes?

Under the Town and Country Planning (Use Classes) Order 1987, several classes of use are defined for which planning permission needs to be obtained. If a use is not mentioned in the use classes order they are know as a Sui Generis use. Examples are theatres, car showrooms and filling stations. A Sui Generis use still requires planning permission but is likely to be more specific than the generally more broad definitions contained in specific use classes.

What is a permitted development?

A permitted development is a list of developments that would normally require planning permission but do not require permission because they are deemed to have planning permission.

HMO Use Class On 6 April 2010, the use classes order was amended and a new HMO use (class C4) was added. The use classes order reads (so far as relevant):

Class C3. Dwellinghouses Use as a dwellinghouse (whether or not as a sole or main residence) by—

(a) a single person or by people to be regarded as forming a single household;

(b) not more than six residents living together as a single household where care is provided for residents; or

(c) not more than six residents living together as a single household where no care is provided to residents (other than a use within Class C4).

Interpretation of Class C3

For the purposes of Class C3(a) “single household” shall be construed in accordance with section 258 of the Housing Act 2004.”

Class C4. Houses in multiple occupation Use of a dwellinghouse by not more than six residents as a “house in multiple occupation”.

Interpretation of Class C4

For the purposes of Class C4 a “house in multiple occupation” does not include a converted block of flats to which section 257 of the Housing Act 2004 applies but otherwise has the same meaning as in section 254 of the Housing Act 2004.”.



Permitted Development

From 1 October 2010, the permitted developments order was amended to allow a class C3 (family dwelling) to become a class C4 (HMO) without the need for planning permission and vice versa. This is actually better than pre April 2010 because only class C3 existed then, meaning the letting as an HMO was always possible to require planning permission (but rarely enforced). This new permitted development basically makes all HMOs up to six persons lawful in England as long as the local authority have not issued a direction that the permitted development does not apply to a certain area.

When does the permitted development above NOT apply ?

Under Article 4 of the permitted development order:

… if the local planning authority is satisfied that it is expedient that development described in any … Class …, should not be carried out unless permission is granted for it on an application, … the local planning authority, may make a direction … that the permission granted … shall not apply to–

(a) all or any development of the … Class … in question in an area specified in the direction.

The approval of the Secretary of State is not required for a direction made under above, if the relevant authority consider the development would be prejudicial to the proper planning of their area or constitute a threat to the amenities of their area. [Article 5(4) of the permitted development order].

Article 5 also contains the procedure for publicising a direction made by the local authority that a specific permitted development does not apply to a specific area or areas.

I have a house that will be occupied by 5 unrelated sharers on 1 October 2010. Will I need planning permission?

As long as no direction (Article 4) is in force, then, no, planning permission will not be required because it is deemed to have planning permission (permitted development) from that date.

I have a house with 10 people sharing. Do I need pl anning?

The new class C4, and permitted development is only permitting the use for up to six persons. Therefore any property let to more than this has no specific class within the use classes order. The use of a property as an HMO with more than six people sharing is therefore known as a “Sui Generis” (from the Latin meaning ‘of its own kind’). This type of use will normally require planning permission and the new rules (from October 2010) have made no change to this.



I am a resident landlord and I let to lodgers. Do I need planning permission?

This type of situation is still regarded as an HMO for the purpose of section 254 of the Housing Act 2004 and would therefore fall under the new class C4. From 1 October 2010, it is be a permitted development if there are up to six persons (and no direction / Article 4 is in force).

However, if there were more than six persons, this situation is slightly unusual because there are two classes now involved (class C3 and C4). It could be argued that the primary use is that of a dwelling and the lodgers are simply incidental to that use and therefore there ‘might’ not be a material change in use and therefore planning ‘may’ not be needed.

HMO Licensing From www.direct.gov.uk Houses with multiple private tenants - Licensing

Landlords may need a licence to let a House in Multiple Occupation (HMO) - a rented property with shared facilities. They must also maintain good housing conditions, otherwise tenants can complain to their local council. Find out about HMO licences, how to apply, and general rules for HMO properties.

Licensing of HMOs

Your property is an HMO if you let (or plan to let) to at least three tenants who form more than one household and who share (or will share) toilet, bathroom or kitchen facilities. If so, you may need a licence. Mandatory HMO licences You must have a licence if you own a large HMO. A large HMO has:

• three or more storeys

• five or more tenants forming more than one household

Some councils require smaller HMOs or all HMOs in certain areas to have a licence as well. You should contact your local council to see if you need one. It is an offence not to apply for a licence if your property must have one.

Applying for a licence for an HMO

As a landlord, you need to contact the local council where your HMO is located to get an HMO licensing application form. You would usually apply for a licence yourself, but if you use a managing agent they can apply for you. When you apply, you must tell the following people who have an interest in the HMO:

• the owner of the HMO, the future licence holder, mortgagee, long leasehold tenants and any person who has agreed to be bound by the conditions of the licence



A licence will normally last for five years and will need to be renewed before the end of that period. A local council can shorten the time period if they feel it is necessary. You will usually be charged a non-refundable fee when applying for a licence. You should contact your local council to find out how much the fee is, as they decide on the amount.

How a council decides to grant an HMO licence

Your local council will look at many things to help them process your licence application, like the suitability of the:

• HMO for the number of tenants

• facilities - kitchen, bathroom and toilets

• landlord - are they fit and proper

• management arrangements

Your local council must be satisfied that you are a suitable person to hold a licence, otherwise they may ask for someone else to hold it. When an HMO licence is refused If the council refuses to grant you a licence, they will try to solve the issues with you. If nothing can be worked out and a licence is still refused, you can appeal to a Residential Property Tribunal. If a council refuses a licence they must make an interim management order which will enable it to take over management of the HMO. They can do so for a maximum of 12 months. If at the end of the 12 months a licence still cannot be granted, the council must make a final management order. The final order puts in place long-term management by the council for the HMO, which can last a maximum of five years. When a final order ends, either a licence can be granted or the council makes a new final management order. You can appeal against the making of an interim or a final management order through a Residential Property Tribunal.

Licence conditions for an HMO

If you are granted a licence for your HMO, you must meet the conditions your local housing authority sets out. Examples of conditions they set out are:

• producing an annual gas safety certificate

• making sure all electrical equipment and furniture that you supply is safe

• installing smoke alarms and making sure they work properly

• giving tenants a copy of the statement of terms for living in the HMO.

• A council may also set additional conditions, like the standard of facilities, state and management of the HMO and how you deal with tenant behaviour

All these conditions are to make sure you maintain your HMO to a good standard and manage it well. If you disagree with any conditions that have been set, you can appeal to a Residential Property Tribunal.



Selecting the Right Properties / Different Types of HMO Best for Cashflow:

� Solid working class area

� Cheap to buy

� Maybe ex council or spacious older properties

� Mixture of families, couples and older people

� Mainly working, low benefit dependant area

� Low to medium family income

� Mix of ‘council’ and ‘owned by someone’ properties

� ‘Blue Collar’ type of area

� Lots of Satellite dishes! Massive TV’s!

� Great transport links – Bus every 10 min type areas

� Walking distance but not next to local amenities

� Older cars but generally looked after



Best for (Potential) Growth - Private Estate / More Affluent Suburb

� Middle class neighbourhood

� Higher than average cost to buy

� Mixture of professional families young, more affluent people

� Don’t have to be new builds

� Higher than average income

� Perhaps a 70/30 mix of owner to investor

� ‘White Collar’ type of area

� Iphones and Ipads

� Good transport links but also off road parking � Walking distance but not next to local amenities

� Newer cars, quite often German

� More people degree educated



Kitchens / Kitchenette’s for Bedsits and Studios

Master Key Systems (Simply Google ‘Master Key System’)



Round-up and summary Actions required now:

1) Share your biggest learning point

2) Complete your action sheets

3) Work out the priority order

4) Commit to your partner Further learning

• Monthly property investors network meetings – www.pinmeeting.co.uk

o Preston 1st Tuesday of the month o Southampton 1st Tuesday of the month o Huddersfield 1st Tuesday of the month o Worcester 1st Wednesday of the month o Stoke 1st Wednesday of the month o Norwich 1st Thursday of the month o Oxford 1st Thursday of the month o Canary Wharf 1st Thursday of the month o Cardiff 2nd Tuesday of the month o Coventry 2nd Tuesday of the month o Bristol 2nd Wednesday of the month o Sheffield 2nd Wednesday of the month o Hammersmith 2nd Wednesday of the month o Chester 2nd Thursday of the month o Watford 2nd Thursday of the month o Nottingham 3rd Tuesday of the month o Cheltenham 3rd Tuesday of the month o Manchester 3rd Wednesday of the month o Croydon 3rd Wednesday of the month o Brighton 3rd Thursday of the month o Birmingham 3rd Thursday of the month o York 3rd Thursday of the month o Bournemouth 4th Tuesday of the month o London 4th Tuesday of the month o Basingstoke 4th Wednesday of the month o Leeds 4th Wednesday of the month o Liverpool 4th Thursday of the month o Cambridge 4th Thursday of the month o Lincoln 4th Thursday of the month o Paris 4th Thursday of the month

Put the dates in your diary for the pin meeting closest to you



Most people believe that their pension will be enough to support them in their old age but the truth is that 90% of the UK population

will have to continue working until they day they die or end up living on Rivita and Kitty Kat, unless they take control of their

financial future now!

The Property Mastermind Programme Now you can learn how to become a professional investor with 12 months of learning, support, and accountability. We have put together the most comprehensive programme in the UK to help you build a pension and give you cash flow now to accelerate the point where you can chose to retire and spend your time however you want. The main components of the Mastermind Programme include:

• The Brain Transplant Pack

• 3 day Mastermind Accelerator

• 10 x 1 day advanced workshops

• Monthly group coaching with Simon Zutshi

• Access to all monthly pin meetings

• Personal 1 to 1 Coaching with a successful Mastermind graduate

• 2 days of personal mentoring

• 24/7 online Mastermind forum We run 2 programmes each year, one starts in April with all the advanced workshops on a Friday and the other programme starts in October will all the workshops on a Saturday. To find out more details visit: www.Property-Mastermind.com



Power Team Contacts Solicitors Richard Spencer BPE Email: [email protected] Telephone: 01242 224433 Dean Alexander Alexanders Email: [email protected] Telephone: 01245216050 Paul Gelder MS Law Email: [email protected] Telephone: 0161 772 4500

hmo & multi let quick start seminar april 2012 with paul...

Documents