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Hmo Daddy Jim Haliburton: 100 Properties, 800 Tennants

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Rent-farming parasite gets unconditional love from the Torygraph.

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/10990419/Buy-to-let-creating-bedsits-for-20pc-returns-is-just-a-response-to-the-market.html

Markets have a way of exposing unpalatable truths. One such truth is that if Britain does not build more homes, then more and more existing properties will be chopped up into tiny units.

Ten days ago I wrote about self-styled “HMO Daddy” Jim Haliburton, pictured below, who makes 20pc annual returns by buying three-bedroom Victorian homes in the West Midlands and slicing them up into five or six bedrooms, each of which is let to a separate tenant.

PX5765069_20140724_2986559f.jpg


Here is his system: buy the property with cash for £80,000; spend £20,000 on the makeover, then let six bedrooms each at £275 per month. Hence a £20,000 income on a £100,000 outlay. It doesn’t really matter what happens to the capital value of the property, the profit is in the income.

Mr Haliburton is currently buying and converting a property every few weeks, alongside his second job of training other people how to do exactly the same. And he has many takers. When that piece was published readers raced to criticise Mr Haliburton and the whole HMO – “house of multiple occupation” – model of buy-to-let investing.

A typical comment said: “These people have bought up the properties that should have been available to first-time buyers, rented them back to them, and made themselves a fortune.”

There was also much comment about the creation of “HMO slums”, with people saying the character of streets and neighbourhoods had deteriorated following the arrival of Haliburton- style landlords.

But it is the market at work.

“Traditional” buy-to-let, where someone buys a two-bedroom flat and lets it to a single professional or couple, doesn’t stack up the way it once did.

...

Jim Haliburton argues he is doing tenants a favour by offering his bedsit-style accommodation on a mass scale. They can save more money toward buying their own home if they pay less now in rent, he says.

I have my doubts. But what is not in doubt is that unless more homes are built, the market is behind Mr Haliburton’s approach of chopping up existing properties into ever smaller, more affordable bedsits. That is where the demand lies and the returns, and so that is where the money is going.

If it hasn’t happened yet, get ready for an HMO Daddy to start buying up near you.

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Jim Haliburton argues he is doing tenants a favour by offering his bedsit-style accommodation on a mass scale. They can save more money toward buying their own home if they pay less now in rent, he says.

Not if you and your ilk continue to push up prices faster than wages and interest on savings!

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This country is sh*t. Our elite literally hate people.

Agreed,

Why on earth anybody ever gave up their lives for it to return to this is quite something. Total contempt from the top.

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This is the market at work

Indeed it is the market working with a false building restrictions forced upon by the government. This is the direct outcome of government and the laws the impose upon the country.

There is no change in sight, in fact I may as well get in on it myself during the next dip.

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Remarkable that this should make a news story.

Are there adults around today who haven't spent at least a few years of their youth in an HMO? Perhaps it would have some more interest if it discussed how those things have changed over the years.

Edited by porca misèria

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Remarkable that this should make a news story.

Are there adults around today who haven't spent at least a few years of their youth in an HMO? Perhaps it would have some more interest if it discussed how those things have changed over the years.

BTL/HMO is a business, not an investment. Things are changing for some student HMO, but I don't think Big Daddy Jim does much student HMO. What's he selling anyway, always giving it media? Property courses or something? Ah yes, something like that. *alongside his second job of training other people how to do exactly the same."

It's certainly changing for some HMO-ers though, with new facilities from other providers coming online at some unis. It's just I also don't know where students get the money to afford the smarter new self-contained rentals. http://forums.moneysavingexpert.com/showthread.php?t=5020034

Spoke to a landlord today...

18-07-2014

...He now owns 6 student HMO flats in Glasgow. He was having a right old moan at Glasgow City Council for granting planning permission "to more and more of these flashy student accomodations" including one about 5minutes walk from some of his flats.

I had always assumed that he made a huge profit from the HMOs but apparently it is not as easy a business as it once was with fewer students seeking private rentals. He thinks the council should show loyalty to people who have helped students out for years and not the bankers behind these new places! (which do look rather nice I must say)

Posted by Big Aunty

21-07-2014

..I lived in the city in the 90s when the council bought the HMO policy in because a stingy landlord essentially killed a student because of poor fire safety.

I actually had a temp job with a university accommodation office one summer and they had a file of student complaints about landlords in the west end, often about the failure to get repairs done or the witholding of deposits. The same names of landlords and addresses of properties kept appearing, often of the same ethnicity.

...I have seen lots of large HMOs for sale across the city and west end, often in extremely poor condition, grubby, nasty decor, dated furniture. I recall my friends living in grotty flats back then in flats where the landlord didn't even feel the need to install central heating as they had no problems letting them out due to demand.

I am not surprised that the schemes have made letting large properties to student less attractive to landlords. I have also seen how the local Unis have divested themselves of some of their historic halls of residence, too, so I expect they couldn't turn a profit because of high maintenance costs and the way that many 1st year students no longer want to share rooms.

I have also noticed the large rise in the number of professionally run student halls by independent providers and I imagine these shiny, safe, modern buildings are very popular with todays students who are much more affluent, fussy consumers than the students of 20 years ago.

I think it is the expectations of modern students for their living standards that have made the dingy tenement flats fall out of favour, their desire for privacy and not having to haggle over the bills with their flat mates, the aggro that comes with a joint tenancy, that have made them abandon the drafty HMOs of old.

I see no need for the council to support private landlords - they are at the mercy of the market. It's not the councils (and therefore the taxpayers) fault that 4/5 bedroom tenements are subject to such stringent rules and are less profitable and popular with their target group.

I always felt sorry for the stream of students who were regularly ripped off by landlords who had a portfolio of HMOs near the Uni and did !!!!!! all to maintain them or run them professionally.

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BTL/HMO is a business, not an investment. Things are changing for some student HMO, but I don't think Big Daddy Jim does much student HMO. What's he selling anyway, always giving it media? Property courses or something? Ah yes, something like that. *alongside his second job of training other people how to do exactly the same."

It's certainly changing for some HMO-ers though, with new facilities from other providers coming online at some unis. It's just I also don't know where students get the money to afford the smarter new self-contained rentals. http://forums.moneysavingexpert.com/showthread.php?t=5020034

In some (many?) places the smart new self-contained rentals aren't much more expensive than the HMOs. Where my daughter goes to university a room in a flat in one of the university's blocks costs a smidge over £5,000, for 41 weeks, including all utilities, internal phone system, broadband, the lot, and you get your own toilet and shower, and all repairs done pronto. A room in a student HMO is around £4,600 - for 52 weeks, but you don't get the option of not paying for the summer - and for that you could be sharing with 4, 5 or 6 other people with 1 or 2 bathrooms/shower rooms, and the house is usually crumbling in places. That generally includes utility bills, but not broadband, which you have to sort out yourself, and again you'll have to pay to at least a year.

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In some (many?) places the smart new self-contained rentals aren't much more expensive than the HMOs. Where my daughter goes to university a room in a flat in one of the university's blocks costs a smidge over £5,000, for 41 weeks, including all utilities, internal phone system, broadband, the lot, and you get your own toilet and shower, and all repairs done pronto. A room in a student HMO is around £4,600 - for 52 weeks, but you don't get the option of not paying for the summer - and for that you could be sharing with 4, 5 or 6 other people with 1 or 2 bathrooms/shower rooms, and the house is usually crumbling in places. That generally includes utility bills, but not broadband, which you have to sort out yourself, and again you'll have to pay to at least a year.

Yes, it's good to see this competition.

aSecureTenant, not a student to my knowledge, was eyeing this sort of accommodation up longingly, and wouldn't mind moving in himself, as I recall it on one thread.

Pity The Poor Rigbys In Huddersfield

Started by aSecureTenant, Jan 26 2014: "When completed in September it will house 653 students whose every need will be catered for from en-suite facilities, 24-hour staff, 20MB internet, utility bills, round-the-clock security and contemporary fitted kitchens. But it’s a competitive market in studentland these days and so the prices tend to be relatively modest from just £105 per week."

Saw HMO Big Daddy on 'Meet the Landlords', BBC, last year. It didn't give me an favourable view of HMO accommodation, but then I accept the producers may have gone for that theme. There is surely some good HMO high standard property about, with good landlords. All HMO landlords should all have to be held to high standards, and its good regulation has tightened up in recent times.

A couple of Property Tribes (forum) views of that show. http://www.propertytribes.com/new-bbc-1-programme-meet-the-landlords-t-8517.html

Jim Haliburton's rooms were pretty vile but it seemed that it was all the kind of tenants he had could afford.

The tenants blamed Jim Haliburton for squalid properties and Jim Haliburton blamed the tenants for their squalid lifestyles. It was hard to know which was more to blame. The featured tenants did not like him very much and said he was only in it for the money.

His premier accommodation "The 3 Horseshoes" - a grimy pub converted into bedsits - did not seem that lucky for his unfortunate tenants who were expected to pay £15 per week top up on their housing benefit payments to pay for "extras". Tenant Mikey claimed the room was a bedsit masquerading as a "studio flat". The room was damp and cramped.

Jim Haliburton said that he turned properties into HMO's by "adding a few smoke alarms and putting some locks on the doors ... nothing much to do really".

Featuring Jim (The HMO Daddy) proved to be effective in branding HMO landlords as greedy, unprofessional and unsympathetic. This was certainly disappointing as many of us know plenty of professional landlords providing good quality HMO accommodation.

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Many rural properties, those that were once inhabited by poor farm workers, have been knocked into one.

I know of properties that sell for over half a Million, that once housed four seperate families.

The three rural families displaced in this way, now have to live in tiny boxes in the towns.

Consolidation in the villages, and separation in the towns.

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His premier accommodation "The 3 Horseshoes" - a grimy pub converted into bedsits - did not seem that lucky for his unfortunate tenants who were expected to pay £15 per week top up on their housing benefit payments to pay for "extras". Tenant Mikey claimed the room was a bedsit masquerading as a "studio flat". The room was damp and cramped.

Oh, this is very poignant for me. This is exactly how I got to move to London in 1998 on the dole. The rent was pitched at £5 more than what the housing benefit paid and I had to cycle on my crappy old bike to pay the £5 in cash over the counter in some shady office in Leytonstone. I had a rent book for this £5 payment and everything.

Difference is, this was a self contained 1 bedroomed flat in Lower Clapton, Hackney (Zone 2), not some sh1tty HMO.

What a step backwards.

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I lived in HMO housing as a student, and also when I worked away from home once! A bit basic, with shared bathrooms, but the electricity and hot water was thrown in, with the price! Basically a bedroom with a mini cooker and a sink! I had good neighbours, and the landlords were quite OK at getting stuff fixed! I think they had a few big old houses like this, not hundreds!

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Free advertising for vomit pig Haliburton and his courses.

Remarkable that this should make a news story.

Are there adults around today who haven't spent at least a few years of their youth in an HMO? Perhaps it would have some more interest if it discussed how those things have changed over the years.

I had a bedsit (would now be advertised as a studio apartment) in an HMO but I was a teenager, couldn't have cared less. It was a temporary place to sleep, wash and dress, not a home. Difference I see now is that these same types of accommodation are advertised and priced for professionals, who are often people in their 30's and upwards. The big old houses in Belfast either belong to the very wealthy or they are divided up into as many 'studios' or 'apartments' as possible. What was realistic for a teenager even 20 odd years ago is now out of the reach of many working adults.

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Read a lot of councils are jumping on the licensing scheme bandwagon and inspecting and insisting on some pretty wide-scale improvements to bring them up to a reasonable spec. Nominal fee to be part of the (compulsory) scheme set on size and number of properties which pay towards the admin of it.

One not too far from me is (according to a report in the local paper) having to spend around £45,000 on improvements before the licence (to operate as a HMO) will be granted.

As more councils switch on to this (powers handed down from central Government under the localisation acts) I can see BTL HMO style becoming a bit of a liability. A bit of a self cancelling liability as they will try to hike rents to cover the costs.

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How much (proxy) housing benefit does Halliburton trouser a year I wonder?

Don't hate him though. Hate his tenants.

Hmmm. Doesn't housing benefit still pay based on actual rents (up to a limit)? So there's no incentive to look for anywhere cheaper than the LHA rate for an area. A landlord letting rooms for £275/month might not get many takers in that market, unless he offers as good as someone charging twice as much!

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I think HMO's are becoming the places for single benefit claimants.

HMOs for a lot of working young adults were finished off by parking permits.

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This country is sh*t. Our elite literally hate people.

But very good at having their views promoted by the peasantry ala Tea Party. Take the CPRE for example. Suggest building more homes on the green belt and get tons of abuse from the penniless claiming the countryside is 'ours for generations.' It never was 'ours' and never will be!

I lived in HMO housing as a student, and also when I worked away from home once! A bit basic, with shared bathrooms, but the electricity and hot water was thrown in, with the price! Basically a bedroom with a mini cooker and a sink! I had good neighbours, and the landlords were quite OK at getting stuff fixed! I think they had a few big old houses like this, not hundreds!

Leave computers on all day/night. Setup Bitcoin mining operation!

Edited by aSecureTenant

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I'd like to see some actual sums for houses he's done up, actual rental income and voids, and physical depreciation

I bet his real yield isn't 20%, and I bet there's leverage in there somewhere

Edited by Si1

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Recipe for success: Jim Haliburton buys unloved two- and three-bed terraces typically costing £60,000 to £80,000 each, for cash. He spends £20,000-£40,000 converting them into five- or six-bedroom units, with each room typically letting for £280 per month. For a six-bed house, that works out as an annual income of £20,000. With that sort of revenue, the property is worth £200,000 to another investor-buyer.

Mr Haliburton then takes out a mortgage against the property, of £140,000, or 70pc of its value. "After the £100,000 I spent on the property, I've now got £40,000 in my back pocket. And an income for life," he said. "It's a no-brainer."

Up to his eyeballs then. Sounds like a beneficiary of zirp more than anything else

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Recipe for success: Jim Haliburton buys unloved two- and three-bed terraces typically costing £60,000 to £80,000 each, for cash. He spends £20,000-£40,000 converting them into five- or six-bedroom units, with each room typically letting for £280 per month. For a six-bed house, that works out as an annual income of £20,000. With that sort of revenue, the property is worth £200,000 to another investor-buyer.

Mr Haliburton then takes out a mortgage against the property, of £140,000, or 70pc of its value. "After the £100,000 I spent on the property, I've now got £40,000 in my back pocket. And an income for life," he said. "It's a no-brainer."

Up to his eyeballs then. Sounds like a beneficiary of zirp more than anything else

Income £20,160k (six units@ £280/month, no voids)

Mortgage of £140k, at 4% IO means £5,600 per annum.

Voids of 1 month per annum means £1,680

Management fee - 8%? - £1,500

That's down to £11k before repairs/maintenance although the voids may come in lower of course.

I find it hard to believe that mortgage companies lend on the basis of a £200k value for this income, it looks pretty pricey to me at 18 times net (I'd be expecting significant growth prospects for that multiple)

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Yes, it's good to see this competition.

aSecureTenant, not a student to my knowledge, was eyeing this sort of accommodation up longingly, and wouldn't mind moving in himself, as I recall it on one thread.

Building even more in Huddersfield now! :D

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