BTL · Property AnalysisStrategic Overview: A 6-bedroom terraced property currently operating as a high-performing HMO in a prime Southsea student/professional rental pocket. At a purchase price of £400,000, this presents a "BRRR" potential for professional HMO management.
Rental data analysis indicates an average weekly income of £905 per week for comparable 6-bed HMO properties in this PO4 catchment. The gross yield of 11.7% is exceptional, driven by the current HMO configuration. We have calculated the ROCE based on a £40,000 down payment plus £35,000 refurbishment and £12,000 in bank fees/legal costs, total cash invested approx £92,000.
Monthly projections account for a conservative interest-only mortgage calculation, agent management fees at 12%, and a healthy allowance for utilities/maintenance required for an HMO setup. Positive cash flow is achieved immediately upon completion of the licensing and refreshing process.
Growth Score: 7/10. Southsea benefits from strong University of Portsmouth demand and proximity to the coastline. While the property currently acts as an HMO, the ability to convert back to a high-end family home (6-bed) provides a strong floor for capital value. Area regeneration and infrastructure investment continue to support consistent price appreciation.
Demand for 6-bedroom shared accommodation in Southsea is perennial, primarily driven by University of Portsmouth students and young working professionals. Void risk is extremely low due to the location's proximity to the seafront and local transport hubs (Fratton Station 0.4m).
Location Score: 8/10. Situated in PO4, a key arterial hub for Portsmouth. Excellent amenities, high walkability, and strong transport links to London via Fratton. No Article 4 constraints cited that prevent the existing HMO use, though local council licensing must be verified.
The property is highly liquid. Strategy: Operate as a high-yielding HMO for 3-5 years, then exit by selling to either a seasoned HMO investor (looking for ready-made yields) or a family unit seeking a substantial 6-bed property in a popular district. Refurbishment ensures the property remains competitive for both profiles.
The property requires a "refresh" rather than a structural overhaul. Focus on cosmetic upgrades to increase room appeal (vital for HMO tenants) and ensuring compliance with fire/HMO safety regulations (hardwired smoke alarms, fire doors, etc).
Add Bedroom Potential: No. The property is already at its functional capacity with 6 bedrooms; adding more would crowd the internal space and potentially breach licensing standards.
Primary risk is the 90% LTV assumption, which is difficult to secure for an HMO investment. The secondary risk is the 'Leasehold' status, which creates potential for rising service charges. The interest rate of 1% is used for calculation but is not reflective of current market volatility.
1. Fire Doors (x6) - £1,800 | 2. Smoke/Heat Alarm System - £600 | 3. Kitchen Units/Worktops - £4,000 | 4. Appliances (Oven/Hob/Fridge) - £1,500 | 5. Bathroom Suite Parts - £2,500 | 6. Shower Cubicle/Tray - £1,200 | 7. LVT Flooring - £2,000 | 8. Carpets (Bedrooms) - £1,500 | 9. Paint/Primer/Decorating Materials - £1,000 | 10. Light Fittings/Switches - £400 | 11. Skirting Boards/Architrave - £600 | 12. Garden Fencing/Clearance - £1,500 | 13. Radiators/TRVs - £800 | 14. Blinds/Curtains - £500 | 15. Signage/Safety Notices - £200
1. Property Strip Out - £1,500 | 2. Plastering & Patch Repair - £3,000 | 3. First Fix Plumbing (Kitchen/Bath) - £2,500 | 4. First Fix Electrics (Alarms/Sockets) - £2,500 | 5. Kitchen Installation - £1,500 | 6. Bathroom Installation - £2,000 | 7. Fire Door Installation - £1,200 | 8. Internal Painting - £2,500 | 9. Flooring/Carpet Fitting - £1,000 | 10. Carpentry/Woodwork - £1,000 | 11. Garden Clearance - £1,000 | 12. Gas Safety Certification - £200 | 13. Electrical Certification (EICR) - £300 | 14. Waste Removal/Skips - £800 | 15. Final Snagging/Cleaning - £500
This is a solid HMO play. The 11.7% yield is the headline figure that makes this attractive. However, as a first-time buyer with only £40,000 down on a £400,000 purchase, you are highly exposed. You must negotiate hard on the Leasehold status—ensure the remaining lease term is long (ideally 99+ years) to avoid expensive lease extensions later. Do not count on the 1% interest rate; budget for 5.5%+ to ensure cash flow safety. If you can bridge the finance and handle the HMO licensing, this is a wealth-building asset yielding a strong 12.3% ROCE.