6-bed HMO: looked strong, failed under analysis
A returning investor approached us after sourcing a 6-bed HMO that initially appeared very attractive on paper. The projected rental figures looked strong, the purchase price felt reasonable, and the broker’s projections suggested healthy cashflow.
However, once the deal was reviewed through the CORE Framework™, several weaknesses became clear.
While the headline rent looked attractive, the true monthly profit was significantly lower once realistic management, maintenance and operational costs were included. The property also carried high operational intensity, with increased tenant turnover risk, compliance obligations and ongoing management complexity. The location also had a significant impact on this.
The exit strategy was another concern. The valuation relied heavily on optimistic income assumptions, while the future buyer pool would likely be limited to investor demand rather than wider market appeal.
Following the review, the investor chose to renegotiate and reassess the structure of the deal before proceeding.
Purchase: £200,000
Expected Rent: £4,200 per month
CORE Findings:
• True monthly profit closer to £900 per month
• High management complexity
• Exit dependent on investor demand
• Operational pressure underestimated
CORE Score: 63/100
Decision: Adjust or pass
Client Feedback:
‘Melissa helped us look beyond the headline figures and focus on how the deal would perform once we owned it. It completely changed how we approached the purchase.’
– Deren T, Property Investor