About this video

• Video Title: Inside Mitch Nunn's HMO Investment Blueprint (Full Breakdown)
• Channel: Omer Mehmet
• Speakers: Mitch Nunn
• Duration: 00:35:59

Overview

This video breaks down Mitch Nunn's strategy for investing in Houses in Multiple Occupation (HMOs). He discusses why HMOs are a profitable investment, the current market landscape, how to identify good investment areas, the ideal property for conversion, and the financial aspects of his projects. He also touches on the differences between C4 and sui generis HMOs and introduces his educational platform, the HMO Academy.

Key takeaways

• HMO Investment Potential: Mitch Nunn highlights HMOs as a "sweet spot" for investment due to their effort-versus-return potential, offering better yields than single lets in the current interest rate environment.
• Market Demand: Increasing population, net migration, and changing living arrangements (people having families later or not at all) contribute to a high demand for quality rental properties, particularly HMO rooms.
• Investment Area Criteria: A 10-point scorecard is used to evaluate investment areas, considering factors like proximity to transport, Article 4 status, property style, price point, local rents, and transport links.
• Property Conversion: The ideal property for conversion is a large Victorian-style house (around 1900 build), offering more space and potential for conversion into multiple rooms compared to post-1950 properties.
• C4 vs. Sui Generis HMOs: While sui generis HMOs offer better financial returns, C4 HMOs present lower planning risks, especially for new investors, and may have fewer building regulation requirements.
• Deal Analysis: Nunn shares details of two projects, illustrating the costs, valuations, and projected net cash flow, demonstrating the profitability of his HMO investment strategy.
• HMO Academy: He promotes his educational platform, the HMO Academy, offering resources and support for those interested in learning the HMO investment process.

Mitch Nunn considers 10 key factors when evaluating an investment area for HMOs:

• Proximity to Home: Ideally within an hour's drive for hands-on project management, though a strong power team can extend this range.
• Article 4 Area: Whether the area has Article 4 restrictions, which can act as a barrier to entry and reduce competition.
• Style of Property: The suitability of existing properties for conversion.
• Price Point: Ensuring the property is available at a price that makes the deal viable.
• Local Room Rents and Demand: Understanding the rental market and demand for rooms.
• Transport Links: Proximity to transportation, especially for commuting to London.
• Proximity to Infrastructure: Location near major hospitals and universities, which drive demand from specific tenant demographics.
• Gross Yield: Understanding the potential gross rental yield in the area.
• Saturation Levels: Assessing the number of existing HMOs in the area, though this can indicate demand as well as competition.
• Sustainability: The long-term viability of the location based on employment and population trends.

Mitch Nunn describes the ideal property for HMO conversion as a large Victorian-style property, typically built around 1900. These properties are significantly larger than post-1950s builds and offer more potential for conversion. Specifically, he looks for houses with a large double-story outrigger. His "bread and butter" conversion is a seven-bed, seven-bath HMO (six ensuite, one off-suite) on the existing footprint, which his team can typically convert in about 16 weeks. He also mentions that properties with L-shaped dormers and loft conversions are advantageous for maximizing space.

Here's a prompt you can use for GPT, designed to extract the key learnings from the video:

"Based on the transcript of Mitch Nunn's presentation on HMO investment, create a comprehensive guide for aspiring HMO investors. This guide should cover the following key areas, drawing directly from Nunn's insights:

1. Why Invest in HMOs: Explain the advantages of HMOs over other property types and the current market conditions that make them attractive.
2. Identifying Investment Opportunities: Detail the criteria for selecting an investment area, including specific indicators of demand and desirable location features.
3. Property Selection and Conversion: Describe the characteristics of an ideal property for HMO conversion and the typical process and considerations for renovation.
4. Understanding HMO Types: Differentiate between C4 and sui generis HMOs, outlining the pros and cons of each from an investment perspective.
5. Financials and Deal Analysis: Provide an overview of how to analyze HMO deals, including typical costs, valuations, and yield expectations, referencing the examples given.
6. Risk Management and Strategy: Discuss potential risks and strategies for mitigating them, such as Article 4 areas and the importance of room size and quality.
7. Educational Resources: Briefly mention the availability of educational resources for learning the HMO process, as presented by Mitch Nunn."