It’s now been just over a year since Olaf Fetter and Jacqueline Standen purchased a unique property in Nottingham and embarked on an exciting refurbishment project to turn it into a large HMO.
Now, just weeks after completion, they explain what they have achieved.
Olaf: “After the completion of the 6-bedroom HMO conversion on the ground floor, the builders made a start on the basement. As we explained before, this was going to be a very large one-bedroom apartment with an impressive open-plan kitchen and living space.
“It took 10 weeks – a little longer than we expected and did come in a little over-budget, but it’s such high quality.”
Jacqueline: “It’s strange because you never expect there to be natural light, but when you enter the apartment, it really is a pleasant surprise. We didn’t even have to advertise the apartment and it was rented to the second person who saw it. They said there was nothing else out there like it.”
Olaf: “As soon as a toilet was installed in the basement apartment, we were able to tenant the ground floor HMO. Our original plan was to move the students (that we inherited when we bought the property) from the first floor into the ground floor once it was available. But, we wanted the whole building to cater for professional tenants and decided not to renew their contract. We gave them lots of notice and even released some on the students from their tenancy agreement early.”
Jacqueline: “This also meant that we could fill the ground floor earlier. As it happens, we didn’t have to advertise this property either. We just told tenants who enquired about our other HMO vacancies about this new property, and they were instantly impressed.”
Olaf: “It was more expensive but higher quality – even though all of our other properties are already much higher quality than anything else in the area – and obviously brand new. Everybody that viewed the property wanted a room. The first tenants moved in on 1st July and pay an average of £525 per month for an en-suite bedroom including bills. There are three girls and three guys, all in their late twenties.”
Jacqueline: “We also had our longest standing tenant move in from another one of our HMOs.”
Olaf: “We hadn’t actually heard anything from the tenants at all since they moved in and then I bumped into one of them and asked if everything was OK. She said there was nothing to report and that it was perfect. So they all seem to be getting on really well.
“In all of our other houses we’ve had at least a couple of teething problems – a leaky shower door, problems with hot water for example. There was nothing. That was the advantage of doing it slower and taking more time over the refurbishment. It’s our only property where we won’t have to do anything for a long time. We won’t need to enter into a second refurbishment as quickly as we would with some of the old Victorian houses we have in our portfolio.”
Jacqueline: “Once the last of the student tenants moved out of the first floor, we started the small amount of work required on that. This involved installing a new kitchen, giving the place a lick of paint and a very deep clean, servicing the air conditioning and installing some new lights.
“We finished the work a couple of weeks ago and the first tenant moved in on the same day. We are achieving an average rent of £550 per room, which is fantastic and at the highest end of the rental market in Nottingham. And the bedrooms are huge at 20sqm each, not including the bathroom.”
Olaf: “We obviously got planning to put another storey on, and this was going to be the next step instead of tenanting the first floor. But we’re not going to do that for now. It’s got a lovely zinc roof which would have taken a lot of work to keep during the extension, and we have been so involved in all of our projects over the last few years that we wanted to take a step back sooner.”
Jacqueline: “We’ve made back what we spent on it and having the planning in place has also added to the value. However, we’re also getting £3,000 net income per month from this property alone. So we’re really happy with how everything has gone.”
Olaf: “This was going to be our last property project for a while anyway because we want to try something new and PPP has given us a secure income stream that enables us to do that. And it’s an easy building – It’s like buying a Mercedes as opposed to an old banger. You might pay more upfront, but it won’t cost you as much to maintain or run in the long-term.”
Jacqueline: “Our plan is to now take a step back. We’ve just handed over the lettings and management of the HMOs to the management company that runs our flats. We’re also going to sell the apartments in one of our developments individually over the next couple of years because they are costly to run and maintain. This will help us raise some capital which we can invest into our HMO portfolio in the future.”
Olaf: “The time has come for something else, but Jacqueline is addicted to property, so we’ll no doubt continue down that route. After all, it’s a robust market and a business model that doesn’t need us to be around all of the time.”