HMO yield calculator
Houses of Multiple Occupation are complex from a financial perspective.
To assist you, we have built a HMO net yield calculator which attempts to capture all those complexities in a straightforward manner.
This online calculator is free to use and does not require you sign up!
|Room 1 rental income (monthly) £|
|Room 2 rental income (monthly) £|
|Room 3 rental income (monthly) £|
|Room 4 rental income (monthly) £|
|Room 5 rental income (monthly) £|
|Room 6 rental income (monthly) £|
|Broadband bills (monthly)|
|Electricity bills (monthly)|
|Gas bills (monthly)|
|Property management (annual % including VAT)|
|Council tax (monthly) £|
|Services charges (monthly) £|
|Buildings and contents insurance (annual) £|
|Ground rent (monthly) £|
|Rent and legal guarantee insurance (monthly) £|
|Other expenses (annual) £|
|Total purchase costs £|
|Net rental yield|
Copyright: Property Investor AcademyUse Of This Calculator
1. This calculator is suitable for Houses Of Multiple Occupation only.
2. This calculator is NOT suitable for single-let properties or serviced accommodation.
3. The default values used should not be relied upon as indicators of market rates. Please customise all amounts to your actual facts and circumstances.
4. Once the financial values have been updated, please press the button immediately below to refresh the calculation.
How To Work Out HMO YieldExpressed as a formula, HMO yield can be calculated as follows:
HMO Yield=(Annual rental inome minus Annual utility bills minus Other annual expenses)/Purchase Price
What is an HMO yield calculation?
An HMO rental yield calculation is a financial metric for the net cashflow generated by a House in Multiple Occupation, expressed as a percentage of the total investment made. It does not consider capital growth.
Yield is normally expressed as an annual percentage rate.
Why is rental yield so important?
Understanding the rental yield helps property investors evaluate whether the property is a good investment. It also helps in making comparisons against other investment opportunities.
Why have void days been included?
Generally speaking, standard buy to let properties are let out on long term tenancy agreements and void days should be minimal.
However, in a HMO of say 5 individuals there will be a higher levels of tenant turnover. This means that there will be more void periods where rooms are empty . Furthermore, there will be marketing costs incurred on finding tenants and the drawing up new tenancy agreements (assuming property is self managed).
Why are there so many expenses included above?
In an HMO the utility bills are paid for by the property investor. In addition, unless it is a student HMO, council tax is also paid for by the property investor. From a tenant perspective, the room is let “bills inclusive”.
How do maintenance costs of a HMO compare to a standard buy to let property?
Maintenance costs are higher due to higher wear and tear.
What might be included in “Other expenses (annual)”?
Fire risk assessments reports; gas safety certificates, electrical inspection condition reports.
What might be included in “Capital costs incurred upon acquisition”?
Costs associated with initial HMO licensing, Refurbishment costs; professional fees such as architect fees; fees and professional expenses associated with planning permission; conveyancing fees, stamp duty costs.
Do you have single let properties within your portfolio? If so, please feel free to head over to our rental yield calculators.