Photo by Crockwell Properties

When I began growing my HMO business, I started working with an experienced investor as a mentor, and it was one of the best investments I ever made, helping me take my portfolio to a whole new level.

Following a decade of investing in HMOs, I started mentoring HMO investors myself to provide guidance and help them achieve their own property ambitions. Over the years, I’ve worked with some incredible people and businesses.

One of the long-standing members in my mentorship programme is Jonny Stockwell, a professional TV and film stunt performer turned HMO investor. Here I’ll talk about how Jonny got into investing in HMOs, what his investment strategy is and highlight one of his first investments and the lessons he learned.

HMO investment strategy

Jonny has been interested in property from a young age. His parents were always doing home renovations, and he worked for a builder for a couple years. When he and his partner, Rosie, bought their first home, they completed a renovation on it. 

After that, Jonny and Rosie, a professional make-up artist in the TV and film industry, wanted to supplement their fluctuating incomes. They formed Crockwell Properties and started investing with a single buy to let, but quickly realised they needed an alternative to get the monthly income they wanted.

Following years of research, Jonny took the plunge into HMO investment. He loved the idea of turning run-down properties into high cash flowing HMOs. For their first investment, they bought two already tenanted HMOs together in 2019.

Once I started mentoring Jonny the following year, I helped clarify his vision, and from that, we built a business plan and developed strategies to deliver results. They have a laser-focused strategy of investing in student HMOs within a small area of Liverpool.

Additionally, the structure of the student turnover cycle works very well for them as they live in London, 200 miles from their HMOs, so they rely on their team to deal with any issues that crop up and maintain the high standards they’re striving for.

Crockwell Properties concentrate on finding three-bedroom Victorian terrace houses and transforming them into sleek five and six-bedroom HMOs with large communal spaces. They aim to raise standards within the student HMO market in Liverpool and create spaces designed around tenants’ wellbeing. 

A stylish five-bed HMO with ensuites

Taking a look at a property they purchased in 2019, Crockwell Properties created a five-bedroom and five-bathroom HMO. Their principle goal was to ensure that every room had an ensuite and was at least 8m2 to 10m2.

This meant they couldn’t make it a six-bedroom property, which was the original plan. However, they decided that five spacious rooms all with ensuites would future proof their investment and create a more desirable house, despite the loss in monthly cash flow.

With this project, they undertook a large refurbishment, taking the house back to the brick, using the existing basement space and going into the loft. The functional design and stylish finish made their property stand out

The results, challenges and lessons

The project threw up some challenges with their 10% contingency getting swallowed up. The existing rear kitchen extension was very damp, forcing them to re-render and damp-proof the walls. They also found that the 100-year-old floor joists were rotten and needed replacing. 

Towards the end of the refurbishment, they were hit by COVID-19. This caused delays in getting materials, and the pressure to finish the project was on. They then faced a delay in the building inspector signing off the work. 

However, the biggest challenge came with the revaluation. From knowing their location so well and what other investors had their projects revalued at, they were confident that it’d reach £300k, but during the pandemic, the surveyor felt it was only worth £250k.

This was naturally disappointing, but it was a good lesson that despite having prepared as best they could, there are always things out of their control. Through our discussions, Jonny learned the importance of staying flexible when unexpected challenges arise. Thanks to good relations with their private investors, they paid them back plus their interest payments and used the money they withdrew from the deal to help fund their next project. 

Once the project completed, Crockwell Properties managed to achieve 100% occupancy through an incredibly difficult time in the industry. They were inundated with requests to rent the house due to the property’s strong appeal among their target demographic.

Buying the property for just £160k and spending £107k on the refurbishment, Jonny and Rosie added £21,800 in equity. They earned a 16% return on capital employed and bring in more than £14k in net annual cash flow.

Mentorship programme

When Jonny joined my mentorship programme, they owned three properties. Fast forward four years and they now own nine properties with one purchase currently going through. They run seven properties in total, managing 34 tenants, with further growth planned. 

Jonny has mentioned how having someone to bounce ideas off made the process smoother for him, and I continue to support him in developing his knowledge, holding him accountable and ensuring he’s moving towards his goals. 

If you’d like to level up your own HMO investment strategy, there are a few spaces left in my one-to-one mentorship programme The HMO Fastrack. Visit thehmoroadmap.co.uk for more information.

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind, writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!