Excellion Capital research shows that the average sold price for a three or four bedroom house in England currently stands at £444,273.

Meanwhile, the cost of converting a property into an HMO works out at an average of £11,345 per bedroom. This means that the cost of converting a three or four-bed house into a six-bed HMO costs an estimated average of £68,067.

From this, it suggests the total upfront investment when accounting for purchase and conversion comes to £512,340.

The average HMO in England has a monthly rent of £711 per room which, when accounting for six occupants, comes to a total monthly income of £4,269.

As a result, the average gross yield delivered from a six-bed HMO in the current market sits at 10%, which is higher than the wider average rental yield in England which usually sits between 5% to 6%.

In terms of regions, the average investor in the North East can expect a yield of 12.5% after converting a three or four-bed property into a six-bed HMO.

In the North West, the average yield stands at 11.5%, while in Yorkshire & Humber it’s 11%.

The lowest yields are found in London where expensive property prices mean the average HMO yield sits at 6.6%, while in the South East it sits at 8.1%.

However, some of England’s other major cities provide much higher yields for an HMO conversion.

In Manchester, where the average three or four-bed property sells for £329,163 and the average rental income from a six-bed HMO is £4,050, the yield stands at 12.2%.

Meanwhile, the average six-bed HMO yield in Newcastle stands at 11.9%, and in Birmingham it’s 10.6%.

Excellion Capital vice president of real estate Robert Sadler says: “We are seeing a lot of property investors in the residential space turn their attention to the bustling HMO market, especially in the regions.”

“Particularly outside of London and our other major cities, investors are snapping up relatively cheap three or four-bed terraced homes and converting them to six-bed HMOs with extraordinary results when it comes to returns and yields.”