Why HMO is a Great Option for Property Investment

Houses of Multiple Occupation (HMO) are becoming increasingly popular in the property investment world – and with good reason!

An HMO involves a property being let out to 3 or more people, who are not a collective household, often students sharing a house or singles or couples just wanting to rent a room.

Here are some great reasons to go HMO –

1. Great Returns

One of the main reasons that HMOs are great for investors is that they yield high returns as you have more than one rental income coming in from the property. The fact that the returns are so good means that you have some options as a result:

  • You could use the money you’ve made to live on.
  • Save it to make your next property investment
  • Overpay your mortgage to create a pension for when you retire.

2. HMO Is a Huge Growth Market

In the face of the shortage of affordable housing in this country, the HMO market is a strong one due to the demand for a place to live. Housing Benefit rules now mean that single people under 35 years old are only entitled to a room in a shared house, which opens up even more of a need for HMO. If you have a good-quality property for HMO then you have a bright investment future!

3. You are at less risk from non-payment of rent

Due to the nature of the set-up, you will always have several rental incomes coming in from the one property. This means that if you have one tenant out of five paying late, you still get 80% of the income on time. If you are single-letting and the family occupying the property are late paying, then you have no income. It’s a no-brainer really.

4. Letting HMOs can bring you a lot of freedom

Focussing on a property that has a high yield means that you won’t need to be travelling to many properties to conduct viewings, organise repairs and solving issues at different addresses. You can spend your time looking for your next HMO to invest in!

 

We hope that this brief guide to the benefits of HMO has been helpful. Good luck and go for it!

 

If you are looking for further advice on property investment, take a look at the property mentoring services we provide at Nick Fox Property Mentoring here. We offer a range of mentoring packages to suit all needs.

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