Houses of Multiple Occupancy are a unique opportunity to make more money from your property investment by renting space to several individuals at one time. A few fairly simple renovations can alter a property to make it suitable as a HMO meaning monthly revenue can double or even triple. However, renting a house as a HMO means dealing with more tenants, and the more tenants you have the more work there is. It is often not a case of letting the property then returning in 6 months to check out progress, but rather a much more active, hands on job for the landlord. If you aren’t sufficiently prepared for the HMO letting world, the tenants will eat you alive but if you are on top form, as involved as you need to be there is certainly a great deal of money to be made and enjoyable work to be done.
The mix of tenants you are dealing with in HMO letting is often very different from a single let. Rather than families, you are most often looking at students or low income individuals. This may mean dealing with citizen’s advice, job centres and other welfare agencies. Be sure to do an excellent job when it comes to applications and references as well as right to rent checks. You need tenants that will pay on time, respect the property and the other tenants!
One of the hardest things to balance in HMO letting is the mix of tenants in the property and it is an equilibrium that is always changing as tenant flow is sure to be far greater in a HMO. One bad tenant could send the others walking so you need to aim for compatibility when filling rooms, the tenants need to be able to get along for the HMO to work. The turnover will always be higher than in a single let so you need create a culture and set a standard for your properties as to tenant type and how the properties will be lived in.
In a HMO problems need resolving asap. Communal areas are a cause of dispute and any breakages or repairs need to be rectified before tensions amongst tenants escalate. A single let is easier to manage in this respect, one disgruntled client rather than five will always be so! However, there are advantages to having many tenants under one roof, in the long term outgoings should be less and income more so the potential yield is enormously greater.
Letting HMOs is not for the fainthearted but it is for those who enjoy a challenge, are up for some hard work and want to make their investment work for them. There is no better training ground to ensure you are fully equipped in all areas of property management than renting out a HMO, you will quickly become adept at tenant screening, problem solving and other management techniques.
Nick Fox is a highly experienced HMO practitioner and has a variety of books, training resources and mentoring programs available to guide you on the journey from being a single let landlord to a HMO investor. We would love to hear from you and help you as you take up the challenge of becoming a HMO landlord. Contact the team at firstname.lastname@example.org or check out our website.
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