Jim Haliburton – a celebrated landlord who owns around 150 HMOs says that the best way to survive in a property market where property prices keep rising while rent remains stagnant is to curve your properties up into HMOs. We are talking studios and bedsitters. This, in its essence, is the HMO business. If you can find excellent properties which you can then curve up into smaller properties within a property, you can make a decent living renting these smaller properties to the right kind of tenants. But, you would have to find the right kind of tenant. That is a major issue that affects the profit margins of most HMO owners and landlords.
Hire the right property management company
Yes, managing your own property will mean cutting out the middle man (property managers). Instead of deducting the percentage that you would normally pay them, you can simply do the job yourself and add that amount to your bottom line as part of the profits. The problem with this strategy is that you will quickly realise just how cumbersome managing even one HMO can be. Plus, property management companies bring a lot to the table. Namely:
- Property management experience: They will handle all the legal issues as well as tenant disputes.
- They know how to find the right kind of tenant: They can find tenants who will pay top rent on time.
- They bring a unique point of view: Because their fee percentage is pegged on the overall profits, they can suggest excellent ways for you to get more out of your property.
Instead of viewing that percentage you pay them as a loss, you should look at it as an investment and hire the right kind of property management company.
Train other would-be HMO owners
Although this isn’t the primary focus for any property owner, it is a wonderful way to make some extra cash through your HMO business. In fact, property investors like Rick Otton, Reena Malra, Simon Zutshi and the like have all shown just how lucrative conducting training programs can be.
If you have enough experience and enough demonstrable success, you can put that knowledge to good commercial use by providing professional training to the thousands, if not millions, of aspiring HMO owners.
It is true that there are many business minded people out there who have access to the money and can afford to buy HMOs. The problem is that these people have no experience when it comes to managing any kind of properties. They do not know:
- What is legally required of them by the local Government?
- How to get the necessary licenses and permits.
- How to get the right kind of tenants.
- How to deal with tenant disputes.
- How to properly curve up their properties so that they are profitable.
As well as any other vast number of issues that experienced HMO property owners already know how to navigate. Why don’t you package that knowledge in the form of a training course where aspiring property owners can learn how to succeed at HMO management from you?
These are two excellent ways through which you can ensure that you get the most out of your HMO.