We all know now what landlords have known for years; there is real money to be made in HMO properties. However, it is going to take some serious research skills, persistence and a willingness to learn how to get the most from your HMO.
If I had my way, all real estate properties would be HMO properties. That is how much I like this model of business. Suffice it to say that I have made a great deal of money investing in this kind of real estate over the years. That is not to say that it doesn’t have its challenges (every money making venture has its challenges). It is just to say that I find it exceptionally rewarding as a landlord. The good thing is that you too can start making money if you know what to expect when investing in HMO.
Of course, imparting this knowledge is going to take a lot more than just one post. However, I am going to show you the three simplest ways through which you can get the most out of your HMO investment.
How to get the most from your HMO
It is all about the numbers
A huge mistake that first time landlords make is to impose their own personal preferences on the kind of property in which they invest. Yes, a swimming pool and beautiful view of the River Thames are all wonderful things, but will they translate into better rent? There are those things that obviously determine just how much rent your tenants will be willing to pay. Things such as proximity to good schools and transportation will matter more to a practical tenant than the fact that you have beautiful rose bushes around the property. Be careful not to invest too much of you money on a property based on the fact that you like its aesthetics. Do the math and ensure that the add-ons translate to better tenants and higher rent.
Are newer properties better than older ones?
This might sound obvious to you, but when you think about it, it isn’t quite that straightforward. On the one hand, older properties are cheaper to buy and with good repair and makeover jobs can really be just as beautiful and as appealing as new ones. One the other hand, newer properties have better finishing, modern fittings and are simply easier to maintain than the older ones. You need to look at the future projections. Which property is likely going to cost you more in the future? Older ones will likely need more repairs and maintenance work sooner than later while newer flats have issues such as lease hold problems and so on. This is something you need to seriously consider and the only way to determine which one is better for you at the moment is to run the projections.
Get a good property manager and agent
Managing your own HMO might sound appealing at first, but once you start getting calls from your tenants at 3 in the morning for one flimsy reason or another, you will realise that it might not be the best of ideas. The best course of action is to get a good property manager and agent. These are people who will make sure that every grievance is settled and that the property is in good conditions. The agent will ensure that you always have tenants lined up and that your occupancy rate is at optimum.
Remember, your HMO will only make sense as an investment if it has high quality tenants who have a low turnover rate. Every time you get new tenants there are costs associated with repairs, paint jobs and so on. Try as much as you can to make your property appealing to the best clients who will then go on to stay for a good stretch of time. It is less expensive and less tedious.