Once you have gone through all the trouble of finding the right HMO and amassing all the money you would need to own one, there is still one more step you need to undertake before you can start celebrating and rolling in the ‘dough’.
You have to run it successfully. And this is where it get’s tricky. A poorly run HMO will have more vacancy signs than it would be fully occupied. As any landlord will tell you, a high vacancy rate is probably up there with their worst nightmares. It means:
- They are losing money on maintenance.
- Losing money on potential rental income.
- Losing money on tenant acquisition.
Basically, when your HMO is vacant, you are losing money. To avoid all this, you need to ensure that your HMO runs smoothly and that your tenants are always catered to even if you have to do it yourself. Here are some things you need to do to ensure that everything runs smoothly:
- Come up with a binding tenant contract for every new acquisition.
- Keep track of your expenditures, income and cash flow for tax purposes.
- Work tirelessly to attract the best tenants to improve your occupancy rate.
- Ensure that your current tenants are satisfied so they can stay longer or renew their leases.
- Resolve any disputes, make any repairs ensure that there are smiles all around.
All this can be overwhelming for one person to handle. This is especially true if you have more than one HMO to run. So, what do you do when this gets to be too much? How do you get someone to manage your HMO?
Hire a relative
This has to be the best option for new HMO owners. By hiring a relative, you basically give them a room in the HMO for free and in exchange, they have to handle the day-to-day HMO work and document everything. Basically, you are making them a supervisor of your building. In most cases, you might have to give them a small stipend for upkeep, but the bulk of the payment will come from the fact that they do not pay rent. This way you have someone you trust running your HMO, you look good in front of the family and you have all that tiresome admin work handled by someone else.
Hire an actual managing agent
Once you have several HMOs then maybe hiring relatives might begin to get a little shortsighted. You basically have an empire that needs professional management and that calls for a professional HMO management firm. The best way to go about this is to run a quick search on Google for the best agents or property managers in your specific location. Or, you could ask around in landlord-based forums for suggestions. Of course, these professional firms will cost you a bit of money, many often charge a percentage of your rental income.
But in exchange, you will have all the headache of running an HMO taken off your plate. They will ensure that your occupancy rate is always high because their cut depends on how much rental income is coming in at the end of it all.
You could also hire your children to do the work. You know, induct them into the family business. Whichever way you choose to go, hiring someone to handle these day to day issues of running an HMO gives you the kind of space to work tirelessly and find more properties in which to invest.