Almost every HMO owner dreams of the same thing: a day when they will be able to earn more from their properties without stress, aggravation and tax increases. But alas, that kind of Utopia only exist for a few lucky property owners who have found the secret to making the most out of their HMOs.
The funny thing is that the things these successful property owners do aren’t that special. There is no super-secret to making more from your HMO, it just a matter of strategic planning and some basic sales and marketing tactics. With that in mind, here are some tips that should help you earn more from your HMO.
Add more bedrooms to your property
This is basic math, the more rooms you have, the more rental income potential your HMO develops. The problem is that adding extra bedrooms to your HMO isn’t as simple a putting up a dividing wall within the property. In many cases, you will need permits from your local Government and you would have to ensure that the bedrooms being added actually create value to the property as opposed to taking away from it.
Meaning, you cannot expect to charge the same rate once you have reduced the amount of space every other renter has in the property. So, the new bedroom/s have to be added in such a way that they do not take away from what is already in existence – maybe an attic or a basement. Even the garage, with some modification, can be a new bedroom.
Your timing has to be right
You have to place break clauses within your rental contracts in a strategic manner. In the UK, the month of September sees a surge in tenant demand. If your ensure that all your rental contracts have to be renewed at around this time, you can easily increase your rental rates to meet the surge in demand thus increasing your income potential and shortening your summer voids.
Make the property worth more rent
By renovating and improving the aesthetic value of your property, you can justifiably ask for more rent on grounds of providing better accommodation. This will require you to renovate the property and to ensure that you are actually providing superior accommodation as compared to everything else around your property.
I’ve written about property meets before, but I can’t stress enough how important it is to be attending these events every now then. These events are great places to learn rental rates in any given area. In that way, you have an idea on how realistically you can increase your prices. This will also give you an idea of which refurb projects to take. You wouldn’t want to go all out on a major renovation only to price yourself out of the market and not get any tenants in the process.
Buy properties in the right location
Location, location, location…that old real estate credo still stands today. You cannot expect to buy properties in low-income locations and charge premium rental rates. It just doesn’t work that way. You need to find locations that are well sort after by tenants who are willing to pay premium rates for that address.
Another option would be to hire effective property managers who know how to advertise your property, get excellent clients and manage those clients to avoid long vacancy periods. Many of these strategies have worked for the best in the industry and can work for you as well if you are consistent.