How To Invest In Houses in Multiple Occupation


The main reason why houses in multiple occupation otherwise known as “HMO” are popular is they present a great investment opportunity. There are always tenants who are willing to rent whether it be those that have just gotten their first jobs or college students. The returns on your investment can really be huge. HMOs are far more profitable to run than other types of rental properties with rental incomes often double to triple those of single households.

However, as an investor you need to carry out research and ensure that your decision to enter into this market is based on facts rather than your opinion or others. You need to first understand what HMO are, the pieces of legislation that are put in place to govern this sector and how to make the most of this business.

HMO definition states that a property is a House in Multiple Occupation if all of the following apply; it accommodates at least 3 tenants who form more than a single household and these tenants share bathrooms or toilets and in some occasion kitchens too.

HMO Requirements

Most HMOs are in poor state and house vulnerable occupants. Many countries have introduced a licensing system which is intended to improve both property and management standards in a high risk category of these homes. Therefore, if any of the following applies to your rental property, make sure that you obtain a HMO licence before taking in tenants:

  • It is at least 3 stories high.
  • It is intended to house at least 5 individuals.
  • Tenants will have to share amenities for example food preparation areas, toilets or bathrooms.
  • It is intended to accommodate at least 2 households.

Once you have obtained the licence and are certain that all the HMO requirements laid down by the law are satisfied, it’s time to start thinking about how to attract tenants and how to make the most of this business. Consider the following helpful tips and hints:

1) Create Effective Advertising

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It’s hard to get people’s attention with cluttered signage.

Think about what factors add to a pleasant rental experience for the tenant. What do you have to offer to your tenants that other landlords don’t? Are they going to be happy and satisfied? By assessing these questions, you will be able to decide how to create an effective rental ad.

2) Charge a Slightly Lower Rent Than Others

Property investing requires shrewd marketing strategy. If the competition in your area seems to be too high, you could draw tenants by charging an amount that is slightly lower than what other landlords are actually receiving. Check in the rental listings for your area to see what the standard rates are for similar properties located within comparable neighbourhoods and lower your rates by a small percentage.

3) Shun Agents if Possible

Most tenants prefer to deal directly with the landlord rather than an agent because agents require commissions when the tenant could go direct through the landlord and avoid this cost. By choosing to deal directly with the would-be your occupants, you will attract many tenants. This will enable you to make the most of this business.

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