HMO Landlords are lucky to be in one of the most profitable sectors of the property rental market. HMOs are heavily regulated, so it isn’t just an easy money making venture, you have to be committed to the job, but if you invest your time you can earn up to three times more with a HMO then letting the house to a single household.
If you’re ready to do the work and invest in becoming a HMO Landlord, we have 5 useful tips for you.
Before buying a HMO property, research different areas to see which ones would suit your target tenant. For example in Leeds, we have great public transport links to the Universities and the city centre, so ideally you want your property to be near a link. HMO’s tend to come in clusters, so if it is a quiet residential street, it may be work looking elsewhere for a community that already houses HMOs.
Many HMO landlords choose older Victorian terraced houses for their investment as they tend to have a lot of bedrooms and high ceilings and plenty room for 5 or 6 bedrooms. It is very important when buying an older property to have it surveyed to make sure there are no major problems, such as rising damp or subsidence.
When looking at properties, we recommended checking whether the property has enough bathrooms in comparison to bedrooms, whether the kitchen and living space is big enough for a large group of people, whether there is available parking for multiple occupants and will the expected income cover the mortgage cost.
HMOs landlords tend to target a few different audiences for tenants. Here in Leeds because we have a number of popular Universities, student accommodation is highly requested, with students providing reliable, long-term tenancies.
Similarly, many students who come to Leeds for University end up staying to work after graduation. Young Professionals are another excellent market for HMO’s, however it is worth noting that they tend to look for a higher spec house, as they are moving on from student life to work life.
Because you are dealing with a higher number of tenants in one property, it’s important to carry out regular property inspections.
HMOs usually come furnished, and unless you are targeting up-market young professionals, it’s best to stick with more robust items of furniture that aren’t expensive or too flashy. While cheap furniture won’t last with the wear and tear from having a high amount of tenants, it also means more people, more chance of spillages and breakages, so you don’t want to spend too much.
Always check up on new tenants to make sure they are getting on OK with the other tenants and not breaching the terms of their tenancy agreement. HMOs can have 5-6 or more adults living under one roof so there tends to be more problems and repairs being reported.
Use an agency
If you fancy becoming an HMO landlord to add to your property portfolio, but dont want to manage it as a full time job, there is always the option of using a letting agency who will source your tenants, put together your paperwork and deal with any issues and repairs the tenant might raise, so you can sit back and reap the rewards without the hard work.