Colloquially known as house shares, HMOs are now more common than they have ever been. From students to young professionals and even beyond, they’re all looking towards house shares in order to save money on ever increasing rental prices.
This is good news for landlords, as HMOs can offer incredibly high yields (as much as double) compared to that of single tenant properties.
With the demand rapidly increasing, what can landlords be doing to capitalise on HMOs?
Choose the right area
Not every area is well suited to the HMO market and the demand simply isn’t there.
Rural locations, as well as small towns and villages, see very little demand for HMO. Possible reasons are a larger proportion of older people and lower rental and property prices.
Large cities are a good choice because rent will most likely be higher and therefore pricing a lot of people out of renting their own place. Student towns/cities are also good because they offer a reliable and steady stream of tenants year after year.
Streamline the letting process
When renting an HMO, it would be wise to make the letting process as simple as possible for your tenants. If you don’t, making arrangements for four of five people can become incredibly complicated and drawn out.
If, for example, you can streamline the process of protecting your property, you can save a lot of hassle for your tenants whilst at the same time making sure that you, the landlord, are protected and covered.
Maximise the room count - but be considerate
It sounds obvious, but the more bedrooms you can offer in a house, the higher your yields will be.
Most houses can have at least one bedroom added to them, whether it’s transforming the living room into another bedroom or renovating the attic, value can usually be added.
However, don’t underestimate how important quality of living is going to be to your tenants. Just because they want to live in an HMO, it doesn’t mean they want to be feel cramped and overcrowded in their own home. You need to be careful to overestimate the amount of people who can realistically live in the space you have. If there is only one bathroom but 5 bedrooms, that might be a problem. Tenants have been known to move out because they keep being late for work because they’re queuing for the shower.
An HMO increases the capacity of a home and therefore increases yield. As demand increases, so too will the number of HMOs vying to attention.
Therefore it’s important that you take the effort to make the experience of living in your properties as enjoyable as possible. From making it easy and stress free to move in to providing space and comfort for your tenants to feel at home in. It all adds up, and in this age of online reviews and accountability, providing a good experience can add real value to you as a landlord and therefore your properties.