Houses In Multiple Occupation (HMO)

 

With the chronic housing shortage in the UK & demand for rental properties there has been a growth in the market for room rentals. HMO’s – houses in Multiple Occupation offer landlords the opportunity to look at the possibility of increasing their rental income and rental profits by offering accommodation on a sharers basis.

There are many different types of HMO’s and I classify mine by the tenant profile.

I categorize the tenants into 3 main areas:

  • Students
  • Professionals
  • Local Housing Allowance tenants.

I then take it further by splitting the professional market into young white collar professionals, normally graduates and then non-graduates who may be more likely to be trade orientated than office workers.

When I look to create an HMO I ask myself - who are my target tenants.

I look at the local area to determine the demographic and I design my HMO around this market.

For example, top end professionals will usually want top end properties where things such as private bathrooms and Wi-Fi would be critical to this group. I therefore look to put in as many en-suite shower rooms as possible and install the best broadband product available.

I find that in these HMO’s televisions are not as highly regarded as the broadband speed & the need to be able to download large quantities of data fast. Another important factor is to make sure there are a good supply of local bars, coffee shops and local transport links.

At the opposite end of the spectrum we have the Local Housing Allowance (LHA) tenants. These tenants are on a tight budget and are therefore more motivated by price rather than the services on offer. In my LHA HMO's I do not provide Internet and will not invest in creating en-suites, it just doesn't make financial sense as they would struggle to pay the higher rent I would need to charge to make it worthwhile.   I have learnt over the years that I my LHA HMO’s a TV aerial is important and to make sure one is installed for my LHA tenants.

I started investing in HMO's 10 years ago, and I started with a student HMO very close to the University. 

If you are wanting to get started, the simplest HMO's would be either a 4 bed Student HMO or 4/5 Bed professional HMO.

A good way to start an HMO would be to buy a 3 bed house offering 3 large bedrooms & 2 reception rooms. You then use either one or both of the reception rooms as the extra bedrooms in order to allow for 4 or 5 sharers in the house. These days you can also find up and running HMO's for sale. 10 years ago you were unlikely to find many on the market.

Presently, I’m still a proactive investor looking to invest in HMO's and I continue to buy these 3 bed houses to convert into 5 bed HMO's as simple HMO deals to add to my portfolio.

Another way to get higher returns would be to look at houses with the opportunity to get 6 or more bedrooms by converting a loft or adding on a single storey extension –these are my favourite HMO projects.

My journey to 100 rooms - a Landlord's tale

  This FREE webinar is a way for Mike to share best practice & also showcase his journey and go through his many trials, tribulations & WINS associated with being an HMO landlord.  Information shared will include how he has unique abilities to obtain added values from strategic deals, how upgrading standards increases occupancy & higher rental values, how to increase value with strategic planning gains & he also the delves into commercial finance.  Mike Frisby conducts his business with transparency, security, simplicity and trust and is hoping that this webinar will provide great inspiration for investors seeking premium yields and portfolio diversification.  Click here or the photo to view the video.  
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Mike Frisby's Simple Secrets to 50k a year in property

Here's a great video from Mike Frisby, our HMO expert.  Mike says, he often gets asked "What is the quickest way to get started in property and give up my day job?"  Well, now he wants to let YOU know how you can do this and share my knowledge with you! Just click here to view the 5 minute video.  http://www.mikefrisby.co.uk/video_50kliuzutfg/
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Fantastic webinar with Mike Frisby

We hosted a fantastic webinar last night with Mike Frisby.  It was a very busy webinar and we were thrilled that so many of you managed to get on. The webinar (LHA and Rent 2 Rent - made simple) was presented by Mike and he gave out so much useful information.  I was astounded by how much profit Mike and his students were making from using his strategies. It was interesting to hear that the social housing market is worth £22bn in the UK. There has been a large increase in claims over the last 12 months. Mike discussed many of his strategies, including the 2 +2 strategy and the micro studio strategy.  You can make thousands more out of your portfolio using these strategies. One point that Mike made clear is that you need to be educated in these strategies properly before you go ahead.  Its very easy to...
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Guide to Becoming a Multi Millionaire HMO Landlord

  Written by Jim Haliburton, it is an essential tool for the acquisition and management of HMO Properties. The fruit of over 20 years of real hands-on experience, it will pay for itself over and over again. Included is a copy of the Tenancy Agreements used (licences) and Operating Standards which give a detailed day to day instructions on how the author operates his business. Contents of the Book             Ch 1 The HMO Market           Ch 2 The type of property to buy           Ch 3 The price (buying price and rent to charge)           Ch 4 Tenants           Ch 5 Management           Ch 6 Property standards           Ch 7 Pearls of wisdom Here are just some of the topics covered...
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HMO’s... (House of multiple occupancy ) 5 ways to make managing them, stress free.

HMO’s can provide the savvy investor greater cash flow returns than single let properties, however many investors are put off using HMOs to expand their portfolio because they view them as being a hassle and less consistently full.    The key to successful investing in HMO’s is all down to experience. It is worthwhile paying an experienced property management company the management fee, unless you are willing to put the effort in and be proactive all the way.  Young people are still finding it extremely difficult to find the deposit to purchase their own property; they are also struggling to pay the increasing rents which Landlords are demanding for self contained properties. This situation has strengthened the case for HMO’s making excellent investments. However choosing the correct property in the right area with an excellent management company is key to the success of your investment. So where does one start?  1....
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