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HMO Properties Are A Great Way to Get Extra Cashflow

 

HMO Property InvestingA House in Multiple Occupation (HMO) is a property that has been let out to sharers rather than a single family unit. These sharers can be anyone from students to professional employed people.

I am often asked by would be and established property investors, why I invest in HMOs.

My answer is simple: CASH. By letting your house to sharers you can receive up to 300% of the income that you would otherwise get. However, it is more common to achieve on average 100% additional cash flow.

With this additional cashflow, you can invest in further property acquisitions or go on that much needed holiday!

The reasons I love HMOs so much are because:

1. I get immediate and greater cashflow than I would not normally get from a single-let unit.

2. I still get the long term capital growth.

3. I do not need to fill all rooms to get a return on my investment!

In my opinion, the enhanced cashflow outweighs any disadvantages such as possibly higher maintenance costs. Once you have your system in place to deal with HMOs, the disadvantages will feel like nothing, and you’ll wonder why you never considered multi-lets before.

If you are still uncertain about HMO properties, I would suggest you sit down and do a quick calculation.

A 3 bedroom house with a downstairs lounge, that would normally rent to a family for £600 per month could bring in £1,040 pcm if you were to rent each of the 4 rooms out at £60 per week; that’s an additional £440 pcm, ie. an extra £5,280 per year!

You only need to do this a few times before you start seeing amazing returns on your investment.

So next time you’re looking for an investment property, you should definitely consider converting it to HMO use. Try doing it for just one property – make it work for you and then replicate your successes.

Once you have developed a system to manage your HMO properties, you will find it’s no more work than managing a portfolio of single-let properties.

 

HMO Property Riches Book Javaid Kiyani

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Where To Buy Your First Investment Property!

 

“Location Location Location”

The location of your buy to let property is one of the most important variables you need to consider when looking for your first investment property.

Getting the location right will mean a steady flow of good rent paying tenants.

However, if you make a mistake with the location you could be faced with long voids, damaged properties, and disruptive and possibly even dangerous tenants.

One of the first things you need to do before buying your property is to gauge whether there is a market for your choice of property in your location. NEVER buy in an area where there is little or no perceived demand.

Whether you are investing in HMOs (Houses in Multiple Occupation) or single family properties, I find that if your location is good, you will always exceed your expectations when it comes to finding good reliable tenants.

In the past 10 years, I have found that the market for sharers has increased significantly especially in sought-after cities with good work opportunities and transport links.

I find the following types of people wishing to share with others:

• Students
• Nurses
• Doctors
• IT contractors
• Shop workers
• Airport workers
• Newly qualified graduates
• Asylum Seekers
• Housing Benefit tenants
• Recently divorced tenants
• Foreign (non-uk) citizens
• Etc.

I get several calls a day from the above types of potential tenant looking for individual rooms to let in a property. The same is true for young families who cannot yet afford to buy their first home and are looking to rent smaller 2 to 3 bedroom houses.

So how can you guarantee that you will easily let your property once you have completed on the purchase?

Advertise

If I am unfamiliar with the location of my anticipated purchase, I will normally place an advert in the local paper advertising for my particular tenant type. For example, if I am looking for professional sharers, I will state so. Conversely, if I am looking for a family, I will indicate this in my advert.

I normally place adverts for a minimum of 4 weeks. If I receive just a couple of calls in the 4 weeks, I will most likely not invest in that area. However, if I receive 10s of calls for my proposed property, there is a greater chance of me buying in that location.

When answering calls from tenants, I will always ask them questions to help me complete my market research. For example, I will ask them specifically what they are looking for. Which particular areas and streets are they interested in and why? What size of house would they prefer to live in? In the case of sharers, how many people are they happy to share with etc?

Getting these types of questions answered by my potential tenants is valuable in my search for the ideal property in the ideal location.

If I am looking specifically for a student tenant, I will visit the local university and not rely purely on advertising.

I will:

• Visit the University Accommodation Office and ask them what the best locations for student properties are. Always buy in these locations even if they are more expensive than others further down the road.

The university is very knowledgeable on their local areas and if they don’t like any particular location, be sure that every single student on campus will know about it!

• Try not to buy my student property in a location greater than a 20 minute walk from campus.

Students have become lazier and more demanding over the years. They prefer to hop out of bed at 8.55am for a 9am lecture.

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