What is an HMO and why invest in one?
A House in Multiple Occupancy (HMO) is a property that is rented out to multiple tenants, usually sharing common areas such as kitchens, bathrooms, and living rooms. HMO investments can provide landlords with a higher rental income compared to traditional buy-to-let investments, due to the ability to rent out multiple rooms in the same property. You can read about the profits of single let family BTL vs a HMO property investment in our HMO Meaning Landlord’s Guide to HMO Investments article.
Setting Competitive Rent Prices
The first step to maximising your HMO investment is to set the right rent prices. You need to strike a balance between charging a high enough rent to turn a profit and keeping your units affordable for your tenants. To determine the value of the room, you can look at comparable rooms in the area and consider their pricing. Additionally, you can consider the target market for the room, such as students or young professionals, and their willingness to pay for certain amenities.
One option is to use value-based pricing to determine the rent for the room. You could consider the value that the room provides to potential tenants, such as its location, size, flat screen TV in the bedroom, the en-suite facilities, high speed internet and quality and access to a communal kitchen.
You can also use techniques such as anchoring or social proof to influence potential tenant’s perception of the room’s value. For example, you could display the room’s rent alongside higher-priced rooms in the property to make the room seem more affordable or emphasise the room’s positive features to make it more attractive to potential tenants.
Attracting High-Quality Tenants
One crucial aspect of maximising your HMO investment is attracting high-quality tenants. This can prevent costly evictions, property damage, and turnover expenses. To ensure you attract desirable tenants, it is important to be selective about who you allow to rent a room in your property.
Landlords should either meet potential tenants in person or enlist the services of a trustworthy HMO letting agent to do so. It is also essential to ask the right questions during the tenant selection process and to look out for red flags, such as a negative attitude or derogatory comments about their current housemates or landlords. Additionally, providing a well-maintained property with updated appliances and flexible lease terms can make your property more appealing to high-quality tenants. You can read more about the questions a HMO landlord should ask prospective tenants in this article about HMO housing.
Improving the Property’s Amenities and Appearance
As a HMO landlord, attracting good tenants to HMO (House of Multiple Occupancy) properties can be challenging. However, by investing in the right amenities and improving the appearance of your property, you can make your property stand out and attract high-quality tenants and improve your HMO investment. Below, we will discuss some key improvements that you can make to your HMO property to attract the best tenants.
In today’s digital world, fast and reliable internet is a necessity for many people. Having the best and fastest internet on the market can be a major selling point for your HMO property. Investing in a high-speed internet package can make your property more attractive to tenants who work from home, stream movies and TV shows, or play online games.
Rain showers have become increasingly popular in recent years, and they can be a great addition to your HMO property. Unlike traditional shower heads, rain showers provide a relaxing and spa-like experience that can make your property more appealing to tenants. Additionally, rain showers are generally easier to clean than traditional shower heads.
Smart TVs with Netflix etc
Including smart TVs in bedrooms with Netflix ready to watch can also be a significant selling point for your HMO property. Tenants who enjoy watching TV in their downtime will appreciate having a smart TV with access to a wide range of shows and films. Additionally, providing smart TVs in the bedrooms can make your property stand out from others in the area.
Good Quality Cooker
Investing in a good quality cooker can also be a smart move for landlords looking to attract good tenants. Tenants who enjoy cooking will appreciate having a high-quality cooker with multiple burners and a built-in oven. Additionally, a good quality cooker can last for years, which can save you money on repairs and replacements in the long run.
Good Lighting Fixtures
Lighting can have a significant impact on the appearance of your HMO property. Investing in good quality light fixtures can help make your property look more modern and appealing. Additionally, good lighting can make your property feel brighter and more spacious, which can be a major selling point for tenants.
Adding Some Colour Tones to Walls
Neutral-coloured walls are a popular choice for many HMO properties. However, adding some colour tones to the walls can make your property stand out from others in the area. Choosing warm and inviting colours like beige or light grey can create a welcoming atmosphere that prospective tenants will appreciate.
Opting for multifunctional furniture like Ottoman beds can be a great way to save space in your HMO property. These types of furniture can be used for storage, seating, and sleeping, making them a smart investment for landlords looking to maximise the use of space in their properties.
Hanging artwork on the walls of your HMO property can also be a great way to make it more attractive to tenants. Artwork can add colour and personality to your property, making it feel more inviting and welcoming.
Make the Most Out of Small Outdoor Spaces
If your HMO property has a small outdoor space, there are still ways to make the most out of it. Adding some potted plants or outdoor seating can create a relaxing and inviting atmosphere that tenants will appreciate. Additionally, adding some outdoor lighting can make your property look more appealing at night.
Appointing a Quality HMO Letting and Management Agent
HMO management requires specialised knowledge, experience, and a lot of time and effort. As a HMO landlord, your ultimate goal is to maximise your profits. One way to do that is by appointing a quality HMO letting and HMO management agent.
Expertise and Experience
A quality HMO letting and HMO management agent has the expertise and experience to manage your HMO effectively. They have the knowledge and experience to manage tenant relations, rent collection, property maintenance, and compliance with HMO regulations. They also have access to industry-leading tools and software that make property management more efficient and effective.
By working with a quality HMO letting and HMO management agent, you can benefit from their expertise and experience. This can lead to better tenant retention, higher rental income, lower void rates and no issues from the local council.
Managing an HMO requires a significant amount of time and effort. As a landlord, you may not have the time or resources to manage your property effectively. By appointing a quality HMO letting and HMO management agent, you can free up your time to focus on other important areas of your business or personal life. A quality HMO letting and HMO management agent can handle all aspects of HMO management, including tenant screening, rent collection, property maintenance, and compliance with HMO regulations.
Improved Tenant Relations
Good tenant relations are essential for the success of your HMO business. A quality HMO letting and HMO management agent can help you establish and maintain good tenant relations. They can handle tenant complaints and disputes, respond to maintenance requests promptly, and ensure that your tenants feel valued and respected.
By working with a quality HMO letting and HMO management agent, you can improve tenant relations, which can lead to higher tenant retention rates, lower voids, and a better chance to increase the rent of your current tenants.
Enhanced Property Maintenance
Property maintenance is a critical aspect of HMO management. Proper maintenance can prevent costly repairs, extend the life of your property, and improve tenant satisfaction and therefore how long they stay and how much they pay. A quality HMO letting and HMO management agent can handle all aspects of property maintenance, including routine inspections, repairs, and renovations.
By working with a quality HMO letting and HMO management agent, you can ensure that your property is well-maintained and in good condition. This can help you attract higher-quality tenants, charge higher rents, and improve your overall profitability.
Compliance with HMO Regulations
HMOs are subject to strict regulations that govern safety, hygiene, and fire safety. As a landlord, you are responsible for ensuring that your property complies with all applicable regulations. Failure to comply with these regulations can result in hefty fines and legal liability.
A quality HMO letting and HMO management agent can ensure that your property is compliant with all applicable regulations. They can handle all necessary inspections, obtain the required licences and certificates, and ensure that your property meets all safety and hygiene standards.
Another benefit of appointing a quality HMO letting and HMO management agent is that they have local connections. They know the local plumbers, electricians, handymen, and other service providers who can help maintain your property. They can also recommend trusted vendors who offer competitive rates and high-quality work.
In addition to local connections for property maintenance, a quality HMO letting and HMO management agent also has connections in the local property investment community. They know many other investors in the area and agents. As a result, they often hear about property deals before they hit the market. By leveraging these connections, a HMO landlord or HMO investor can get a good deal on a great property. Having an agent who is always on the road in your investment area and knows local people is invaluable.
An HMO investment can provide landlords with a higher rental income compared to traditional buy-to-let investments. To maximise profits, it is crucial to set competitive rent prices, attract high-quality tenants, improve the property’s amenities and appearance, and appoint a quality HMO letting and HMO management agent. By following these steps, HMO landlords can increase tenant retention, charge higher rents, and maintain good relations with their tenants. Ultimately, by investing time and effort into their HMO properties, landlords can reap the benefits.
For expert HMO management and HMO letting services for your South London property, or if you require any HMO advice or consultation, contact us today.