HMO property investment can seem like something of a black art to the uninitiated. What makes a great area for investing in HMO property to one landlord can seem like a crazy plan to another.
Are there key ingredients to look for when investing in houses in multiple occupation? Where do the tenant group that I want to let to want to live? What can I expect to charge per room within an HMO property? All these questions and many more are often the very reason why so many landlords become overwhelmed when trying to decide where to invest. This is no surprise. But it doesn’t have to be this way…… in fact, it’s fairly simple when you know how.
The problem with reading headlines
As landlords we are often told that we should buy in ‘hot spots’ or areas that have strong local infrastructure such as hospitals or universities. We’re told that these areas will have large numbers of doctors, nurses and students looking to rent a room within an HMO property making our lives easy. If only this was the case! We have plenty of experience to demonstrate that this strategy has not worked out for some landlords.
We’re told to look for areas where there are signs of ‘gentrification’, another term used to describe a location where we see smart coffee shops and restaurants suddenly appearing – a sure sign that an area is ‘on the up’? However, from our experience the problem with this strategy is that these are often the very areas that are already saturated by the experienced landlords that have HMO property having got there many years ago.
So where should we invest in HMO properties to get the best possible return?
For me the answer is simple – like any other business starting out, landlords need to conduct some very real and importantly, up to date market research. The very best form of research into where to invest has to include test marketing. And faced with relatively strong competition within established areas perhaps it would be wise as the old saying goes ‘to tread the least trodden path’. At Slater & Brandley we invest a great deal of time as hmo agents in test marketing by pitching potential properties on leading property portals such as Rightmove and Zoopla before we buy. This has to be the very best way of discovering the least trodden path. We write detailed descriptions, take great photography and list rooms to let at what we feel should be the market rate with the all important ‘all inclusive’ room rate model.
On receiving calls from interested tenants we then spend a good deal of time taking down details and enquiring into their every whim to ensure that not only will a location stack up as a place to establish a new HMO property but more importantly a great place where our target tenants wish to live. Only then can we begin to ensure that we both build new HMO properties in the right location and design in all of their wish list in the hope that we can create long-term tenancies that work for both parties.
And so it’s not rocket science but tried and tested marketing that tells us where to invest in houses in multiple occupation.
Are you considering investing in HMO properties as a means to generate greater returns? If so, feel free to talk with our resident expert, Garry Slater who will be only too happy to discuss the pros and cons of owning shared properties and the importance of adhering to HMO management rules.
Tel. 0115 981 8855