personal HMO's are all workers and professionals.
I have never rented to students, but that's only
because I don't have a University in my town, and
not because I don't think it's a good market. Personally,
I've not had the best experience with LHA tenants,
but again I know a number of successful HMO landlords
and investors that only do LHA. So really, what's
the best market then? Well, in my opinion, the best
one is the one that's best for you! If you haven't
got a University in your town, I'd guess it's not
going to be students for example.
bias is to workers and professionals and I have
been able to achieve a very good track record of
reliability with tenants who are working. Also,
personally, I feel more affinity and rapport with
working professionals and this helps be build good
relationships with tenants.
you need to decide which part of the market and
which types on tenants you want, and really focus
on that. There is a real benefit in focussing in
just one sector as every enquiry is relevant to
your properties and equally and every room / property
you have is relevant to the person enquiring. It
is of course ok to have different HMO's, eg a few
student houses and a few professional houses, but
if doing this mixed strategy, the only rule I recommend
is this: don’t mix and match in the same house.
Eg, LHA does not mix with professionals, students
don't mix with workers....quite simply, it's just
a different tenant profile and for harmony in the
house (which ultimately helps you leverage your
time), stick with the same!
of a £1,000+ HMO
And now I'd like to share a case study of one of
my first HMO’s, which generates a clear profit
of £1,000 per month.
property was originally a 3 bedroom townhouse with
the following original layout: ground floor –
integral garage, wc, kitchen/diner; first floor
– lounge and bedroom 1; second floor: 2 bedrooms
and family bathroom. The garage had since been converted
into a family room / study / 4th bedroom. In this
property, the kitchen / diner is a large space,
so it’s more than enough ‘communal’
space for me to use all other rooms as bedrooms
(including what was traditionally the lounge). So,
I now have 5 bedrooms to let and still have a good
kitchen / communal area, plus 2 bathrooms, as the
ground floor wc was big enough to easily add in
property was bought for c £125,000, and would
rent as a single let for c £750 pm. However,
on an HMO basis, the rooms average out at £375
per month (ranging from £300 - £450),
which gives £1,875pm. The mortgage + bills
comes to around £800pm, giving a positive
cash flow in excess of £1,000 per month.
property is in a high rental demand area, so operates
at ‘pretty much’ 100% year round occupancy.
It’s walking distance to the town centre,
with great transport links, local amenities / shops
/ take-aways etc, and all the rooms are good sizes.
was one of my first HMO’s and really got me
started on making this my main strategy in property.
Today, some of my HMO’s return double this
cash flow, but once I knew £1,000 clear profit
per property, per month was achievable, I’ve
never looked back. Undoubtedly purchase prices will
of course vary from area to area – as will
room rates – and I was fortunate in that the
garage had already been converted (saving me some
re-furb costs), but the point is this, a clear profit
after all costs of £1,000 per property, per
month IS achievable, and I’ve gone on to repeat
the model again and again.
you start with then end in mind and think about
the income you want, take that monthly figure and
divide it by £1,000….and that’s
how many HMO’s you need to have the lifestyle
you want, and I’ll be talking more about the
lifestyle that’s possible as an HMO Investor
/ Landlord in my next article.
the mean time, if you'd like to receive my latest
FRE training videos as soon as they're ready, simply
visit my website and register your details: www.TheHMOGuy.com