The HMO Opportunity

Posted by Peter Licourinos on 15 February 2019 | Comments

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Most investors understand and appreciate the value of HMOs and that they can make superb investments and are fast relapsing the buy-to-let market place 

They give rental yields that can’t be achieved with standard buy-to-lets and in the right areas, the demand for affordable, flexible housing as offered by multi-let properties has never been higher.

A topic that we cover in our two-day Property Investing course in London, HMO’s are becoming increasingly popular due to the rental needs of young professionals and students.

Of course, managing the property can have its own complications and like anything within this industry you need to afford a great deal of care and attention to the finer details. With the regulations having changed back in 2018 it’s vitally important that all HMO’s are completely compliant, or you can expect a hefty fine. HMO Image

Due to the increase in demand and interest surrounding the HMO strategy we have also created a one-day HMO Masterclass in London that is running in March. One of PMA’s partners and mentors Peter Licourinos, who has significant experience with the HMO strategy, stated:

“HMO’s are a fantastic investment if done correctly, especially when in consideration of the current climate, changes to the property market and the opportunity to buy. Making at least £30,000 in a year on one single property, is not to be sniffed at and a reason why this strategy is continuing to go from strength to strength up and down the country.”

Jackie Reeves, added

“We’re really looking forward to the HMO course in particular, there’s been a great deal of interest on the topic whenever we covered it in our two-day event. The clearest benefit of investing is HMOs is that they can provide much higher returns and cash-flow than most single lets. It’s an exciting opportunity that we’re really looking forward to showcasing.”

 

With rental yields as much as four times higher, there are also less (impactful) rental void periods. There is less exposure to arrears. With multiple tenants, you’re are less exposed if a tenant falls behind on their rent as there are still other tenants that are still paying. In a single let, arrears can mean the entire income on a property.

 

Tenant demand for flexible, affordable housing is increasing. There is also a rising trend in the UK (especially in cities and larger towns) where the average size of a ‘typical household’ is reducing. At the same time, the overall population is increasing. This combination is leading to increased demand) for HMOs. 

 

There are also some fantastic locations across the UK where you can carefully buy below market value and also add value and capital to the properties, building your investment up and preparing the opportunity to take your money back out, whilst still benefitting from the monthly income.