When you decide to invest in some property for your portfolio, you might think that choosing an HMO property is going to give you some great returns. They tend to be larger than most, and can frequently be found in high-demand areas around universities and colleges so there is a great chance to pick up tenants. However, there are some considerations that you need to make before investing in an HMO property.
As a landlord of an HMO property, you might have to be subjected to more rigorous testing than for your other rental properties. To obtain an HMO license, a property needs to be held to a higher standard and will often have more safety features and other small changes installed to reach these requirements.
You need to ensure that the property stays at these high standards, and that might mean that you need to undergo new tests each year. For example, carrying out a regular HMO fire risk assessment will ensure that the property is up to code in this area. It will grant both you and your tenants some peace of mind that it is in fact safe, and the measures are there should a fire break out.
You Might Have to Manage the Property
Due to some of the red tape that can be involved with HMO properties, you might struggle to find a letting agent who is willing to help with managing the property. They will help you fill the rooms, but they won’t be able to help out with finding repairmen and many of the other managerial tasks that come with renting out a property.
This means that you might have to be a more hands-on landlord than you were hoping to be, and you might have to track down a network of trusted repairmen you can turn to. However, there are many letting agents out there willing to work with HMO landlords, so you might be able to find one that suits you.
There is Less Chance of a Void Period
Due to the way HMO properties work, there is less chance of a significant void period in which the rooms of the property are empty. You might even be able to keep the other rooms tenanted even if someone moves out and leaves theirs.
If you are renting to students – as is common with HMO properties – you can even plan your calendar around a predicted void period such as the summer break. Your tenants might be planning on going home and leaving their rooms empty for the summer, offering you the perfect opportunity to potentially make improvements in the property.
Investing in an HMO property is very different compared to other buy-to-lets, but it has its rewards for those willing to put the work in. Take the time to establish the work that needs to be done when owning a managing an HMO property before you make the investment to acquire one.