Are HMO properties a good investment?
Are HMO properties a good investment? This is a key question to ask when considering where and how to invest your money in property. HMO investment requires serious consideration yet can be incredibly profitable, especially when you use an HMO investment strategy through a reputable HMO investment specialist.
How does an HMO property investment work?
An HMO is a home occupied by at least three tenants from more than a single household. The tenants share the communal areas such as bathrooms, kitchen, and other shared spaces. An HMO may already tick all the essential required boxes for health and safety, or it can be designed by an expert with all the mod-cons you would expect to find in a high standard residential letting.
All parties can benefit from a well-run HMO.
A private landlord owns the shared accommodation, and it is usually marketed as a house-share, especially when targeting graduates, professionals, and students. While the rent is often more affordable for the residents because the landlord can have multiple tenants in one property, the yield is very appealing despite the slightly higher running costs.
Why choose to invest in HMO properties?
The returns are far greater than a standard buy-to-let property where you are renting to a single-family. By increasing the number of single occupants, you increase the rent you can charge, which could be as much as double. More of your costs could also be tax-deductible, which means the numbers speak for themselves.
What type of properties can be an HMO?
- Converted houses or flats for professionals.
- Student accommodation/private halls of residence.
- Hostels and bedsits within one building.
- Individually shared self-contained cluster flats.
HMO market growth
HMOs have become a popular investment move for many buy to let landlords. The need for more affordable housing across the North West and many parts of the UK have seen an increase in demand. Student accommodation is also in greater demand due to the rise in student fees and the student population.
Competitive HMO lending
HMO mortgages are far more competitive than they used to be due to the increasing number of lenders entering this specialist market. Greater demand for HMO properties will no doubt further increase the lending opportunities available.
Providing a need for the great demand
Despite government attempts to improve the situation it remains challenging, and in some cases impossible, for many people to get on the property ladder. Renting is often the only option for many young professionals and late bloomers, and in many cases, shared housing and HMOs are the only affordable and sensible option.
So, are HMO properties a good investment? We think the numbers speak for themselves. The demand is high, the yield is high, and with the right people in place to help you make the investment and management as smooth as it can be, the rewards can far exceed those of any traditional property let.
About HMO Property Designs
HMO Property Designs is a multi let property investment company based in the Northwest that provides various sourcing and funding options alongside optional independent property management. They provide HMO property schemes incorporating a cash flow strategy that generates ultimate yields of more than 20%.