HMO Landlords – Useful Tips for Managing Your Time
Here in the UK, despite the goings on in the world and in the economy, the property market is doing surprisingly well. In fact, as of late 2020, average property prices are as much as 6.5% higher than they were a year ago. You certainly wouldn’t get that type of return in the bank, which is why investing in property could be the smart thing to do.
Suppose you have decided that property is for you, as a landlord, an HMO could prove to be very lucrative indeed.
The demand for HMOs over the last decade has sky-rocketed, and if you are fortunate enough to be in a position to rent out your rooms in an HMO, if you do your research you could wind up making a lot of money. HMO’s in the buy-to-let market can be highly lucrative, with landlords potentially earning as much as three times more each month than they would by simply renting out an individual property.
It isn’t all smooth sailing, though, as being an HMO landlord can be time-consuming and potentially stressful.
Here are several tips for managing your time as an HMO landlord.
First off, what is an HMO?
To make sure you’re all clear with precisely what an HMO is, HMO stands for Houses in Multiple Occupation.
If a property that you own is home to more than 3 tenants forming more than 1 household, or if your property has shared toilet, kitchen, and bathroom facilities between other tenants, legally it is classed as an HMO.
Basically, to cut to the chase, a HMO is a large property, usually with between 4 – 5 bedrooms at least, whereby tenants rent out a rooms in the property, rather than the property itself.
Time-saving tips for HMO landlords
Now we’ll compile a useful list of time-saving tips for HMO landlords
Contact a lettings agent
One of the best tips when it comes to renting out an HMO property is to hire a lettings agent or agency and let them handle it for you.
Basically, a lettings agency will manage your property for you and will find tenants, move tenants in, collect rent, deal with questions and complaints from tenants, arrange for repairs, carry out routine cleaning and maintenance, and anything else relevant to your property.
They essentially do all of the work for you, allowing you to sit back, let your HMO work for you, and collect your rent in the process.
There is a catch of course, and that catch is the fact that lettings agents will take a percentage of your rental earnings as payment.
Fees vary from agency to agency, but generally for full management, 15 – 20% of rental collections is quite common.
Choose the right location for your HMO
As an HMO landlord, your primary objective is to obviously have all of your rooms filled with paying tenants as quickly as possible, which is why choosing the right location is vital.
If you venture out into the countryside where there are fewer people and facilities, obviously you’ll rarely find an HMO because there would be no demand for one. Head into a busy town or city, though, and it’s a different story.
To save time hunting down paying tenants for your property, find an HMO in a prime location, ideally as close to a town or city as possible, with good travel facilities and amenities ideally within walking distance.
Basically, where there are people, there are potentially paying tenants.
Choose a target tenant demographic
Another tip to save time as an HMO landlord is to try not to mix target tenant demographics in your property.
Cities or towns with universities will often have HMOs for students, so if students are your target demographic, make sure you stick with students. Don’t try to fill an HMO with students and workers because that is a recipe for disaster.
Generally, students have a reputation for staying up late, drinking, partying, and making a lot of noise and if you try housing warehouse workers in your HMO who have to be up at 5am for a shift at the warehouse, they won’t be happy being kept awake at all hours by rowdy students.
Whether you are targeting LHA (Local Housing Allowance) tenants, working professionals, or students, try to stick with just one demographic. Trust us, it’ll save you more stress and aggravation than you could ever imagine.
Thanks to the advancements in modern technology, life as an HMO landlord can potentially be made even easier with the right tech and software.
PSEngine for example, is a great way to save time as it can dramatically cut back on the amount of time you spend sourcing your next HMO to add to your portfolio.
Ensure the property is cleaned regularly
One mistake that HMO landlords tend to make is that they try to cut corners and save money by not hiring cleaners. That is a big mistake.
Tenants in HMOs will often not take responsibility for cleaning communal areas because they will resent cleaning up a mess that another tenant made. The worse these communal areas get, the more likely this is to result in conflict, complaints, withholding of rent, and endless phone calls and texts that you could do without.
To help ensure that you aren’t having to deal with complaints and discrepancies over cleanliness and hygiene, we recommend that you hire a cleaner to clean communal areas such as kitchens, bathrooms, and living rooms at least once a fortnight.
Okay, it’s yet another expense, but if it keeps your tenants happy and keeps them in your rooms paying you rent, think of it as an investment.