How HMO Properties Could Improve Investors’ Returns

houseshare

As movement to big cities increases and demand for housing continues to rise, houses in multiple occupation (HMOs) are becoming very popular. HMOs, more commonly known as house shares, are a great alternative to house or flat rental where property prices are high. Multiple tenants cover the rent and share the property.

The demand for these properties, and the chance for a decent return, should make HMOs highly attractive to investors. The rental business can be tough, especially in London and other large cities – but investing wisely in the right type of property can ensure you make back money on your investment.

The benefits of owning a house share

More people than ever before are moving to the city. Whether they are seeking the perfect career, lapping up the nightlife, or just enjoying the hustle and bustle of the city, London is in high demand. However, house prices are high, and rents are too. As a result, more people than ever before are opting to live in house shares.

Renting a room, instead of a whole flat, is cost-effective for the tenant. They get their own space, plus use of the facilities, for a fraction of the cost of a full house or flat. It also works well for you, the landlord. You can maximise the return through the rent per room.

This kind of property has a higher turnover of tenants, with many using HMOs as a temporary stopgap. However, multiple occupancy means there are rarely periods without tenants. When one moves on, the room can be filled – meanwhile you continue to collect from the remaining tenants, thereby covering your costs and keeping losses to a minimum.

Cost-effective rentals

When you rent to tenants, one of the biggest risks is that they won’t pay – leaving you out of pocket, and perhaps struggling with the mortgage. Letting a HMO property reduces the risk to you. Even if one tenant fails to pay on time, you can still collect from the other housemates and limit your deficit.

Of course, good tenants will pay their way on time – and you benefit from increased overall rent. Multiple rooms, and multiple rents, allow you to collect a higher overall amount while your tenants are still benefiting from cheaper rental costs themselves.

If you think HMO investment could be the way forward, you want to find the right property to invest your money in. Depending on your circumstances and finances, you may wish to buy a HMO premises as it is, or purchase a large property to convert into a HMO yourself. There are specialist letting agents who can advise on purchasing HMO properties and show you plenty of great options in London.

Make your property investments work for you. The future of London living lies with the flexible and affordable HMOs. Take a slice of the multiple occupancy market for yourself and you could enjoy a tidy return on your investment – with reduced risk and a steady income as the added benefits.

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.

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