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Why choose a HMO property investment?

What is a HMO?  HMO is the acronym for house of multiple occupancy; effectively, a house share.

Unlike a typical buy-to-let, the rental yields on a HMO are much greater. Imagine two properties next door to each other both purchased at the same price, one a buy-to-let giving a typical rental income of £6,000 per year and the other a HMO property giving a typical return of £16,000 per year – which would be your choice?

What’s the difference between a Buy-To-Let and a HMO property investment?

Primarily, buy-to-let properties are aimed at the residential/family market and the rental amount is based on a ‘per household’ basis. For an investor, the rental return is usually between 7-8%.

A HMO property investment can often achieve much higher returns, usually in the region of 9-15% (dependent on gearing). Unlike a buy-to-let property, higher rentals are achieved through the addition of extra bedrooms which are then rented out on an individual basis – usually to students or professionals.

It’s not all about the number of bedrooms with a HMO property investment…

Having extra bedrooms and complying with the legal HMO requirements is one thing, however for a HMO property investment to be successful, there are other factors to consider:

Location – the location of the property must appeal to your market. If you’re hoping to rent your property to students, you must purchase in a location that is easily accessible to universities or close to public transport links. If you’re hoping to tap into the professionals market, maybe a property that’s more centrally located to the city or local business parks may be more beneficial.

Specification – It goes without saying that a well presented property will rent out quicker than an outdated one.

Management – Tenants will want to know what provisions you have in place to manage their property should a problem arise. A professional UK property management company will provide a swift, personable service to minimise disruption to tenants whilst resolving any issues quickly.

Should you be considering purchasing a HMO property investment, The Mistoria Group have a number of investment opportunities available. Speak to a member of the team today on 0800 500 3015 or visit www.mistoriagroup.com. Alternatively, email info@mistoriagroup.com and a member of our team will contact you to discuss your requirements.

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