Five tips for investing in an HMO

There is a growing trend amongst landlords to add HMOs (House of Multiple Occupation) to their property portfolio. The principle reason for the rising popularity of HMOs is that this type of investment typically offers a better ROI than traditional buy-to-lets.

If you are thinking about purchasing an HMO in 2020, take a look at the following five tips for investing in this lucrative type of property.

Research the rental demand of the area

Like with any rental investment, the location is of vital importance. When looking for an HMO investment, research the area to determine if there is a strong rental market. For example, does the region attract young professionals who may be interested in sharing accommodation with others?

Pick the right street

As well as picking the right area, you should play attention to the street the HMO is located on. Broadly speaking, HMO occupants want convenience and to live in a property that is close to amenities, transport links, etc., hence why the specific street and postcode of the property is of vital importance.

Research the maximum rental income in the area

When investing in an HMO, it is important to do your figures to ensure that the maximum yield you can get in the area and for that type of property will cover any mortgage and other costs you have on the property and that you will come out with a profit.

Have the right licenses in place

Some HMOs and all large HMOs require a license, which can be obtained from the local council. Anyone investing in HMOs must check licensing rules as failing to comply with such legislation can lead to penalties.

Buy at a good price

Many HMO investors renovate their investment so it can comfortably accommodate multiple occupants. With money required to refurbish or renovate the property, it is important that investors buy the property at a good price to maximise profit margins.

Property auctions can be a great place to purchase HMO investments. Check out the lots listed for our next auction in London where you might find your dream HMO investment.