An HMO, or House in Multiple Occupation, is a property rented out to three or more unrelated people who share facilities such as a kitchen and bathroom. Investing in HMO properties can be a good way to generate a high rental income, but it also comes with some risks. Lots of onerous regulations make up lots of trip hazards, so read further to see if it's for you!
Pros of investing in HMO properties:
- Potential for higher rental income: HMOs can generate more rental income than traditional buy-to-let properties because you can rent out multiple rooms.
- Diversification: Investing in HMOs can help you diversify your property portfolio and reduce your risk.
- Demand: There is a growing demand for HMOs, particularly in urban areas where there is a shortage of affordable housing.
- Flexibility: HMOs can be a flexible investment, as you can rent out the rooms individually or as a whole property.
Cons of investing in HMO properties:
- Increased management: HMOs require more management than traditional buy-to-let properties, as you need to find and screen tenants, collect rent, and deal with any disputes.
- Regulatory compliance: HMOs are subject to more regulation than traditional buy-to-let properties, so you need to make sure you comply with all the relevant laws and regulations.
- Risk of damage: HMOs are more likely to be damaged than traditional buy-to-let properties, as there are more people living in the property.
- Tenant turnover: HMOs typically have a higher tenant turnover than traditional buy-to-let properties, so you need to be prepared for the hassle of finding new tenants.
Overall, investing in HMO properties can be a good way to generate a high rental income, but it's important to weigh the pros and cons carefully before making an investment. In days gone by letting a property to a group of sharers was the most common thing in the world, and there wasn't all the extra regulation to deal with. There is certainly more to it nowadays. Whether you are renting out the property on one tenancy agreement or many agreements (by the room generally) the same rules will apply for fire safety, licensing and so on.
If you are looking at an investment property and would like a professional to glance it over to see what rent it would fetch then drop me a line, I'd be happy to help!