As a landlord, purchasing an HMO (House of Multiple Occupation) or renovating an existing property to transform to an HMO can be an excellent way of generating an ongoing income through high rental yields. Average rental yields for single – let properties in the UK hover at around 5%- 7% depending on area. However, on HMO’s the yields can be up to three times higher than the equivalent property let to a single family or tenant.
However, to ensure that your property is gaining the best rental yield possible, and offering you the best return on your investment, there are some factors that are worth bearing in mind.
Property Condition and Refurbishment in HMO’s
Like any other rental investment, the more attractive your property is to potential tenants, the better price you will attain, and the quicker your property will let. With increasing competition for HMO landlords, be it from other HMO’s, purpose built student accommodation, or inexpensive single lets, anything that makes your property stand out from the crowd can improve your rental yield.
Initial investment in your HMO is likely to increase your returns over the long term. For example, investing in hard wearing flooring in communal areas is likely to offer far better value for money than installing a cheaper alternative which will need constant replacing.
In this modern age, it is also worth investing in the tech side of your property. Wi-Fi is of the utmost importance to most tenants and can be a cause of termination if there is not adequate Wi-Fi provision to the property. It is worth planning for adequate, consistent Wi-Fi that covers the entire property when looking at any refurbishment.
Energy Saving in HMO’s
Most tenants in HMO properties will expect that bills are inclusive, as from a tenants point of view, identifying usage with several tenants involved is both time consuming and can lead to conflict. As a landlord, it is then worth investing upfront in items that will both reduce energy consumption, and possibly technology that can also cap temperatures, or usage. For example, if you are providing a washer dryer, you could look to invest in a coin operated machine (don’t be fooled by the term – they now take card!) It is also worth ensuring that the property is as energy efficient as possible, make sure that windows are well fitted, lofts are insulated, and that the property is made to both contain heat, while still providing adequate ventilation.
The true key to making sure that you get the best return on investment is choosing the right management for your HMO. Some landlords choose to manage tenancies themselves which, while it may initially seem to be the most cost effective solution, can be extremely time consuming. Many new HMO landlords underestimate the time involved in liaising with tenants, coordinating repairs, and maintaining the property. Those who have more experience often find that once they clock up the worth of their time, against the costs of a managing agent, the latter is by far the better value prospect.
Here at Student Haus we take the strain out of HMO management for student properties, offering an all in one solution for tenant sourcing, management and rent collection. Find out more about our services.