Sourcing a Good HMO Property Investment
When investing in HMO property, sourcing the property itself is a large part of the process. Navigating the property market can be tricky and it’s important to know what to look for when searching for properties, as well as what considerations you should take into account to help you find the most appropriate HMO. There are many factors to consider, such as local planning regulations in your area of interest, your prospective tenants and their requirements, the types of property available and amenities in the local area. Tenant Considerations In terms of HMO tenants, there tend to be 3 main groups of people that tend to be attracted to renting HMOs: Based on these considerations, when thinking about HMO property investment, it is important to consider the types of tenants you are hoping to attract and how you are going to ensure your HMO is set up to attract those tenants. This can influence the type of property you choose to invest in, as well as the location. Students When students go to university or college, they will generally go to a hall of residence or university flat for their first year. It is not until their second, third or fourth year that they’ll move out to a student house or flat. When investing in an HMO property, it’s important to consider the sorts of facilities and amenities that students would be looking for. For example, strong transport links, proximity to places of study, study space, fully-furnished rooms and well maintained facilities. There is also growing demand for high-end HMOs. Young Professionals Young professionals refers to those tenants who are in full-time employment. They tend to have less money than older professionals as they’ll often be working in graduate jobs after university, meaning they’ll seek good shared accommodation instead of renting alone. HMOs offer a great way for young professionals to meet new people, and so are especially desirable for those moving to a new town or city. This group of tenants often seek high-end, quality HMOs and landlords who offer these types of HMOs are more likely to generate higher yields compared to lower quality HMOs in the area. Like students, young professionals tend to seek quality facilities, spacious shared areas, strong transport links and, with the growth in remote working, workspaces. Older Professionals Older working professionals tend to refer to anyone over the age of 30, and these occupants may often seek certain amenities, such as parking or garden space, that young professionals and students may not be as concerned with. These occupants tend to have longer tenancies and seek comfortable amenities, and they often care slightly less about the social aspects of co-living and are more concerned about rental costs. Article 4 Considerations Another consideration for HMO property investment is Article 4. This is the planning control that can be enforced by a local authority or council to restrict the number of HMOs (houses in multiple occupation) in a particular area. With a quick online check, you can understand whether or not the area you are looking to invest in has Article 4 directions in place or not. To do this you can use the online Planning Portal. While Article 4 is a consideration, it is not an ultimatum and converting HMOs in Article 4 areas is possible with the right planning and guidance. To read more about Article 4, take a look at our Article 4 blog. Property Type When it comes to the property type, there is no one-size-fits-all approach as the type of property you opt for can depend on a number of factors, including both the location and your desired tenants. Popular HMO options include: Steps for Sourcing Good Property for HMO Investment Market Research When conducting some of your initial research, it is worth understanding the going rate of HMO properties in your area of interest as well as demand and proximity to establishments such as universities, colleges or large employers that attract lots of students or young professionals. This kind of research can help you to determine average rental rates, occupancy rates and the general overall demand for shared accommodation in the area. Spend part of your research on identifying target areas, particularly those with high demand for HMO properties. You should consider areas where there are good transportation links, amenities and areas of interest. You can use tools such as PropertyData which can help you with understanding local markets, valuations and plot maps. Finding HMO Investment Property for Sale Online Property Portals One of the most used ways or sourcing HMO investment property is online property portals and websites. These websites list hundreds to thousands of properties for sale and you can even set up alerts for specific criteria such as location, property type, and price range. Here are some property portals that Auctions & Off-Market Deals Auctions are a great opportunity for HMO investors to purchase properties at competitive prices. In addition, off-market deals that are not as widely advertised could present attractive investment options as well. There are both online auctions, such as ConnectUK or AuctionHouse, and in-person auctions to consider. It’s worth researching in-person auditions happening in your area, and see which organisations frequently auction investment property, or property that matches your criteria. Property Networking Events You can also go down the property networking events route by attending events such as meet-ups, seminars or events. These events provide a great platform to meet similar investors, property developers, and other industry professionals who could have HMO properties for sale or can provide valuable advice. To find local events in your area, just head over to Google and search for property networking events local to you.