HMO's

HMO stands for Home Multiple Occupancy and involves letting each room out of a property individually. In this article, I will discuss how to assess a HMO, and some tips and techniques that can help you capitalise on this strategy.

The first step to starting your HMO business is to find your gold mine area. This strategy is not going to work in every area, and you need to be able to discern which area it will. I would say, unless you have people in that area who you trust to look after the properties - that you initially look within an hour drive of where you live, so that you can look after the property yourself if need be. If you are like me and you prefer to pay the management fee and scale up quickly then it is plausible for you to look further afield.

Once you have a radius on a map, you will be able to identify the local councils. This is important, because each borough and council have their own rules towards housing and HMOs. In certain areas you can have up to 4 different people living together before you require a HMO license. Once your council is known, research what the rules are around HMOs and licensing requirements including costs.

The next step you take is to request the HMO register from the council. This is a list of everyone who owns a HMO in their jurisdiction and where their properties are. Some may provide details of the number of bedrooms. This is great because you can plot these properties on my maps using google maps. This will give you a visual representation where people are currently running HMOs and could give good indicators to which areas are working and which are not.

Once you have picked an area, head over to Spareroom or any similar website and look for rooms to rent in your area. Make a spreadsheet and take note of how much a single room, double room, an ensuite, a studio is going for. You will get a feel for prices, the sizes and what is available on the market. You can even call and view these rooms if you like. You will then need to set up a Landlord account and post an ad for a room. You can save adverts when you do your rent research outlined above, and use these as templates to write your own. You will need to be creative on how you get pictures to post, maybe take photos of your home. When you are creating the ad, make sure you only put in your email address for contact and not your phone number or you will be bombarded with phone calls for a room you don’t have. Let the advert run for a couple of weeks, frequently resaving the ad to ensure it stays at the top of the page. Pay for featured ads - it will be worth the investment, even if it shows you that area is not worth investing in. After a few weeks, you will have enough data to know whether there is plentiful demand and whether you will be able to keep the HMO at full occupancy.

Now you have confidence in the demand in your area, you can begin your hunt to purchase a property that is suitable. Good Luck!