FINDING AND FUNDING AN HMO One of the biggest challenges most investors face is a lack of quality deals, so it is important to know what you are looking for when it comes to investing in HMOs and where you should be looking for it. Once you know this, you can then decide if it is going to be a good investment… or not! Let’s start with where to look: It’s important to note that there are always exceptions to the rule – we have some very profitable HMOs in areas that we were advised wouldn’t work. Remember that each area is different, and we highly suggest spending time meeting & learning from HMO investors in your area as to what works and what doesn’t. When looking for HMOs, it is important to focus on what type of HMO you are looking to create, as different areas suit different Tenant Types. Some obvious examples include putting a student HMO a long way away from a university or a working professional HMO in a tiny village with little employment. With this in mind, we then go back to property fundamentals and appropriately balance the seesaw of:
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• Tenant Demand • Local amenities • Local employers • Transport Links • HMO Feasibility • Property Prices • Property Layouts/Characteristics • HMO Saturation in the area In our experience, while none of the above should be neglected, tenant demand is the most important factor. If you are going to have large voids with your HMO, it is not going to be a good investment. There are different ways to test this: speak with local agents and talk through similar properties that they manage; look on Spareroom at rooms wanted vs rooms available in the desired area; speak with othr investors and ask how they are finding the market; join & track the local Rooms/Houses for rent Facebook Groups in your area and track properties on Rightmove/Zoopla to see when they are posted and when they become let agreed over several months. There are lots of creative ways to test demand and the list above is not exhaustive!.
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