Have you ever heard of HMOs? If not, you’re missing out on one of the most exciting and innovative ways to invest in property.
HMOs, or Houses of Multiple Occupancy, are a fantastic way to maximise rental income while also helping to solve the UK’s housing crisis.
In this article, we’ll take a deep dive into what HMOs are, how they work, and why they’re such an exciting investment opportunity.
What are HMOs?
Put simply, an HMO is a property that is rented out to three or more people who are not from the same family and who share communal facilities, such as a kitchen or bathroom.
These types of properties have become increasingly popular in recent years, particularly in urban areas where rental demand is high. HMOs come in all shapes and sizes, from large houses that have been converted into multiple flats to purpose-built apartment buildings.
How do HMOs work?
The idea behind HMOs is to maximise rental income by renting out each room individually rather than renting the property as a whole.
This means that the income generated from an HMO can be significantly higher than that generated from a traditional buy-to-let property.
However, HMOs do require more management and maintenance than traditional rental properties, as landlords must ensure that communal areas are kept clean and that all necessary safety regulations are adhered to.
The Benefits of Investing in HMOs
Investing in HMOs can be an incredibly lucrative venture, particularly for those who are willing to put in the time and effort required to manage these types of properties. The best advice when going forward with a HMO, is to go with a reliable architecture & project management company like HMO Designers.
Some of the key benefits of investing in HMOs include:
- Higher rental income
As mentioned earlier, HMOs can generate significantly higher rental income than traditional rental properties.
This is because each room is rented out individually, which means that the total rental income generated from an HMO can be much higher than that generated from a traditional rental property.
Investing in HMOs can also provide diversification for your property portfolio. By investing in a range of different properties, you can spread your risk and ensure that your portfolio is not overly reliant on any one type of property.
- Lower void periods
Because HMOs are rented out on a room-by-room basis, there is less chance of having extended void periods. Even if one room becomes vacant, you will still be generating income from the other rooms in the property.
- Potential for capital growth
Finally, investing in HMOs can also provide the potential for capital growth. If you invest in the right area and manage your property well, you could see the value of your property increase over time, providing you with a valuable asset that you can sell or remortgage in the future.
If you’re looking for an affordable and communal living arrangement, an HMO might be right for you. While there are certainly challenges to living in close quarters with others, the benefits of lower rent and community building can make it a worthwhile option.
Just be sure to do your research and make sure that the HMO you choose meets the safety and living standards set by your local council.