HMO investing

So, I’ve recently moved into HMO investing and have now have a portfolio of HMOs, or houses in multiple occupancy. In short each room is rented out and the property has shared communal space. The refurb spec involves greater rules and regulations related to room size and fire safety etc.

Now, even though I’ say I’ve recently moved to HMO investing. Technically, I’ve sort of come full circle as this is where I started with rent to rents… And, I’ve done the same thing as I did with my rent to rent portfolio - gone all in from the start. I literally seem to have no concept of easing my way into a strategy. No! It’s all in at the deep end!

So, I am prepared now mentally for what’d about to transpire! And, that it is not going to be plain sailing!

I’m anticipating refurbs for these properties to take longer than usual, and the first 3 months after tenanting each property to be a pain in the arse with a general 9 – 12 months of ‘teething period’ . Bills will be all over the place, and tenants settling in tends to throw up lots of random issues. At least this time I am not the agent! So, some of the stress I experienced with my rent to rent portfolio,I’m hoping to be side tracked via my agent (wishful thinking??!)

So… this time round I’m planing on:

1. Creating key performance indicators that you regularly assess, such as cashflow, profit and loss, occupancy rates, time on the market before rooms are filled, your monthly cost of advertising, your time input, monthly maintenance costs and yield. I’m systemising all of this from the start.

2. Each time I go to re-advertise a room I’m going to consider adding a few pounds to the price of the room. In part this is because for half of my portfolio I bought these pre-tenanted and the room rates were low. I also know that I LOVE to give good service, I love to go over and above whats expected… but, I do sometimes let this leak into offering too much for too little. This time I want prices to reflect my service.

3. I will be assessing regular outgoings such as utility bills, insurance, broadband and mortgage costs and aiming to reduce bills, even by 5–10% per annum to improve cash flow and profits and leave that extra buffer which may go to award providing the service level mentioned above. It’s something we applied in Seedball and I definitely need to make sure this is implemented in my property business - grow the top line and shrink costs = grow profit and healthy cashflow!

4. I’m going to keep an eye on meter readings - costs of gas and electricity can be crazy in HMOs.

What’s your strategy? Do you have any tips for me to improve how I run my HMO portfolio? I’d love to know! Drop me a comment below…

Ana ♡

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