Before you think of managing an HMO
You need a game plan before managing an HMO. Otherwise, you will be overwhelmed, may face fines, upset tenants, paperwork out the wazoo, and find it next to impossible to manage the money.
But first, let’s go back to the basics.
What is an HMO (Houses of Multiple Occupancies)
In today’s times of high rents, a lack of properties, and an overwhelming rate of tenants demanding quality and convenient housing, the HMO property shines. An HMO otherwise known as House of Multiple Occupancy is a residential building. This would have either been purpose-built or converted to a house of multiple tenants with shared facilities such as kitchens and bathrooms.
You could almost think of an HMO as student accommodation but for professional tenants, who (if you find the right tenants) will look after the property.
Starting an HMO and What you Need
If you want to start HMO, but your property is not HMO-ready, you may need to make some adjustments to make it suitable for 3 or more tenants. HMO property needs enough space for tenants to live comfortably. It should include proper space, layout, facilities, furniture, and appliances.
If you want to convert your property into an HMO, it will be visited by the local authority within five years. The local authority will carry out the Housing Health and Safety Rating System(HHSRS) risk assessment to identify any issues. And if any issues are found during the assessment, you will need to address them immediately.
Should you rent your HMO as a whole or as Rooms
Renting HMO by room or as a whole property is totally your choice. It depends on the category of tenant you are looking for. However, professionals mostly prefer a room on rent, while students generally prefer to rent as a group which may be of 4 or more people. You could almost think of an HMO as student accommodation but for professional tenants, who (if you find the right tenants) will look after the property.
Advantages And Disadvantages Of Renting HMO By Room?
Advantages of renting HMO by room:-
- It is more productive as you can charge a higher rent per room.
- Can rent the room on a license which will be easier if you need to expel a tenant.
- You will lose less rent if one of your tenants leaves the room comparatively whole group.
- No need to provide the EPC Contract.
Disadvantages of renting HMO by room:-
- You have to pay and manage the bill of HMO. (You can cover it from rent).
- Tenants don’t know each other that may cause issues.
- A tenant takes the responsibility for only their room. And if you find damage in common areas that may be difficult to prove who caused it.
- If you are not using HMO management services, you need enough time to arrange repairs, inspections, and carry out administrations.
Advantages And Disadvantages Of Renting HMO As a Whole House:
Advantages of renting HMO as a Whole house:-
- It is easy to deposit deductions that are needed for damages by the group.
- You will get full rent as a landlord whether one tenant leaves a room.
- It has fewer chances to clash if the group already knows each other.
Disadvantages of renting HMO as a Whole house:-
- If a tenant leaves, it will be difficult to find a single tenant for the existing group.
- The EPC contract is needed in it.
- It is possible that you may get less rent in comparison to HMO by room.
How to Market an HMO Property?
People prefer to make decisions with the swipe of a finger or by clicking the mouse. We live in a time in which we are surrounded by marketing messages more than ever. According to research, we as consumers get 5000 adverts each day. You can’t just stab on your property and hope some tenant will notice it and engage with it. In this way, you can’t stand out in the market.
You can do marketing of your HMO in three ways. First of all, you should put your HMOs advertisement on Let websites. As it is the common and easiest way for tenants to find and contact you further. The second way of HMO marketing is Window Ads. It can be one of the powerful strategies in which you can place ads in local shops and market areas where people are more likely to go. Through these people already living in rooms can also get your ad if they want to change their room.
Black text on yellow backgrounds Notice boards can be the big and bright way to do this. Always keep it punchy with bullet points of details describing why your HMO is best. You can also hang banners and place window ads on your property itself.
Software you can use to manage an HMO
Our society is more reliant on technology to make lives easier. We can also use technology to manage our HMO property portfolio. Software is useful in informing tenants whether the issue revolves around one tenant or everyone is facing it. These are the reasons you need automated Emails and reminders which will go out to all the tenants. For example, a reminder for all tenants through an automated email reminding the due date of the monthly rent.
There is various software in the market ranging from desktop to application that makes tenancy management easier. It is the technology that made it easier to manage one room to a thousand rooms. For smoother management, it will be more efficient to organise tasks via software. The landlords can manage HMO themselves by organising it.
Getting an Agent to manage an HMO
If you are not able to manage your property on your own due to some reasons. You may need an agent to manage your property. Landlord’s get benefits when HMO agents are highly experienced in the property industry. Their job is not just to manage your property but they educate landlords and investors to make better property investment choices to get more return on investment.
HMO agents manage properties which include soul-destroying tasks of finding valuable tenants, tenant referencing, arranging tenants arrangement contracts, repairs management, rent collection, and much more. Collecting rent and arranging contracts from each tenant and dealing with their issues day to day is difficult tasks for which landlords find HMO specialists and Property management companies. Here are common services offered by HMO Management agents:-
- 100% guaranteed rent
- No void periods
- Regular Maintenance and Management Services
- Free photographic inventory
- Monthly property inspections
- Flexible leases up to 5 years
- 24-hour emergency repair service
- Dedicated property manager
- Qualified maintenance team
Use feedback to improve the property
You can consider feedback from Landlords, tenants and agents to improve your HMO property. You should set up an Automated Call in Complaint line for feedback. You can use any software where your tenants call and discuss their feedback about your properties. Feedback can be noisy neighbors, pet waste being left around your property, maintenance issues. These are some issues you should use to improve your property by creating an action plan for it.
Running an HMO is not an easy task you can do in a couple of hours. It requires proper planning and time for maintenance, managing issues, collection of rents, and much more to do. If you have previous experience in HMO Property Management London, it will be easy for you. And if it is your first experience, we advise you to consult a local housing officer.