Managing a House in Multiple Occupation (HMO) can be a good investment strategy for some investors. HMOs are properties that are rented out to multiple tenants who share common living spaces, such as kitchens and bathrooms.
Pros:
Higher rental income: HMOs typically generate higher rental income than single-family homes, as multiple tenants are sharing the same property.
Strong demand: There is often strong demand for HMOs, especially in areas with high populations of students and young professionals.
Cons:
Increased management responsibilities: Managing an HMO can be more complex than managing a single-family home, as you have to deal with multiple tenants and their different needs and requirements.
Higher costs of renovation and maintenance: HMOs typically require more renovation and maintenance work than single-family homes, as they have multiple common living spaces that need to be kept in good condition.
Legal and regulatory requirements: HMOs are subject to specific legal and regulatory requirements, such as fire safety regulations and licensing, which can be complex and time-consuming to navigate. It can also change from area to area.
Higher risk of vacancy: Tenants tend to be more transient, multiple tenants may leave the property at the same time, leaving it unoccupied.
- The landlord is responsible for utilities and council tax.
Investing in an HMO can be a good strategy for some investors, but it’s important to carefully consider the potential benefits and drawbacks, as well as the legal and regulatory requirements, before embarking on this type of investment. It may be helpful to take advice from other investors using this strategy.