The 4 Things to Look for in a Rent to Rent HMO - Part 2
This week it’s all about how to choose the right property, but before we dive in, let me tell you more about our book.
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So let’s get into it...
What makes a good HMO?
A lot of the time we talk about working with landlords and agents and what makes them want to choose us.
But we need to do some choosing too, and that’s why this episode is different because it’s all about choosing the properties which are right for HMOs.
Here we talk about aspects of assessing a property.
This is different to the deal analysis.
This is all about will this property work as a house share?
Is it legal?
Will it rent out consistently to the right people?
There are 4 Ls to lookout for
Licencing
Location
Layout
Lifestyle
We talked about the first two, licencing and location in episode #029.
And in today’s episode we’ll take on the second two layout and lifestyle.
Layout
This is important.
What do I mean by layout?
I mean does the house work as a house share?
It needs to have a good size living space if that's a requirement in your area.
In our area it is typical that you would have a living space in the property.
But I know that in some parts of London you just don't have a living space and that doesn't stop you at all from being able to rent out your property.
But do look at what works well in your marketplace.
If you need a living room area, make sure that your living area is a decent size, that your bedrooms are decent size too.
Remember that more people will be working from home now so space is important.
Where a two bed house has been chopped up to create a five bed, two bath HMO, sometimes those buildings just don't work well as places for five people to live in, so think about that because it will impact you.
People are just not prepared to put up with anything nowadays.
You need your property to be good value for the price.
The happier your customers are, the happier your business is.
The number one driver of rent to rent success is letability.
How lettable are your rooms?
Having this will help you keep your voids low.
You need to ensure that the property you rent as well as being in the right location, is the right layout.
It's the right layout and it's a lovely place to live, and that the bedrooms feel the right size.
I don’t just mean above minimum size. I mean they feel like a good place to live.
A house needs to flow.
Lifestyle
Our final L is lifestyle.
You have to think about how people want to live because this is a business at the end of the day and our customers are our tenants.
It's up to us to ensure that we are creating a lifestyle that people want.
That is the product.
It's living.
It's a home people love coming home to.
And our role as HMO landlords is to make that product, as good as it can be to speak to our marketplace at the price point that we are pricing our property for.
Some of the things that we notice that people really love is extra space. They love extra storage.
While you can’t change the size of a house without major works, you can increase the storage and make it feel more spacious.
We’ve found having 2 wardrobes can be a real winner.
Now that people are more likely to be working from home than in the past, having a desk and attractive work area can also be important.
Ensuring there are enough kitchen units is important too. In some properties we added extra units and this goes well at viewings because people can see that we really care and have thought about the little practical things that make a huge difference day-to-day.
People love en-suites.
If you have them your properties will be more in demand than if you don’t.
However, having said that most of our properties have shared bathrooms and still rent consistently.
With this the fewer sharing the more attractive.
We find that a maximum of 3 sharing is OK.
Two sharing is better.
One is ideal.
Parking
50% of our tenants drive a car and for them, parking is really important.
When you're selling those rooms, one out of two times it will be somebody who's driving a car and so it is worthwhile having at least some properties which have parking, whether on street parking or dedicated spaces.
Being able to park outside their home, take their shopping in, unload or unpack.
If there's a no go area outside the house, and I have seen HMOs for sale in locations where you literally cannot stop outside the house. It’s not impossible but it doesn’t work as well.
And of course these are guidelines. In many parts of London, parking is the exception rather than the norm and parking isn’t expected.
However, it’s almost always the case that if parking is easily available outside the property it will be more attractive to more people than if it isn’t.
The better you get all that right, the fewer voids you have, the happier housemates you have, and the more profitable your business will be.
If the HMO is in the right location next to lots of people hubs, if it has a great layout and space and if it creates a good lifestyle for the people who live there.
So that’s the 4 Ls to lookout for in a rent to rent HMO
Licencing
Location
Layout
Lifestyle
I hope this leaves you energised and excited rather than overwhelmed.
And if you are feeling a little information overload.
Now’s a good time to remind you.
Your focus is one
You need one property to get started.
Two average properties will give you a cashflow of £1,000 per month.
Brenda’s first property in Kensington, London cashflows over £1,200 per month.
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Until next time, have an amazing rest of the week.
And remember,
Believe Bigger, Be Bolder and Be a Gamechanger!
See you soon!
Stephanie & Nicky
xx
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