Should you go for a HMO or not?
In this video, I look at the pros and cons of both

The question we’re looking at in this blog post is…

Is it better to do a property that's currently in a HMO or is better to do a property that's currently not in a HMO?

My suggestion would be to look at both sides and weigh up the pros and cons.

In some areas where it's article 4, or under the fairly new regime of five people or more, the property will need a license, and therefore, you’ll have to get over the hurdles of getting a license.

If you're dealing with an already licensed property, then you're likely to have fewer costs because it's already up to HMO licensing standards with a license in place.

I think both are possible, you need to just look at the numbers. Will there be a refurb, or a time delay involved in getting the license? Put all that in your spreadsheet calculator to work out if the deal stacks up or not.

All our properties that we deal with in Wales, have a license. They must have a license and have planning.
It can be a big rigmarole and can be months of waiting for planning if you go through a non-licensed property.

There are plenty of licensed properties out there, and we just do licensed properties because why wouldn't you when it's already there. Not every HMO is running at optimum, and so because of that reason, that gives us scope.

There are two ways in which they tend not to be running at optimum.

1. The rent is being charged lower than what we would charge.
   

2. The voids are higher, and the occupancy levels are lower than what would be the case if we were managing it.
   So, we're able to pay landlords more than what they're currently receiving, and still make a profit because we're adding that extra value.

I think that's the real message here - you've got to deliver exceptional value. Deliver more value than the agents are currently offering and by delivering that value both to your landlords and your tenants, there's scope to make money because you're providing an exceptional service.

All the best for now,

Stephanie & Nicky

xx

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