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  • HMO & Multi-Lets

    Does "hands off" HMO approach work?

    Hello, I’m new to property tribes and trying to build up my knowledge on property investing.

    I currently have 1 BTL property in Grimsby but I’m wanting to get into HMO’s/multi-let’s in the north (still indecisive on which area would be best, so any advice on that topic would be appreciated also).

    I’m curious as to if anybody on here runs a HMO business remotely? I.E they use a HMO management company to take care of everything for them, and any refurbishments get taken care of by somebody other than yourself.

    I am based in Essex in the military so i can’t really have a hands on approach to property, but I’m looking at ways to maximise my cash flow in order for me to leave my job in a few years time to focus full time on property.

    Thanks, James.

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    Hi James,

    Welcome to Property Tribes.

    There are very few agents who will deal with HMOs due to the higher turnover of tenants and the much stricter management regulations/compliance requirements, so it may be a challenge to find a suitable agent.

    HMOs are typically the domain of experienced hands-on landlords who do not have to give up margin by employing the services of an agent.

    We have some resources that will further aid your decision.

    Concern over investors being sold HMO dream

    When to say "no" to an HMO?

    The Real Life Costs of Running an HMO

    What is a Mini-Mo?

    Management regulations/pitfalls of R2R HMO

    Personally, I think going into HMOs would be very high risk in your current situation and I would not recommend it.

    If you are looking to quit your day job, it would be worth having a look at Platinum Property Partners, who offer a proven business model involving HMOs, but you will need significant cash to get involved in this.  Something to aim for?

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    Student HMO’s could be. I agree that the usual stereotype revolving door of low grade tenants is probably hard graft (but gives the return).

    However 5+ students on an single AST is pretty straight forward and you could run as you suggest, however...

    The good ones never make it to open market so you need to speak to a student letting/estate type agent and have your finance ready to move quickly.

    i think S24 might bring a few to market, but they will be at/above market value if they work. ie rent every year and have the right planning permission, location etc..


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    5 students on a single tenancy agreement is still an HMO and will need licensing under the new regime. This is hardly hands off. A hands off approach to HMOs is very risky.

    Even if you are using a manager you will be liable for prosecution for their errors. If you want hands off you are better to stay away from HMOs.

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    David Smith
    Landlord & Tenant Solicitor
    Anthony Gold Solicitors

    Find me on LinkedIn: uk.linkedin.com/in/dsnsmith

    All opinions are my own and do not reflect those of my firm. No comment made should be taken as legal advice and you should consult a solicitor or other legal professional for advice on your specific situation.

    David,

    I agree with your technical definition of an HMO, etc.

    The practical realities of a student let where 5 students are on the same AST and there are 5 guarantors can result in smooth sailing for the landlord. There are up to 10 individual parties who would be responsible for all the rent and any possible damages.

    Students are their own issue in terms of management. I am just pointing out that the fact that something is an HMO in ever legal sense does not automatically translate into being hard to manage. Being a good landlord and meeting all the legal obligations is a requirement in any of the suggestion solutions.

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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.


    I did not set up a hmo until I had been a landlord for 15 years so had lots of experience but to manage a hmo well and retain long term tenants it needs to be well managed. 

    I am fortunate in that I live 20 mins away from mine and go in weekly, I can spot potential repairs that need doing before they become more expensive/chat to tenants to ensure all well in house and generally check that my investment is operating as I wish it to be. 

    Under the new HMO licensing requirements think management is focused on to ensure no probs to neighbours and any waste is dealt with quickly and effectively.  Also when you have 5 people living in one house all moving in at different times you really need to be able to interview well to get the mix right, my bullsh.. detector is always on high alert!

    Student market is not one I invest in but my son is at a uni so rents locally and I see how they live!  Not for me I'm afraid but good luck to you

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    My personal opinion is that over a long period, a freehold family home will be a better investment.  No sourcing fees, renovation fees, high wear and tear costs and then at the end renovation fees again to turn it back to what it was before so that you can sell it to a family.  Personally I believe one big developer building blocks of apartments can wipe out a local HMO market in one go, as a lot of student landlords are finding out to their cost currently.  You do not see the same thing with family homes.

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    Thanks everyone, taken points on board and will re-think my strategy!

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