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Would you recomend a HMO strategey?  

7 members have voted

  1. 1. Would you recomend HMOs as a strategy?

    • Yes
      4
    • No
      3


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I am a totally new to Property Investment and have been offered the opportunity to start an HMO. I know many people that have started one as their first property and are doing fine, so they say! I know what the Robs say about them and, even though they fit with where I want to end up, goal-wise, I am not sure its wise to start with the strategy. 

 

Anyone have any experience of an HMO as a first property?

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I am hoping to get a HMO as my first investment property, and have done a lot of reading about them. In summary, compared to a standard BTL I think they're likely to;

  1. Be more work, especially if self managing,
  2. Have greater tenant turnover (refer back to point one), especially if student HMOs,
  3. Have a more predictable tenant turnover if student HMO, which means you can plan for it.
  4. Require greater maintenance costs,
  5. Have a far (far) higher yield.

I would say that if you go with an HMO, consider how you might sell it on in the future. If you have something that can only ever be an HMO, you will only ever sell it to other investors, who will only be looking for a good Below Market Value deal. If it is a property that can easily be converted (or doesn't need to be converted) into a family home, then your selling market is far bigger, and you may see better capital growth long term? All depends on what your goals are, you may never wish to sell, but I don't see a need to unnecessarily paint yourself into a corner should your goals change long term.

 

Happy for people to add to to my thoughts and/or disagree with any of my points if they wish- all my views are based on research, as opposed to first hand experience!

 

Cheers, Chris

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Hi Chris, 

 

Thanks for that thorough review of HMOs. I think all your points are very valid and well researched, totally agree with them . Reading your post I thought of another aspect to think about as well. Changes in regulations. I have looked at Liverpool for a HMO, but the market is saturated now. There are areas of Liverpool that have so many HMOs that the areas have become unrecognizable from what they used to be. The local council have now cracked down on regulations and also have stated to restrict the number of new HMOs that they are going to allow. 

 

I think if you are willing to work hard with a HMO, you will get well rewarded. But it may become increasingly more difficult with time , maybe.?

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