Nathan Walker, Sales Director, points out a few pros and cons to HMO properties so that a landlord can better decide if it's an ideal property investment for them..
At CPS Homes, we pride ourselves on being Cardiff's biggest HMO specialists. In fact, information available from Cardiff Council shows we manage more HMOs than any other letting agent in the city. With this in mind, we believe there’s no-one better placed to advise you on the pros and cons of HMOs so that you’re better equipped to decide if a house in multiple occupation investment could be right for you.
Many landlords who are involved in the HMO market are aware of just how attractive they can be as an investment. The rental yields are typically some of the highest around for the right property in the right location, often exceeding regular buy-to-let property yields by quite a margin. The demand for affordable, flexible housing, such as those offered by multi-let properties, has been consistently growing over the past few years.
There are plenty of positives that can be argued to promote a HMO investment, but are there any downsides? As with all investments, there are good points and bad points, and the same certainly applies for an HMO investment.
Firstly, HMO stands for house in multiple occupation, or a house of multiple occupancy. A HMO refers to a residential property that consists of several subdivided rooms (often within what was once a single large house with multiple rooms) that are let individually to tenants from more than one family. HMOs usually have 'common areas' that are shared by each tenant living in the property, such as a communal living room, kitchen, bathroom and garden/patio.
This is a simple definition, but other factors can also come into play when defining what a HMO is. Furthermore, different criteria and licensing requirements may exist depending on your local authority, as well as different planning regulations. For this reason, it’s vital you’re clued up on HMO requirements within your specific location - so speak to your local HMO Officer before coming to a decision.
Thinking of investing in a HMO in Cardiff? Read: Investing in Cardiff
The most obvious benefit and the main reason so many landlords choose to invest in an HMO property is the rental income that can be achieved. HMOs are known for providing much higher returns than the majority of single let properties.
Why do HMOs typically achieve a much better return on investment?
When it comes to potential downsides to investing in an HMO property, there are a few things that need to be considered before deciding if it’s the ideal investment for you.
Some of the things that you need to take into account include:
Ultimately, the key to successfully investing in HMOs is much the same as any other property let investment - choose the right property in the right area for a fair (or better than fair!) price and manage it appropriately. HMO properties can certainly involve far more work to execute and manage successfully, but if you feel the pros outweigh the cons then they can prove to be an incredibly fruitful investment over the long term.
If you’re looking for a qualified and highly experienced letting agent to manage your HMO property in Cardiff, or if you’re on the lookout for the ideal property investment opportunity, don’t hesitate to contact our expert letting team here at CPS Homes. You can get in touch by calling us on 02920 668585, e-mail email@example.com or pop into one of our Cardiff branches.