Elan Arch

HMO Investment: How to maximize a Rental Income?

Are you in search of means to maximize your rental income through HMO investment? Several ways are present through which you can do it without any hassle and complications.

Here, you will get details on the ways to increase the income of your HMOs. This guide on HMO investment will come in handy if you want to increase profits and secure yourself financially.

Nowadays, people are in a desperate search for numerous manners to be financially stable. And it cannot be easy after one’s retirement. Hence, people use properties as a source of revenue, and as a matter of fact, you can do it too!

Back to our point, you can boost and maximize the profits/earnings if you alter it to a House of Multiple Occupancy. And there are distinct ways to do it effectively, which we have described further.

Let’s get on to it then.


Defining HMO:

An HMO, short for House in Multiple Occupation, is a property where multiple unrelated people dwell. When more than three individuals (unrelated) sharing the basic amenities inhabit a residence, that property is said to be an HMO.

Having one bedroom for each unrelated individual– sharing a bathroom, living room, and kitchen facilities– an HMO provides all the necessary comfort that one can get in low rents. It can be beneficial to the owner since it is an excellent way to earn more rentals than simply one tenant.

Do you wish to maximize your Rental income? Then what are you waiting for? Get to the planning, designing, and building of an HMO and get the fruits of your HMO Investment.

Reason for HMO gaining popularity:

Over the recent few years, HMOs have gained popularity in the UK. It is better to finance in an HMO, and it is the most popular property developer choice. Moreover, it helps one be financially stable if inhabiting an HMO rental.

HMO rentals have less rent than the to-let ones. House of multiple occupations enables any individual to obtain high-quality rentals with fewer costs. It is better than using all your money on other rentals, costing more rents for a less-quality home. It is also noticeable that HMOs are popular among youngsters and professionals who prefer stylish yet affordable rental homes.

The benefits of HMO attract popularity. People prefer HMOs more. It is furthermore fundamental to comprehend that even the standard total return of equity (ROE) of an HMO is surplus than to let properties, that is, 108% is to 77%. The rental income of HMO is 2-3 times higher than that of the buy-to-lets.

Thus, HMO investment will demonstrate to be a fruitful means for you to maximize your rental improvement.

Benefits of HMO property:

  • HMO properties benefit the individuals who desire affordable to-let homes. However, its privileges are not limited to only those people since it also helps the investor, that is, you.
  • HMOs are an instant remedy for your low rental profits, as you can expect maximized rental incomes from HMOs. Apart from that, it also helps people to get their desired home for rent at reasonable costs (rent).
  • If someone decides to rent one bedroom flat, it will cost them loads of rent (especially if the flat is of high quality). However, if someone chooses to take an HMO, the rent will be lowered (since the rent is distributed among individuals residing there).
  • The quantity of young professionals and students residing in HMO in London is boosting exponentially. And even the living standards in a House of Multiple occupations are increasing day-by-day due to the local administrations’ initiatives. They are of the motive to assure healthy and safe rental homes in all areas.

Why are HMOs better than buy-To-let properties?

Nowadays, HMOs are preferred over buy-to-let properties, but why is that happening? On average, an HMO has a minimum gross profit of 12% and a logical gross profit on an average of 15% compared to the to let property. It maximizes your rental income if you choose HMO Investment.

Separating rent among tenants is a tremendous contract– both for the occupants and the owner. Suppose you are giving away your four-bedroom home to one individual at £2,000 per month’s rent. Again, if you rent it out to 4 different individuals as an HMO, you can take £700 from each, which leads to £2,800 per month. Thus, the individual won’t have to pay hefty rent, but you will still get more than the average rental income.

If you upgrade your property and add more facilities (such as bedrooms, decor, etc.), you can earn even more than £2,800 since it is an average amount.

Another factor that makes HMOs better is that you can have safety from voids. It means that your house will not be tenant-free if someone wants to leave. You will still have the additional tenants and get rental income from them.

All of it may seem easy; however, your residence’s quality is also a significant factor here. You can focus on your HMO investment and access whatever you can do to modify your home to an HMO.

Converting my house into an HMO:

The first step to HMO investment begins with altering your property. Before converting, you should know that you will require planning permission for such a purpose. You can get planning permission from your local authority, which will help you alter your property as per your will.

Once you get permission, you should focus on the kind of property that you own. If your property inhabits residents (over five) or is 3-story elevated, you might need HMO licensing. If you want to have multiple HMOs, you need to own a license for each HMO you own.

If you want more details regarding the necessity of licensing for your HMO, you can take help from your local council.

Note: You will get an HMO licensing, which will be valid for about five years. After that, you can renew your license.

How to maximize rental incomes?

  1. Look out for the best location: With HMOs, locations matter. You have to choose an area that is convenient and free of accommodation problems. You can hire managing agents for such purposes. However, they can be of great help; however, ensure hiring agents are experienced enough to provide you with the best services.
  2. Bedrooms– the more, the merrier: Extra bedrooms in an HMO proves to be beneficial in terms of rental income. Thus, if you add additional bedrooms in your HMO, you can have more tenants. It can boost your rental income effectively. Our exceptional HMO architects with adequate knowledge can add additional facilities, i.e., bedrooms in your house.
  3. Renovation means improvement: You can quickly improve your HMO’s conditions, increasing its demand and values. All of it, you can do by renovating your house effectively. It will attract more tenants, and if the demand increases, you can increase the rent.
  4. Take Correct time measures: The number of rental demands may affect your rental incomes. The tenant’s needs may increase or decrease depending on different circumstances. Thus, it would be best if you took benefit of the timings. On renewing the tenancy contract, you can put in a proper break clause to benefit from fewer voids and elevated rental incomes.

How can Elan Arch help you?

Having prior experience with architectural problems, we can provide you with architectural consultancy services to offer solutions to all your questions. We have successful experiences in property modification and contain in-depth architecture industry knowledge.

We have a successful list of clients to whom we have provided our services, which resulted in their rental income increment. Thus, if you want it to, we are here for you. Our team of HMO architects and specialists can provide you with adequate services in your HMO investment and will not let you down.

Don’t have second thoughts to reach us if you want to boost your rental income through conversion to HMO.