Are HMO Properties Good Investments?

Are HMO Properties Good Investments?

HMO is an acronym for a house in multiple occupations in English. The kitchen, bathroom, and living room are used jointly in the system established by renting the rooms of the properties to different families and individuals. This form of rental, which is often preferred especially in cosmopolitan cities, can become an investment tool. But as with any investment, HMO has some pros and cons.

What are the Pros of HMO?

The most notable advantage of HMO is that it provides high rental income. Instead of getting fixed monthly rental income from a single-family throughout the year, you can get more than three times the rental income from multiple families. The demand for HMOs is quite high, as it is tempting for renters to move to a house completely furnished. Higher demand means there are fewer void periods. Because even if one person leaves the room, you will still be getting rent from the other owners. In addition, you will not experience the arrears of rent at HMO because if any of your tenants pay their rent late, you won't have a shortage of cash as you'll collect it on time from others. Finally, you can pay less tax because your expenses for the HMO go into tax deductibles.

What are the cons of HMO?

The biggest drawback is the legal applications you need to make for HMO investment and the process by which they are finalized. You may need to be in constant contact with the local council, and planning offices. You may need to make some improvements to the apartment for your HMO investment to be approved because of the reviews. For example, you may need to install a fire alarm system and ventilation system. You may also need to put a camera system on the exterior door of the house for security. You must take the risk because all this is going to be an extra expense. Also, most properties may not be suitable for converting to HMO. For this, you should choose places where there are larger and larger houses. You should also either manage the entire process with your tenants yourself or consider paying extra by hiring workers for it.

If you want to learn about the regions and properties that offer opportunities for HMO by your investments, you can choose Trem Global with its wide portfolio and investment consultancy.

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