So, you’ve chosen to invest in a property. But, do you go for a household or an HMO property? What are the pros and cons of each? Mistoria are here to help:
A HMO (or House in Multiple Occupation) can refer to a house split into bedsits, a house or flat share where each occupant has their own tenancy agreement, or student accommodation.
PROS OF INVESTING IN HMO:
– HMO properties can generate high incomes, with a higher number of occupants paying rent and bills.
– Higher control over the property – with students changing over every 12 months, this gives you more control, being able to make any necessary changes once a year and even being able to choose whether or not to rent out the property year on year.
– A single HMO property in a desirable area can generate a much higher income than several non-HMO properties in less sought-after areas. A property in a good location will be snapped up by groups of professionals who can’t afford to live alone, and a higher rent can be achieved.
CONS OF INVESTING IN HMO:
– The management involved in investing in an HMO property is far greater. If you’re renting to students, the property will need to be maintained consistently and possibly renovated every summer in preparation for new tenants.
– Less stable – groups of tenants are far more likely to want to move out and into their own place at a moment’s notice than a family.
– HMO landlords are required to pay for a HMO landlord license, another additional cost.
A household or non-HMO property is a property occupied by a family, couple or single tenant.
PROS OF INVESTING IN A HOUSEHOLD:
– Less potential for damage than with students.
– A more stable rent – families are more likely to settle down in a rental property.
– Less maintenance – student homes or other HMO properties require refurbishment between tenants, whereas long-term occupancies often take care of their own furnishing, decoration and cleaning.
CONS OF INVESTING IN A HOUSEHOLD:
– Less profit – with only one amount of rent, annual income is usually considerably lower.
– Without frequent and consistent breaks between tenants, deciding to live in the property yourself or taking the property off the market will mean evicting your occupants, which would spark arguments.
– A family may expect more from a property than students. Student properties are more about functionality than appearance, whereas domestic occupants may be more drawn in by aesthetics and even require certain features from a property.
To view our current available property investment opportunities, visit www.mistoriagroup.com/investments or to find out more, contact us on 0800 500 3015.