Benefits of an HMO over a traditional buy-to-let
Although some of the core concepts of buy-to-let investing remain, when it comes to HMOs, there are some distinct advantages with the latter. Your appetite for risk and your profile as an investor will determine what investment opportunities you are more suited for.
Why choose an HMO?
There is no denying that the HMO model contains an element of slightly more risk. But why is this the case? Is it simply because you are dealing with more tenants and more regulations? Not necessarily.
Here are some reasons why HMO investments are potentially better than the traditional buy to let model –
- More control
- More ways to make money
- Less restrictive
- Option to specialise
More control
Once you get the HMO model up and running smoothly, the general everyday headaches of rental property as an investment are balanced.
Being responsible for a larger property and taking care of the common areas can prove to be too much work for the average investor.
At Hoxton Property we offer an all-inclusive sourcing and management service to help you avoid this extra stress. Some people do decide to manage everything on their own, but it’s a good idea to trust the experts with such a large asset.
More ways to make money
The flexibility in rental options for the tenant is also reflected in the myriad of income and profit options for you as the investor. When you buy anything at scale, the possibility of more return grows.
There is a very defined ceiling to how much value you can add to a two bed two bath, buy-to-let flat in Manchester. When dealing with HMOs, your profits are only limited by your vision and your knowledge.
Less restrictive
In the same way as the HMO model suits the tenant by giving them more freedom, the same is true of your options as a landlord.
There are several ways an HMO is more flexible for investors –
- Shorter-term leases easier to exit than short-assured tenancy agreements
- Less likelihood of drawn-out eviction process should the worst happen
- As flexible as Airbnb but with the benefit of a direct contract
- More opportunity to create additional income through extras and services
At Hoxton Property, we guarantee tenancy for you on all our HMO investments, meaning you never have to worry about periods of no occupation.
Option to specialise
By focusing on a niche market and niche tenant, you have the chance to refine and develop your offering in a way that is not possible with a traditional buy to let model.
Including relevant amenities such as vending machines or desk space, providing daily housekeeping or laundry services are all great features depending on who is staying in your property.
From the very outset, you have the chance to design your accommodation with your exact demographic in mind. HMO investment gives you much greater freedom of options than with the traditional buy-to-let model.
