28-08-2024
What makes a successful HMO business, with Wendy Whittaker-Large #23
In this summer special episode of Good Landlording, Richard Jackson and Suzanne Smith pick the brain of Wendy Whittaker-Large about what makes a successful, systemised HMO business.
The episode a fantastic source of information for anyone who has HMOs, is thinking of converting a property into an HMO or is just "HMO-curious".
Wendy gives an insider's view of how to make HMOs a success, and build an efficient systemised HMO business.
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What we cover in this episodeAbout Wendy Whittaker-LargeWhy invest in HMOs?Why do renters like HMOs?Which locations are good for HMOs?How tenancy agreements differ for HMOsWhy 6 Bedroom HMOs are the sweet spotWhat Article 4 means for HMO landlordsTips for developing an successful HMOTips for managing HMO tenantsThe importance of having a systemised business for HMOs
About Wendy Whittaker-Large
Wendy Whittaker-Large is the multi award winning founder of BestNest, a property development and lettings business, and HMO Success, a specialist HMO training and mentoring company. She's also the chair of the HMO Council Tax Reform Group which successfully overturned the single banding of HMO rooms for council tax in 2023.
Wendy is a landlord who's grown a large property portfolio since 2012, mostly focused on HMOs.
She has also published two books about HMOs: 101 Essential Tips for Running a Professional HMO and Extraordinary Profits from Ordinary Properties (Amazon links).
Wendy is a regular on the speaking circuit, and has a successful podcast called the HMO Success Podcast which is available on Apple, Spotify and Podbean).
Why invest in HMOs?
An HMO is a house in multiple occupation, in other words, a building in which three or more households live together It's a cross between a hotel and a house, with people living there, or a family home where you might have you know four or five adults living.
Whatever happens in the market, there is always a need for good quality, dense housing.
Wendy believes HMOs offer tremendous benefits both for the people who live there and also, of course, for landlords investing in this type of housing.
Buying an HMO allows one property to generate more revenue than renting it out as one single family let. Wendy says that an average yardstick would be £1,200 - £1,400 pcm net profit across the country.
On the other hand, there is more work, more investment and more management time. HMOs cost more to refurbish, as they need to have better fire doors and fire protection, and amenities. The HMO is likely to need a licence, and they are subject to more legislation, such as the HMO Management Regulations.
>> Blog post: Property investor guide to the successful management of HMOs
Why do renters like HMOs?
Renters like HMOs as usually they only pay one amount which includes the rent and the bills. In an age of uncertainty over fuel bills and the cost of living, tenants like only paying one amount per month which covers everything.
Living in an HMO is very flexible as there is usually no long term commitment. Tenancies are usually for 6 months and are suitable for those on contracts, who are maybe working across the country, who don't know where they're going to be in the future.
Which locations are good for HMOs?
Wendy recommends cities and large towns with more than 80,000 people, as they are likely to have the demand from HMO renters.
How tenancy agreements differ for HMOs
HMO landlords should use a specialist tenancy agreements for HMOs, as opposed to ones for where the property is let to one household or two sharers. This is because professional HMOs tend to be let by the room, and not as a joint tenancy. The renters have exclusive possession with quiet possession of their room (and perhaps an en suite), and share the common parts.
The landlord is able to enter the common parts for inspections, and often include a cleaner in the rent.
