The 5 Most Common Mistakes Made by HMO Landlords

Wendy Whittaker-Large

  1. Not Understanding Your Tenant Type 

Understanding what your tenants need and want is crucial if you are going to consistently and regularly rent your rooms.  Many tenants move into an HMO for reasons of convenience – they like the benefits of an all-inclusive rent (particularly professional tenants), regular cleaning, and of course superfast broadband. Professional or working tenants might be moving into the area to take up a new job role. They may be earning a basic income, or living away from home. In which case finding cost-effective and convenient accommodation which is also easy to rent is top of their priorities. HMOs provide an affordable and social form of accommodation, which avoids the hassle of organising utilities. However, communication, management and understanding what your tenants need is also key to ensuring low voids.

2. Non- Compliance with HMO Regulations

Did you know that there are over 170 pieces of regulation and legislation when it comes to managing property, including HMOs! These cover all aspects of property management including licensing regulations, landlord and tenant legalities, money management, building regulations and planning permission. Being compliant with the government’s and local council’s requirements is vital, as failure in any area could result in a heavy penalty. If you’re not sure what you should be doing, the first place to check is your Local Council housing standards team. They can advise you on licensing rules, room sizes, and fire & safety features that you will need to install.

Another consideration is whether your HMO will require planning consent. Article 4 directions (Town and Country Planning) can require planning permission to change a property from a C3 class which is a single household dwelling to a C4 class, which is what most mandatory HMOs and additional licensable HMOs would fall under. Any HMO occupied by more than 6 people will be in a class of its own, also known as Sui Generis. If you’re a first-time HMO landlord, having experts at hand who know the regulations and local council’s specific requirements, is a huge benefit and extremely reassuring. 

3. Property Maintenance

HMOs require a higher level of maintenance than a single buy-to-let because there are more people living there and using the facilities on a daily basis. In addition, because the responsibility for almost everything falls to the landlord, even cleaning communal areas and changing light bulbs and smoke alarm batteries becomes a headache. Having regular proactive checks is crucial as  poor maintenance procedures can cost you dearly, especially if it leads to a penalty through non-compliance. A few tips to help you manage your properties more effectively:

  1. Use a suited keylock system that gives you a masterkey and sub keys. This will save you huge amounts of time managing keys
  2. Install a small key lock box outside the property – somewhere discreet. This will allow trusted tradesmen to enter on receipt of the code rather than having to meet you there in person
  3. If you are bombarded with calls from tenants, set up an out-of-hours answering service who can take your calls and send you a text and email. 
  4. Note down all the maintenance issues that crop up. In future you can use this as a tool to predict certain issues that regularly occur and take action to reduce them. 

4. Doing Everything Yourself

Many landlords believe that they can deal with HMO standards, find tenants and carry out repairs themselves. This can lead to an unmanageable amount of work. Well-run and well-maintained HMOs have good teams in place to be able to deal with everything. For a landlord who is looking for passive income and financial freedom from their property investments, working hard to keep on top of everything means that this is not the dream they originally set their sights on. Developing a power team around you who can help with the practical side of the business is critical to ensure you work on and not just in your business. 

5. Not Using an Agent

Many property investors start out with a dream of having a portfolio that will make them money and give them more time. With HMOs, there are so many specialist areas of management that you can find that self-managing your portfolio is just not worth it. In these cases, enlisting the services of a specialist HMO letting agent is almost certainly the best option. With experience and knowledge they can advertise, tenant and maintain your shared house more effectively and efficiently than you. A good agent will have a team already on hand, complete with the necessary advertising platforms, tenant application process and checks, a 24/7 phone and maintenance reporting service, and cleaning companies. They are required to know the law around rent arrears and evictions and can advise you about what to do if your tenant gets into difficulties. Overall it makes sense for you to hand the hardest and most intense part of investing to a company who knows what it is doing, leaving you to do what you love!

Learn to run your business as a business and it will pay you well!

For more information about HMOs and how to make money from just a handful of properties please go to www.hmosuccess.co.uk


52 Week Video Series – Week 5 – The Four Ps!

Do you REALLY know how to make customers return to you time and again? What are the four Ps that make them use YOUR services/ and business more than anyone else’s?

 

 

 

I look forward to hearing how you get on increasing your business by using these four Ps!

52-week video series – Week 2 Planning – Fail to plan, plan to fail!

Welcome to week 2 of my video series! (Watch week 1 HERE.)

This video addresses the subject of planning!! Watch now for hints and tips on how to plan for success in the year ahead!

 

 

Not the most exciting of subjects but it’s a must for a successful business! Share how you plan for success below!

Buy to let is dead. Right?

Well, maybe Buy to Let in its traditional form is dead! Certainly buying in your own name, putting down a reasonable deposit and then a few months or years later refinancing all of your money out is something fewer and fewer investors want to do now. We have George Osborne to thank for that.

Investing in Buy to Let has seen a huge amount of change in the last few years, with new legislation that impacts financing, as well as property tax changes which, has left many landlords questioning if Buy to Let is still a viable investment strategy. With that said there is still a huge demand for rental property and with ever increasing ‘transient’ lifestyles people want flexibility, gone are the days when people what to live in the same house for 40 years!

Our first HMOIf you have been wondering what is the alternative, and how you can make your money work for you, I’d like to suggest House of Multiple Occupation are one way you can address this problem. We hold a number of personal B-T-L properties but a few years ago realised that there were other strategies we could use. When I discovered HMOs I raved on and on about them (in only the way a demanding wife knows how to do) and eventually Andy said ‘OK, let’s give it a go’. That was our very first 4-bed Mini-Mo and since then we have not looked back!

If you don’t have much money to invest, or you are concerned about whether this strategy will work for you, then I’d like to invite you to my NEW and IMPROVED HMO Fast-Track Live Event on 14th October in Birmingham. I’ll be sharing with you how to get started with very little of your own money and LOADS of case studies about how you can make huge profits and BEAT THE TAXMAN!

In this jam-packed and interactive workshop, you will learn how to:

  • ANALYSE an area to invest in for long-term cash flow and growth
  • UNDERSTAND the process of a refurb to create a wonderful HMO home
  • SELL rooms effectively so you avoid voids!
  • MANAGE the investment so it becomes HANDS-FREE
  • LEVERAGE your time so you can rinse and repeat!

 

With a mixture of fun, interactive exercises & relevant examples of REAL HMOs, I will share my tried and tested systems to ensure you grow your flow with HMOs. So are you ready to go on your own HMO adventure?

YES PLEASE RESERVE ME PLACE!

 

Why mentoring makes a difference

When I first started out in my property journey (over 20 years ago) I went to speak to a friend’s husband who had 5 student multi-lets to find out exactly how he had created this small but effective portfolio. I copied his model, learned how to raise finance from the bank before BTL mortgages were created, and studied tenant and landlord law to develop my knowledge and application. With Alan’s guidance and support, I began to make good profits from my very first student multi-let property, and I didn’t look back.

Over the years I have had other mentors – business, personal, HMO specialists – all people who have done what I wanted to do but didn’t know HOW to do it. In the past, I have also worked with a personal trainer and a spiritual advisor to help me grow and develop as a person and to this day still implement the practices I learnt with them.  Often I chose people that I wanted to work with because I could see that they had done something against the backdrop of challenges which I too was facing. My personal trainer for example, also had a young family, so could understand the difficulties of fitting exercise around a busy lifestyle. She also understood the problems of feeding a family when they want to eat egg and chips and you want to nourish yourself with avocado and feta salad.

If you need to find someone who is right to mentor you, it helps if you have an understanding of where you are now, and also what’s stopping you. You may have identified a goal that you want to achieve but you aren’t sure HOW to achieve it. You may look at others who are successfully running businesses, creating passive income or building property portfolios but just not know where to start. This confusion leads to you chasing your tail. It leads to indecision, procrastination and defeat. How do you avoid this trap? You need to find someone who has already demonstrated a PATTERN of success, that you can simply copy and paste. Also, someone who you can relate to and who has themselves proven that despite life’s challenges, they have achieved success.

The benefits to you in finding someone who has already done this are multifarious:

1) Not wasting time on U-turns and dead ends looking for answers that someone else has already discovered

2) You can build a business based on tried and tested principals and practice

3) Utilising someone else’s mistakes from which you can grow

4) Improving on the ideas you glean from another person’s implementation

5) Finding short cuts and faster routes to delivery (i.e. NOT reinventing the wheel)!

6) Staying accountable to your goals

7) Regularly measuring your progress

8) Having someone who’s on your side with whom you can confidentially share your worries, concerns and questions

9) Having your ‘blind spots’ illuminated and your ‘starshine’ magnified

10) Saving thousands of pounds and hours of time in non-personalised and irrelevant learning which doesn’t take account of YOUR situation, strengths, position and goals.

The question is – WHO do you need? And WHAT are you trying to achieve? THEN you can find someone who has done it successfully, COPY their systems and processes, and PASTE them into your life, with help and support tied in to ENSURE your SUCCESS! The only question is WILL YOU?!