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Are HMOs High Risk or High Reward?
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In today’s podcast, Mark delves into the question: Are HMOs (Houses in Multiple Occupation) high risk or high return?
When considering purchasing a property in an Article 4 area, it's important to note that you’ll need planning permission to convert and operate it as an HMO. To determine whether this investment is worthwhile, you should first assess the demand for HMOs in that specific area.
Operating an HMO comes with higher running costs compared to a single let, where many expenses are typically covered by the tenant. You must evaluate whether these costs will significantly impact your profit margins and if the rental income can offset them.
Another key difference between HMOs and single lets is the level of involvement required. In a single let, tenant disputes, such as family disagreements, generally don’t require your intervention. However, in an HMO, conflicts between tenants might necessitate your involvement, sometimes even leading to the removal of a tenant if the situation becomes unsafe.
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