Property investment continues to grow across the UK and there are various types of property one can invest in. As you know, property can be very expensive and the more commercial that property is, the more expensive it can be. One specific type of property that is very lucrative to property investors is student HMOs. Let’s take a look at student HMOs and how they are perfect for your investment portfolio.
What Is A Student HMO?
A HMO is a property that has multiple occupants which is three or more people. They won’t be from the same household and they will all have their separate payments which they need to pay to the landlord. So, a student HMO would have multiple occupants, all students, who would have to pay their rental fees for each term. It is like a shared accommodation for students.
What Are The Positives of Student HMOs?
There are many reasons why property investors consider student HMOs. One of the reasons for this is that they offer very high returns for an HMO. Another reason why student HMOs are so common is because of the number of students that are based in cities and it is something that is easy to fill as there new students each year.
Another positive to student HMOs is the fact that you generally don’t need to look for new tenants for a full year. The average university student would remain in this property for a full academic year.
Finally, council tax isn’t required for HMOs if they are full-time students which will reduce the overall outgoings of the property meaning more profit for the landlord.
What Are The Disadvantages of a Student HMO?
One disadvantage of a student HMO is the set-up fees. These generally are more expensive than your typical buy-to-let. Additionally, there can be issues with the tenants, as they will tend to have parties and cause a lot of noise on the street. Not to mention the damages that they can cause during their tenancy.
More often than not, bills will have to be included with the rent, and due to this, students may use the electricity and central heating constantly which will reduce the landlord’s profits.
Competition is very high with student HMOs making it difficult to offload property. Furthermore, there will be periods when your property won’t be accommodated due to the festive and summer holidays.
How To Set Up A Student HMO
There are a few things that you need to consider before you buy a property and convert it into a student HMO.
Location
There are a number of places that are densely populated with student HMOs so you want to avoid that. Ideally, you need to pick a location where competition isn’t too high but there are a lot of students in those cities.
Choosing the Property
Once you have found the location, you will need to find the property. Not all properties can be converted into student HMOs and, you will need to check the room size restrictions with the local council to see how many rooms you can squeeze into this property.
Licensing
The next thing that you need to consider is licensing. For properties with five or more tenants, these properties must have a specific HMO license which is given from the local council. This license ensures that the property meets all of the safety requirements for a student HMO. This includes room size, fire safety, and the right facilities for waste disposal.
Market Your Student HMO
Once you have acquired your student property and got the right licensing for it, you need to market your property. One of the easiest ways would be to put it on Rightmove and other property agent websites where they essentially list your property. However, another way of getting tenants would be to set up a pop-up stall if you have multiple HMOs in the area. Set this up in the city or near a large student campus and people will come to your stall to have a look at what you have available.
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The Tenant Requirements
The tenant requirements for a student HMO are also very simple but if you don’t tick off these three things then you are going to struggle to fulfil the student accommodation.
Proximity
One of the first things you need to ensure is that the property is close to a student campus or even multiple campuses to broaden your chances of getting occupants. If there aren’t student buildings nearby then there must be an easy transport route to the property. That can either be a bus route or even a train route.
High-Speed Internet Performance
The Internet is something that students need for their studies and for the fact they will be using it a lot to communicate with their friends. Additionally, they will need the internet for their streaming services. As you can see, the internet is essential and it needs to be able to function with multiple devices all connected at once.
Be A Responsive Property Agent
There are many landlords out there who can be very ignorant to a tenant which just makes it difficult for all parties involved. That is why you should be a cooperative property agent. Additionally, students can be quite troublesome and create a lot of noise for the neighbours. If this is the case, you will have to deal with the students and the landlords yourself. You also have the overall responsibility of your commercial property maintenance.
To Conclude
As you can see, there are many things that you need to do to secure your student HMO. Additionally, there will be different rules and regulations, depending on the council that you are with. Remember, you will need a certain number of rooms to make a good profit on your property so if you can’t fit more than 4 bedrooms into the property, it is not worth doing.
No matter what property you purchase, you need to ensure that it also has a good efficiency rate and obeys the rules and regulations of an HMO license. Proper insulation is required and if you have a conservatory, consider a conservatory conversion to turn this into an additional room for the property to help generate more revenue. Good luck!
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