Will anyone make a property investment that does offer a good return? The answer to this question is no. Financial returns matter a lot when you are picking an investment option. Property investment offers a good earning option, but several factors can create differences. Location of property, tenant type, and overall condition being some of them.
Conventional properties surely generate financial income but not at the highest level. HMO properties are surely lucrative and there are several reasons for this.
1. Most tenants live on a long-term basis.
It is never easy to search for another tenant if the existing one does not want to live anymore. More importantly, it stops your earning which is a major problem. HMOs are not rented out by standard families who can make a shift easily if things do not work out. They are rented by working employee’s convenience. They take an HMO property on rent mostly because it is located near to where they work.
For them, shifting between residences can be a big problem. Hence, such people take an HMO property on rent to live for a long span. Thus, if you are an investor, be rest assured that there will be consistent income on regular basis. This is not the case if you own a standard single let property. Your tenant may live for few months and want to move out.
This creates another problem for the property owner. He or she must spend money on renovation so that the next family can move in.
2. Good rental raises
How much rent are you generating from a rented-out property? This would possibly be the most important question in the mind of any owner. With the inflation rate going high each year, a good raise is needed to cover all expenses. The conventional property options may not necessarily produce a good rental sum. If there have been commercial developments around it, the rental rates may decrease instead of increasing.
● HMO properties are in high-value areas, so the annual profit raise is quite a lot., Investors never have to think about the rates going down. In some areas, the returns are as high as 10 to 12%. Thus, generating profits does not become a complex task.
● The best thing about these properties is that the income does not depend on one tenant. At a time, multiple tenants live which means that owners can earn a substantial income. The best thing is that it does not depend on one person. Even if one tenant decides to move out, the inflow continues.
3. Timely rentals without multiple reminders
Some tenants can create things quite horrific for you by delaying rents. At the end of each month, you would have to run after them, send reminders and follow up. A lot of property owners are patient and they do tolerate delays for several months. However, eventually, this issue cannot be managed.
● It is always good to have tenants that pay their rent on time. People who live in HMO residences are working professionals in most cases. They are responsible people who make sure that the rent is paid on time.
4. HMO properties are preferred by working employees.
There is no doubt that people working away from home prefer living with like-minded people and this is what an HMO property provides them with. Most of these residences have several similar people living together. In this way, they can become a part of a good social circle. As these properties are furnished in the best possible way, it becomes easier to get quality tenants who are willing to pay a high monthly sum.
Summing it Up
Having the wrong tenants can prove to be a big problem for any owner. Most of your tenants would be working professionals who pay their rent on time and keep the house in good shape as well. Unlike conventional property owners, there is no need to be apprehensive about delays. HMO properties have higher rents than normal apartments or villas as they are equipped with all the needed facilities.
The annual increase in these properties is quite attractive as well. In addition to that, with more people working in mainstream cities and not living nearby, the requirement for HMO properties is increasing as well. As an investment option, it is expected to generate higher returns in the future