More and more investors are getting interested in HMO rental business due to its high rental yielding ratio. A significant profitable return is what every investor dreams of. However, to get started, you need to have an HMO property or a multiple house in occupation, where several unrelated tenants live together.
Each tenant has separate rooms and rents but shared facilities. With increased demand, we all are aware that now is the time to invest in an HMO property. But sometimes, it doesn’t go as planned. Here are some possible reasons for it.
1. Not Doing The Calculation Earlier
Before you invest in an HMO property, it is advisable to calculate all the rental expenses and expected profit. It may seem like a painstaking task; however, it will save you from loss. Add in all the expenses, including HOA, maintenance, insurance, taxes, paying property manager, and unit turnover costs.
It will also give you an idea of setting the right rent for your property. Ideally, the rent should be 2% of the purchase price of an HMO. Apart from this, also do some market research to see what rents other HMOs in a similar location are offering.
2. Having Poor HMO Location
Choosing the right HMO location is the key for property investors to generate profits. You may have empty apartments if their location is not desirable. Renters look for places that are closer to public transportation, universities, etc. Therefore, contact a local real estate agent to get insights into the location and get better ideas. It is worth doing the market research, or you will end up with a small renter’s pool or even no renters.
3. Ignoring The Move-In And Move-Out Inspection
A sloppy attitude can cost you hundreds of bucks. It includes documenting the condition of the apartment before the tenants move in and also when they move-out. You need to follow the State laws regarding apartment inspection. Moreover, if you have everything in writing, it will be easier to tap the tenants’ security deposit for the repair of the apartment.
4. Not Paying Attention To Maintenance
In the current time of tough competition among property investors, you can attract quality tenants only if you have a highly maintained apartment. If you do not pay attention to the renovation or maintenance of your HMO, you may lose the chance of attracting renters.
Therefore, take advantage when the renters move out and get all repairs done. Also, make sure you do not take too much time to get this work done. Clean bathroom, modernized kitchen, maintained communal area, and latest HMO Property Designs ensure you improved rental rate.
5. Poor Screening Process
Not having good tenants can be troublesome, all because of the inadequate screening process. You need to be cautious of who you let your property to. If it goes in the wrong hand, there will be more costs, late rental payments, regular complaints, and turnover, among other tenants sharing the apartment. Never get tempted to skip or go for a flawed screening process explains HMO Property Designs.
Though HMO is a great investment decision, it requires planning, precision, and research. Without paying attention to any of these may result in low rental yields, longer void periods, or even no renters at all.