Good morning guys, I hope you are all enjoying the bank holiday weekend. There are many different ways of making money from property rental income is one of them, but there are many different ways of making money from the rental income to. Most traditional BTLs are rented to couples, individuals or a family. However there is another option and depending on the location and the property there can be a market for renting out individual bedrooms within the property instead of the whole property. This is currently a booming market at the moment as the demand is increasing as many young people have been priced out of the market to buy their own property due to the increase in larger deposits and also the rise in living costs have increased in comparison to wages especially when young people are starting out. Consequently taking advantage of the trend in the rental market by providing a service to single tenants or couples to provide them with a room in the house is where you can significantly increase the income and the rental yields that you will be able to get from a property. It is a specialist strategy and is becoming increasingly popular due to the current climate. However it is a strategy that if you get wrong there are quite severe penalties so you have to ensure you understand the legal and health and safety regulations that come with this strategy.

There are ways to get the information that you require and it is readily available on governmental and council websites which provide information on HMOs. This is generally the first point of call if you are serious about doing HMOs as a strategy because as regulations change it is important to obtain it from the source. You should also speak and become familiar with your local HMO officer and discussing with them what the requirements are and what is or would be required of you from a regulatory perspective as there are always changes in legislation and additional requirements for HMOs. They are also good for doing market research as they will give you an idea of where the towns are overly saturated with HMOs and also provide you with areas where there could be more. Most demand for HMOs tend to typically be in larger cities or towns which are quite populated.

To understand where the money is in HMOs and where you would make your profit and cash flow is you can indeed still benefit from capital growth depending on the area where the property is located. However the main value of HMOs is the increase in the rental yield of the property. If you compare it to standard buy to lets the rental yield that we would recommend for HMOs is a minimum of 12% gross rental yield to make it worth considering. However when purchasing HMOs you should look to achieve around 15% plus yields. The downside to HMOs is they do require more time and more management.

Managing a couple of these properties can be a real handful and the real reason that a lot of investors get into property is not to have time intensive management. Therefore you either love HMOs or you hate them, I have come across a balance of investors taking both views so it entirely depends on personal preferences and your circumstances. However if you want an agent managing the property it is imperative to ensure that it is a skilled management agent that is up to date with the rules and regulations and is aware of the demand required for managing HMOs. Therefore always pick your agencies carefully. I hope this has provided some useful tips in being effective and making the most of using the HMO strategy.

Best of Luck!