In this article, we have named the biggest mistakes that HMO property developers can make. If you are a newbie, be very aware of these; and even if you are a seasoned investor, it doesn’t hurt to make sure you still know what not to do.
We don’t often like to post anything negative or problematic for property developers, however, we know it can be very stressful to enter into property development, and we know these mistakes are much easier to avoid when we make you aware of them!
1. Not understanding the risk involved with property rental markets.
There are always risks in HMO property rental and renovation, these can come in many forms, but they are often only a problem when there is no foresight. For instance, when it comes to HMO renovation, if you were to buy an older house for a very low price there may costs further down the line and the house could need more work doing to it than a younger property. Also, when you are running an HMO, a risk is that multiple rooms become empty and this will drastically reduce the money that the property is making.
2. Not having a plan.
The mistake is to hurry with decisions without considering the impact on your HMO portfolio and your income. You need a plan to make sure you are earning enough to cover your outgoings and that you can include expanding your HMO portfolio or making sure you have some money spare if anything goes wrong.
3. Not checking regulations.
You don’t need to check the planning permission if you are changing some design or want to put a lamp in a room. However, if you are planning any work you better read up to see what the regulations are. For instance, removing or replacing a fence may seem like a great idea until you realise that the house next door has listed status, causing you a great deal of unneeded stress (and meaning you have to pay a big fine).
4. Not monitoring your HMO portfolio.
Your HMO portfolio can tell you both what you are earning and what you can spend, it highlights the prices that people are expecting to pay to live in you HMO, and it’s even suggesting where to invest in the future. Without checking it regularly, you may end up spending more than earning out of your properties.
5. Not consulting the experts.
Heading into HMO property development without speaking to experts who know the market, know how to develop an HMO, and has the experience, is going into a complex industry blind.
If you avoid making these mistakes, you can achieve an HMO property investment success without any stress!