I love H.M.O’s (Houses of Multiple Occupancy or Multi-let) because they are the foundation of so many other property strategies and they will make you the most profit for the least amount of effort.

An HMO is simply a house occupied by 3 or more unrelated people who share common facilities like a kitchen or bathroom.

Now is the perfect time to invest in HMO property because there is massive demand for affordable rented housing. Property prices are rising so you will increase your equity – mortgage interest rates are still very low, and it’s easier than ever to run profitable HMO property using (free) technology with very little of your time.

And you can make great profit from HMO when you invest in them or when you manage them (many call this ‘Rent2Rent’)

But you have to understand your local HMO licensing rules because they are ‘the rules’ and will help you build a good reputation and increase your profits when you follow them.

In general, there are two types of HMO license: Mandatory and Additional – sounds complicated and scary but they really aren’t!

Mandatory licenses are for larger HMOs with 3 storey and 5 or more people. Additional licenses might be required in your area for anything smaller than Mandatory. Councils use HMO licensing to improve the quality of housing and they give exactly the steps you need to follow to run a legal HMO property that is safe for your tenants.

Typically HMO licenses cover things like the number of people who can live in the property, minimum room sizes, the amenities needed, and how to keep your tenants safe from fire. These licensing rules are easy to find, simple to follow and essential if you want to run legal and profitable HMO.

I think licensing is a good thing because when you get your license it proves you are a professional HMO investor or Rent2Rent business and you automatically get credibility in the eyes of your council and your tenants.

Here’s a tip for you – go onto your council website and find out the HMO definition for your area as councils can use slightly different definitions to suit local and it’s important to know your local HMO rules.

Get your HMO officer to be a raving fan

Many people are scared about working with their local council officials but in my experience your local HMO officer can be your best friend – when you follow our tips can become a raving fan too! I think this is vitally important if you want to build a great reputation as an HMO investor or Rent2Rent operator. But why would you want them on your side?

Typically an HMO officer’s job is to find out rogue landlords who are running illegal HMOs as they don’t have  licenses or they are cramming lots of tenants into unfit accommodation, risking their lives, just to make a profit.

How do you think they will feel if as an alternative you met local HMO officer and told them about the great quality property you are going to supply in the area and ask their advice on what you need to do? Do you think this will help build rapport and credibility? Yes!

When I set up my HMO Rent2Rent property business years ago,  I met Julie Monk, our local HMO officer, and in twenty years of being in that job it was the first time a property investor had spoken to her like that. I invited her in to the first property and asked her advice on what I needed to do. Now Julie is my best friend, we meet up every six months and she loves the quality of HMOs we provide in the town.

She also gives me advance notice of any  licensing changes that the council are introducing, and the best thing is that when the council now catch rogue landlords they recommend us to the landlord to either manage their property to bring it up to HMO licensing standards or if they want to sell then we are best placed to invest in their HMO property and buy it from them!

Maximise your HMO profit

The best thing about understanding your local HMO licensing rules is that you will know the simplest way to maximise the profit from your HMO investment or Rent2Rent property. A simple thing like knowing the minimum room sizes required on your license means that when you view any property you can quickly see within the room layouts if you can add extra bedrooms.

Here’s an example. If you view a two story semi-detached house that has a separate sitting or dining room downstairs that is over the minimum room size, you could convert that into an extra bedroom and charge another £500 per month in rent.

Now I’m not saying subdivide the HMO property into lots of rooms and cram people into unfit, cramped rooms and maximise the profit you can make from them. That’s what Rogue landlords do and they will be caught and fined.

I suggest you work within the rules and if you can create extra rooms that match the minimum bedroom size, you could unlock more profit from your HMO – legally!

A quick tip for you is to download a free App for your tablet or phone called Magic Plan. This allows anyone who understands the local HMO licensing rules to create a quick floor plan in any property you view by working out the size of the rooms that could be used as bedrooms. Using an App like this also makes you look very professional in front of your HMO officer, landlord or letting agent – very useful when you need to build trust, rapport and credibility that you are a professional HMO investor.

Understanding your local licensing rules and using these three HMO secrets will help you build a legal and very profitable property business.

If you want to discover more on how to maximise your profits from HMO investments and Rent2Rent , and get all the tools needed to build a legal, profitable and scalable HMO business come and join me on the next HMO Pro course.