As we start the New Year you might be wondering about investing in HMOs for high cashflow and longterm wealth. I wouldn’t blame you! I’m planning on doing exactly the same, and this year we have a number of exciting HMO projects lined up. It took me just two and a half years to create £6,500 income per month from HMOs starting from scratch, enabling my husband to give up his well-paid contracting role, and for us both to be home-based and creating a life focused on what we WANT to do, NOT want someone else wants. You can create financial freedom even faster than me by learning from experts who have systems you can copy and being committed to applying your learning by taking massive action.
I’d like to share with you here some reflections and trends that I’ve noticed which I think will impact anyone investing in HMOs this year and I hope these will give you the ‘insider edge’ we all need to stay ahead of the curve.
1. Local knowledge. You need to understand your local area better than any other investor. Where are the new business or retail parks springing up (or planned to), where are the large employers re-locating to, or moving away from in your area? Where are the new rail hubs or transport links being created, and what does the local council have planned for its road network? What about new leisure facilities or housing developments? You need to know all this local information to plan your investment strategy well. HMOs work best in areas of high employment, where access to retail, leisure and transport is easy, and where there is growth. Unless you keep abreast of local plans you could easily find you have invested in an HMO on the wrong side of town.
2. USP / Brand – what does your HMO offer that no other local landlord offers? Whether it’s bedding packs (an idea we invented long before Serviced Accommodation took hold), complimentary snack boxes on move-in, technology- enabled systems, or friendly staff, it doesn’t really matter. What matters is that your Unique Selling Point is communicated to tenants and potential tenants so that they quickly form a loyalty to your brand. People won’t remember what you do for them, but they’ll remember how you made them feel. Sometimes just s super-warm welcome is enough to make someone say yes.
3. Systems – You need to invest in systems that support your business, and are flexible enough to grow as you scale. Make sure that the investment (cost) is worth the outcome (will it save you time and make you money?) – many online systems offer a ‘try before you buy’ option which allows you to see whether they deliver on their promises. You will also need to plan time to test it so that you can make a considered decision. We use Google services for practically everything – not only is it massively scalable it’s also totally cloud-based so our team can access all the information they need wherever they are, and everything is automatically backed-up. Make sure that any systems you use work well together so that you can create a seamless information flow. This too will save you huge amounts of time and will allow you to take on staff or readily outsource.
4. Service. In the HMO market we are beginning to see the difference between those agents and landlords who offer great customer service and those who frankly cannot be bothered once they have their tenant in situ. Word of mouth is a powerful tool and if you lose one tenant due to poor customer service, you may also fail to get another one as a result of your reputation. Social media and local networks are fantastic tools both for good and bad news, so make sure your reputation for service goes before you. Your tenants will love you for it, your voids will decrease as a result and you will probably get a lot of referrals for free. We offer a £25 voucher for any referral that leads to a new tenancy – can you imagine how it feels to get money BACK from your landlord just by passing on someone’s name?
5. Interior design trends. The HMO market has many strands and each of them has a particular attraction to certain tenant types. So design your interiors accordingly! While you might like the idea of the latest subtle Farrow and Ball colours, will they suit the cool hipster student community you are looking to attract? This year there are a number of interior design trends that I suspect will influence HMO design, one of these being the Danish preoccupation for ‘hygge’ (pronounced ‘hougar’ like ‘cougar’). It means comfort or creating a feeling or mood that comes taking genuine pleasure in making ordinary, every day moments more meaningful, beautiful or special. Comfortable furnishings, soft lighting and warm and cosy rooms typify the ways that the Danes (and now plenty of the Brits) are re-creating hygge in their own houses. However, when it comes to HMOs I would hold back on installing the complete hygge experience. Certain key items such as real fires (I know, toasted marshmallows are the ultimate in tenant-bonding experiences but it can turn sour pretty fast if no-one calls the fire brigade when they’ve put one too many logs on the fire). Candles (your local HMO officer may want to enrol you on the ‘HMO Fire Prevention course’ if these are endured, let alone allowed, on your premises), are also a no-no as is any other naked flame which, unfortunately for us trendy HMO owners, is the decisive cornerstone of hygge.
There are ways you can send a nod to our Danish counterparts though and still demonstrate your ‘up with the beat’ knowledge in interiors: grey/ white and red colour schemes highlighted with comfy Scandinavian rugs and prints; pictures of deer heads (Ikea do a good one surprise, surprise) and other Elk-like creatures adorning the walls of the bedrooms, and soft, low lights that highlight nooks and crannies and create that soft, comforting feeling of hygge.
Keep an eye out for other trends that you can incorporate into your designs. Whilst details may change, basic good design lasts forever, and if you design your properties well, you can adapt and update as often as you need.
What trends do you see emerging for 2017?