A professional House of Multiple Occupation (HMO) is quite simply an HMO which is let out to professionals only. As a result, this type of property will be more upmarket. This means it will be in a nice location and have amenities such as en-suite rooms.
The landlord will have arranged for a cleaner to call in weekly and there may even be the option of a laundry service. In fact, a professional HMO can be very like a boutique hotel room in many ways.
Benefits of a professional HMO v standard HMO
With a professional HMO, you are less likely to worry about rent arrears since your tenants will all be employed – at least when they arrive initially!
They are also more likely to be older, meaning they will be more responsible individuals and expect certain standards with regard to cleanliness and tidiness. In other words, they will keep the HMO in good order, meaning you should have lower maintenance costs. Some of those tenants will have families, after all, who they will return home to at the end of the working week. The HMO will merely be a place for them to lay their head at the end of a long working day.
Because a professional HMO is finished to more upmarket standards and has additional amenities, you will be able to charge a higher rent. As a result, your yield should be better than that of a standard HMO in the same location.
And talking of location, your professional HMO should be in a city centre, where there are plenty of solicitor, surveyor, architect and accountant etc offices. Then again, it could be out of town but near a specialised work location, such as an IT hub, media city or a large insurance campus.
It could also be near a hospital as doctors, consultants etc also need to live where they are working and will want to get out of the hospital environment when they can.
Disadvantages of a professional HMO
You will have to spend quite a bit of money initially on making sure the décor of your professional HMO is to a high standard. That means quality fittings and fabrics.
You can also expect to pay out quite a bit of money on buying suitable amenities including a coffee machine, toastie maker, air fryer, smoothie maker (the kind of kitchen equipment your tenants probably already have at home and/or are familiar with).
There is the time factor to consider too. All HMOs can involve quite a lot of work. And that’s not just initially; if you have a handful of tenants then that is, for example, five people you will want to check are happy and paying rent on time etc. The alternative is to outsource to a professional HMO management company – but be aware that will eat into your profits.
How to build your HMO portfolio
At Sourced Franchise, we have the experience and knowledge to help you build a portfolio of professional HMOs. Our team will provide training and support you every step of the way on your HMO property venture.
If you would like to generate 30% returns and more with your property portfolio then it’s time to download our Sourced Franchise prospectus now.