What’s the best location to an HMO?
I get asked “of all the places you travel to, what’s the best place for HMOs?”
And again, when asked this on a webinar this week, I copped know out.
I can’t bring myself to say any specific location because I know that is the wrong piece of advice to give.
There are far too many variables outside of the usual purchase cost opportunity, tenant type, tenant demand, capital appreciation opportunities etc relating to the operational side of making any HMO successful.
How well do you know an area?
Do you have access to reliable trades and handy people?
Can you self-manage?
Is there a quality managing agent you can work with locally?
How much cash do you have?
There’s no point me advising that, say, Doncaster is a great location to you if you can’t operate the HMO successfully beyond the initial purchase, development or refinance.
For the record, Doncaster works for many HMO landlords but has been a nightmare for others so the example was carefully chosen! (Just like everywhere else)
The numbers stack in most locations across the UK if the HMO is managed properly. But the reverse is true too…
A while ago I went to 2 almost identical HMOs in Kent, both developed at a similar time and both having exactly the same target tenant base, income potential and success potential.
The thing is, one was really badly managed and, even in the 2-3 years it had been operational, it had got to a stage where the tenants clearly weren’t looking after the place, maintenance issues were all over the place and I ended up refusing the listing.
The other had an asking price offer on it very quickly, coincidentally.
The location in Kent where these HMOs were offers a great opportunity to landlords and investors….but only if they are managed properly.
Otherwise this part of Kent is a crap place to invest, just like everywhere else would be.
If you are considering buying HMOs, there will be parts of the country that appeal to you most based on what you’ve heard about growth, employment, ease of entry (£), yields on offers etc
Maybe locations that you will be considering as first choice purely because there’s no article 4 and the BRRR potential is higher…
But none of these locations will work unless you take time to understand the nuances, put in place a robust management structure, cater your product perfectly for the target tenant base and have a trusted local team for all operational moving parts, year on year.
Otherwise the ‘location’ won’t work for you.
