August 12th, 2014. Tom Rowlands
The Best Areas for Investment: HMOs
When it comes to buy-to-let, Homes of Multiple Occupation (HMOs) can be extremely rewarding in terms of a return on investment. There are several factors that you need to carefully consider when making this kind of purchase though; including the type of habitant you want renting and the most popular locations for these renters.
Finding the Perfect HMO Location?
Knowing what you want is essential for finding the best location to purchase a HMO. If you want to create student accommodation, then finding a location close to a university and in an area that students commonly live is essential. Alternatively, if you’re aiming for young professionals as your tenants then your HMO needs to be near transport links, business parks and local amenities.
Hands on or Hands off?
The way in which you choose to handle the property will be a large contributing factor to where you will be looking. If you are planning on taking care of your portfolio on your own then you will want to consider property that is close to where you are living, giving you much easier and faster access if needed. Hiring a HMO company to take care of your portfolio will give you much greater freedom in location but will cost you a percentage of your profit.
Read more: A Guide to being a Landlord in 2016
Let’s take a look at some of the best locations for letting to students and professions:
Best Places for Investing in HMOs for Students
1. Birmingham – with three universities, this city has over 57k students every year.
2. Nottingham – thanks to 2 universities and cheap housing, this is a great area for a bargain.
3. London – might be expensive to buy, but thanks to wealthy overseas students you can make a profit when you buy well.
4. Coventry – with over 35k students every year, Coventry is a great place to invest in student housing.
5. Glasgow – with two bed flats costing just over £100k you’re likely to see a great return on housing here.
6. York – the universities and transport links here mean that you’re going to see a great return on any investment.
7. Reading – again another city with 2 universities; Reading is a rapidly expanding city ideal for students.
8. Oxford – you may see London prices here, but rental costs are also very steep which will comfortably help you turn a profit.
Best Places for Investing in HMOs for Professionals
1. Southampton – with over 7,600 businesses operating in Southampton, you’ll find hundreds of young professionals looking for house shares.
2. Manchester – one of England’s largest business cities; there are plenty of opportunities here that will see a great ROI.
3. Nottingham – not just a thriving student city, but an excellent place for business. Ideal location to set up both student and professional HMOs.
4. Blackpool – this seaside down isn’t just great for tourists, it’s a very profitable place for buy-to-let investors.
5. Kingston Upon Hull – with roughly a 7.5% gross rental yield, HMO property in Kingston will see you with a fair return.
6. Coventry – another city that’s ideal for both students and professionals, making Coventry ideal for expanding your portfolio.
7. Oxford – similar to Coventry but with more expensive housing. Regardless, the return on rent makes buying very profitable.
8. Portsmouth – this port town plays host to hundreds of business and has thousands of young professionals living there.
Pin-pointing the exact places in these cities to purchase homes will require a lot of in-depth research which is best done yourself.
Read more: What is the Future for Buy-to-let Investors?
As well as choosing an optimum location, it’s important to remember that the best way to turn a profit is to get the best rates on your mortgage – talk to a HMO mortgage broker with access to the whole market in order to ensure you’re in the best possible position.
Article By Tom Rowlands
August 12th, 2014
Tom joined Pure Property Finance in 2017 after a career as a Client Wealth Manager, where he spent just under 3 years advising on financial and tax planning. Tom specialises in bridging finance and property development funding, having completed deals ranging from a simple £30K property purchase through to £2m+ mixed-use developments.See more articles by Tom