In this month’s article, I look at how you can make this happen even in today’s market and start on the ladder to property success

To begin with, you need to change your mindset (yes, I know its somewhat trite but just bear with me for the next 200 words or so!):

The majority of investors invest in two-up, two-down terrace houses and if lucky make yields of 5-6% - not much help when the interest rate rises! The savvy investor actually makes more money from buy-to-sell and small development projects – but this requires a lot of cash.

The more advanced investor uses a combination of the above tactics but cements their monthly profit in renting out properties on a room-by-room basis – in effective a HMO.

Now the word HMO puts the fear of God into a lot of people; the worry about the hard work, the tenant problems, the maintenance etc – and yes, there is more work but this is reflected in the yields.

In essence a HMO is a collection of single-let properties that just happen to share a communal living room and bathroom. It’s our multiple unit strategy that has allowed us to continue expanding in the downturn and cements our long-term profits from both our rental and portfolio businesses!

Picture this – you purchase a three-up, three-down terrace for about £100,000-£150,000. You convert it into a HMO for c. £15,000. You rent out five rooms (without touching a cellar or attic) and bring in rental income of £1500-1700 pcm. Approximate profit after all bills is around the £500-700 pcm. Yes, you do have five tenants to worry about and yes some tenants may only stay for three months – but you make pure profit on the fourth and fifth tenants so all you need to do is keep the house full!

The next step in your journey is to buy good quality stock in good quality locations.

Yes, you can pick up so-called deals on every street corner – but are they the right street corner and can you attract the right tenants? Generally, a deal is a deal because its often in a poor condition or in the wrong part of town or its discounted value is what its truly worth – it’s rare to find prime location properties where you can get 20-30% off the market valuation. A “professional” tenant generally wants off-road or liberal on-road parking; a “key worker” tenant is more concerned with how near it is to town or the nearest bus stop to get into town. Just because a house is cheap doesn’t make it a good house. So scout out for those properties which are bang in the centre of town and will rent out all day long to both professionals and key workers; and your main concern over location is ended.

Do a test advert or utilise specialists like Millennia Property (property management in Northamptonshire, Bedfordshire, Hertfordshire, Essex, Lincolnshire and Yorkshire) to give you a steer for what areas work best.

Then you need to create simple checklists and process maps so that your business can be automated or passed onto other people to run. This is the painful part but the investment made here will pay dividends in the long-run. Our Operations Manual is 250 pages and counting!

How do you get started without making “beginner” mistakes?

Well, that’s fairly easy.

The first place to start is our blog www.yourhmoexpert.com where there are a ton of free articles, podcasts, a video or two and free information to download. Unfortunately, there’s only so much we can reveal on the website without giving away all of our trade secrets but if you want the long way around, then this might work for you.

The second place to go and find out more information, short-cut the learning process and start making cash within 30 days (if you follow our step-by-step plan) is at www.hmopropertysecrets.com

This is a BRAND-NEW big pack that’s being launched this month and you can get ahead of the game by registering your details right now. Its an 18-module set that goes into major detail on how you can get started making profits of £500+ pcm from EVERY house that you buy. Consisting of video, audio and workbooks; it’s the ultimate HMO investor guide – and if you’re serious about making money in HMO’s this year, I recommend you take action right away and get your details registered for when we go live.
www.hmopropertysecrets.com