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What makes the right HMO deal is very unique to each of us… We all have our own overarching goals and objectives and that will naturally impact what we should be investing in. Maybe you’re prioritising capital gains or cash flow – or perhaps a balance between the two. 

We also all have different levels of financial resources, experience and time that will impact what we can invest into our portfolio. But no matter what, finding the right HMO deals isn’t something that you can only do on the side!

If you’re looking to scale your HMO portfolio, you must be searching for deals every single day. If you don’t, there’s a very good chance you’ll miss out on good opportunities, which will hold you back from growing your business.

Because of this, improving your strategy for finding deals should be one of your highest priorities in your HMO business. So, here’s a six-step guide to help you find the right HMO deals for you, in addition to my top advice to help you do this effectively!

1. Understand What You’re Looking For

For starters, you need to know in depth what you should be looking for when it comes to prospective deals. You need to know the exact location, size and features that will fit your investment strategy and target tenant demographic. 

So, spend some time understanding the ins and outs of this and how your strategy and goals should impact what you’re looking for. We all have our own individual targets and goals as property investors, so it’s crucial to evaluate what a deal means for you personally.

Assess your plan, and look at what you need to extract out of your deals. This can also help you figure out if you have realistic expectations of the current market. The sector is always changing, and sometimes you might need to reassess your plan and manage your expectations accordingly.

If you fully understand the type of HMO, the size, the location and the numbers you need from a deal and why, this will make it so much easier to find the right HMO deals for you and ensure you aren’t wasting your time on deals that simply won’t work for you!

2. Don’t Write Off Ugly Listings

It’s important to not overlook ugly listings on property portals, auction houses and commercial websites. These can be great opportunities for HMO investment. So, keep an eye out for properties with poor pictures of the garden or the road and maybe you can’t even tell which property you’re looking at…

These properties typically have less competition as they can put a lot of people off straight away. As long as there’s a good floor plan in a good location, there can be lots of potential, and the prices are usually better, which can mean these deals can end up being the most profitable! 

So, go out of your way to look for the ugliest listings out there. Ensure it’s part of your strategy for finding deals. If you do this, I guarantee you’ll find some really good properties and a lot fewer people will be interested in them purely because they’re uglier.

Properties that have big, boxy floor plans with garages and high-pitched roofs that are potentially convertible can be particularly great finds. This can help you create as many rooms as possible inside the house and can often be easier to convert into a HMO.

You’ll want to avoid spending too much time looking at properties with complicated floor plans that would require a lot to change. I’ve personally found that former local authority houses are often great for converting into HMOs.

3. Focus on Finding Motivated Sellers

To find HMO deals, it’s essential to work on finding and targeting motivated sellers. They might want to get rid of their property quickly – this could be for a whole range of reasons. And they could even be open to accepting lower offers.

Because of the benefits of seeking out motivated sellers, make sure you’re going out of your way to find them. If you’re just waiting for deals to be found online, you’re not doing enough to find your next HMO investment.

You really need to be going straight to these motivated sellers. To do that properly, you might need to utilise a direct-to-vendor marketing strategy, especially if your aim is to build and scale your HMO portfolio.

With D2V marketing, you’ll send out communications and try to surface motivated sellers directly. This will give you a massive advantage as this can allow you to build rapport with sellers and get to know their individual circumstances. Understanding their motivations and finding a win-win for both parties is key here.

This of course will take a lot of time and commitment, and there’s also a cost associated with it. If you need any help with this, we have a content subscription service where we help investors across the UK send out direct-to-vendor letters.

If you’re interested in this service or would like more information, email us at info@thehmoroadmap.co.uk and put “D2V Marketing” in the subject line to see whether you can take advantage of this.

4. Work on Pipelining Deals

Pipelining deals and potential opportunities is key in allowing you to find more prospective HMO deals moving forward. So, even if you are unable to secure a specific deal right now, pipeline these potential relationships and deals for later down the line.

To effectively do this, you need to be consistently putting offers in and following up. Keep in mind that an asking price doesn’t mean that’s necessarily the value of the property or that’s ultimately what someone will pay for it. So, never be embarrassed about putting a lower offer in, even if you know it won’t be accepted.

If another prospective buyer or investor puts in a higher offer that gets accepted, there’s still a chance that the deal could fall through as this still happens a lot across the market. If the sale does fall through and the agent or vendor knows you’re interested and can move quickly, they’ll likely call you first. But if you don’t put an offer in, they might not know that you’d be interested.

So, take the time to follow up with agents or vendors. It’s helpful to put all of this information into a spreadsheet or CRM software. Being organised will allow you to keep up with your offers and the latest conversations you’ve had about certain properties, while ensuring you keep following up on any properties you offer on.

If you do all of this, you’ll realise you can build an impressive pipeline! However, pipelining deals won’t come together quickly. Good deals won’t just fall into your lap, and only doing one or two of these things occasionally won’t cut it. If you turn away for a moment, there’s a very good chance you’ll miss out on some great deals, so focus on being consistent with all of this.

5. Put Together an Action Plan

Now you need to start putting together an action plan for finding HMO deals. Write this plan down and keep yourself accountable, ensuring you’re setting aside time to tackle these tasks and execute the plan. This will help keep you moving forward with finding deals to scale your HMO business!

Make a List of Agents 

Start with making a list of every agent that you could potentially secure a deal from in a spreadsheet. Include their contact deals and website links. Set a routine of contacting them regularly and building rapport with them.

Let the agents know what you’re looking for and that you’re in a position to buy now. Then, keep weekly calls up to remind them. This can help put you at the front of their minds when deals come to them.

Having the right relationships can help you access deals that you may have missed otherwise or not been able to access alone, allowing you to enhance the pace at which you can find and buy HMOs. You’ll unlikely be able to do this effectively on your own and be able to maintain enough attention across the entire market! Additionally, a lot of properties move off the open market.

Consider Using a Sourcing Company

Working with a sourcing company comes at a cost, but a few thousand pounds could be worthwhile if they help you source a great deal. This could allow you to really capitalise on the process of securing a deal, especially if you’re not investing near where you live. 

But you need to make sure you work with the right sourcing agency. They should have experience finding deals like the ones you’re looking for and really understand what you need from an investment. 

Set Alerts on Portals

Once you know exactly what you’re looking for, setup alerts on every property portal that lists the types of deals you’re in search of. Get the alerts sent right to your inbox as soon as potential deals hit the market.

This can be really helpful as the portals can do the searching for you. In particularly hot markets, you can’t afford waiting a couple days to call an agent about a deal you’re interested in. You should be calling the agent and arranging a view immediately after receiving the initial notification when it hits the market!

Boost Your Networking

Put time towards networking more online and in-person. Talk to everyone you meet about what you’re looking for. You never know when someone might have or know someone with a property for sale that fits your requirements.

Research networking opportunities and actively work on increasing your network. Make a plan of where and how regularly you will network, and stick to it as it’s easy to keep pushing it off, especially when you’re busy with everything it takes to run a HMO business!

Set KPIs

It’s important to also set KPIs to hold yourself accountable. These are the mini-targets that will help you find and then secure the right HMO deals. So, set some goals, such as calling a certain number of agents every week or organising a specific number of viewings.

But it’s also not just about holding yourself to account to the idea of finding more deals. Make sure you hold yourself accountable to all the little steps you need to take at every stage that will actually help you source the right deals.

This needs to be a priority, because if you can’t find the right HMO deals, you can’t grow your business. So, you need to block out time for this and the tasks you need to do to achieve your KPIs and overarching goals!

6. Review Your Strategy Regularly

Lastly, you should regularly review and refine your sourcing strategy. To find and secure the best HMO deals, you need to be strategic about this. Review and refine everything that you do to see how your plan and strategy is performing and make changes accordingly. 

Check in if you’re on track to hit your goals and if you need to make changes to your KPIs to help you do that. You’ll also need to occasionally re-evaluate the location and type of HMOs you’re investing in at certain points to ensure your strategy is still working.

Start Finding the Best HMO Deals

These are the things you need to make sure you’re doing to effectively find the best HMO deals! If you’re able to do this well, you’ll be able to seek and secure the right deals and build a successful and scalable HMO business.

To gain access to training and resources to help you expertly find deals, become a member of The HMO Roadmap today! You can additionally gain access to our lessons, case studies and even a deal stacker to help you evaluate and appraise HMO deals.

Be sure to join us over in our free Facebook group The HMO Community, which has nearly 10,200 members! Ask your burning questions or discuss anything about HMO investment with our inspiring and supportive community of investors and developers.

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind, writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!