Photo by Property Touch
With more than 15 years of experience in the industry, I’ve noticed there are a few key traits that make a successful HMO investor. I’ve met many great people who have established incredible HMO businesses, and I’ve found the most successful investors in our industry often have 10 traits in common.
Read below or listen to the full episode on The HMO Podcast about these traits and consider your strengths and weaknesses and how you can improve on them moving forward!
1. Financial Acumen
I often hear beginner HMO investors say I’m just not good with numbers. And that worries me… It’s okay to not have a natural instinct towards maths, but as a property investor, you have to know your numbers inside out!
You need to know how to budget, forecast, stack deals, optimise returns and present financial information. Maths wasn’t my strongest skill growing up, and it wasn’t something I enjoyed. I still don’t, but I’m disciplined about it because I understand the importance of the numbers.
It’s also important for banks, investors and business partners to see that you understand the numbers. If you don’t prioritise becoming really good at this, you’ll end up facing issues with cash flow and underperforming assets.
The most successful people in our industry know their businesses and deals inside out. They could recite numbers to you, and they understand why the numbers are what they are and are able to interpret them accurately.
If you want to build a really successful HMO portfolio, bring people into your business, borrow money and do bigger deals, you must be really good at financial planning and stacking deals.
2. Risk Management
The longer I’ve invested in property the bigger my deals have gotten, and the greater the risk and the more important risk management has become. When I look at the most successful people in the HMO industry, risk management is a high priority.
They can also quickly recognise when the risk is relatively low or high. And they understand solutions that allow them to control and manage the risk. Sometimes it’s about being more realistic, or pessimistic, about the numbers and finding ways to build contingencies into the budget, timeline or approach to planning and building regulations.
We can’t entirely remove risk in property, but you can make decisions based on what you think might happen and what you would do if that didn’t happen or something happened out of left field.
Good investors are always considering risks and what they’d do in different scenarios. Beginner investors often overlook this and make too many assumptions on things panning out the way that they want.
3. Adaptability
It’s essential that HMO investors are flexible as the property market can rapidly change from regulation and occupancy levels to interest rates and material costs. There are so many things that can impact our businesses at various stages, so we need to be on our toes!
As a business owner, the wider economic picture can also impact you. And personal and family circumstances could come up that’d mean you may be pulled out of your business for a period of time.
If you don’t have the time, capital and skills to adapt to different problems that could come up, you’ll struggle. When I first got started investing, I was prepared to adapt and always willing to do what was required, but sometimes I just didn’t know or have the ability to do that. Because of that, problems took longer to resolve and cost more money and time.
4. People Skills
Interpersonal skills and the ability to manage relationships are essential in the HMO industry. If you want to negotiate deals, build relationships that are fruitful over time, work closely with landlords and agents, create a rent-to-rent business and offer a successful customer service for your tenants, it all requires people skills!
When I started, I was shy, lacked confidence and wasn’t naturally gifted with people skills. It wasn’t that I didn’t want to be… But I’ve gotten so much better at it, and it’s probably the area where I have seen the greatest benefit as it’s allowed me to strike up a number of successful business partnerships.
This doesn’t mean you need to get on with absolutely everybody – I don’t. It’s about having the confidence to be direct, pushing back when you need to, being aware of when you need to give more and being honest and transparent.
5. Ethical Integrity
The people who are the most successful HMO investors have so much integrity. You can go back and look through their CV, and they’re open and honest about the mistakes they’ve made.
Unfortunately, we don’t always see this in the property industry. Whatever you do, don’t be one of those investors who lack ethical integrity… Do things the right way, and make sure you’re always honest and transparent and hold your hands up when you get it wrong. Despite your mistakes, people will forgive you, and they’ll want to help see you succeed.
As you build a HMO business, you’ll gain more and more responsibility from business partners, banks, investors, tenants and staff. The relationships and reputation you have will carry you a long way. I find people scrutinise even more nowadays. On the bigger deals and when there’s more money involved, they’re actively looking for reasons to not invest with you.
6. Resilience
As an investor, you need to endure things like economic downturns, tenant issues, down valuations and various other challenges without losing focus on your HMO business. Often, we get dragged into those sorts of problems, get overwhelmed by them and that impacts our business and its ability to grow.
Disappointing and frustrating things will happen, and it’s about how you deal with them. When I look at the most successful people in our industry, they’re incredibly resilient to any challenges that come their way. It doesn’t mean they’re immune to problems – it just means they know what to do when they happen and they don’t let it affect them in other ways!
So, be super solutions-oriented when these problems come up. And sometimes it’s about accepting that it is what it is and we may need to bide our time. Being resilient is something you need to actively work on, and you’ll naturally get better at it with more experience.
7. Patience
In an industry like property, you have to be patient. Buying property, refinancing, adding value and making money are all very slow. So, be patient in your ability to build relationships with the right people like agents or investors, which can help you do more deals and bigger deals.
Investors without the experience and appropriate backing often rush into big deals, and this can be really damaging. If you let your lack of patience get the better of you, you’ll get really frustrated and make decisions in haste, and you’ll find that you make the wrong decisions.
This is the area I personally struggle with the most. I have to remind myself that it’s okay, we can wait, it will come. But I can see that when I’ve made decisions in haste, it’s frustrated other people, potentially damaging those relationships, and it’s increased the risks!
The most successful HMO investors understand when they need to wait and move onto the next thing and when to put their foot down and really push on it because they can be more proactive with certain solutions. As much as we all want to get results now, having patience will help you get to where you need to over the long-term.
8. Persistence
The most successful HMO investors are relentless and super persistent. If they have an issue or get knocked down, they get back up again. When you’re just getting started, you need to persistently find deals, build relationships, jump through hoops, get on-site and everything else in between. And when you make mistakes, you need to get up and do it all again!
Persistence is one of the things that differentiates investors who are able to achieve a lot in our industry and those who aren’t. Are you driven to get up and do it again and again every single day? I certainly am, and it’s taken me a long way in this industry.
If this is something you don’t have, put this at the top of your list and build on it. Sometimes it’s just about discipline and doing what’s required to make sure you hit your targets and objectives.
9. Strategic Insight
The ability to develop long-term strategies is absolutely essential. If you only make decisions serving the short-term, you’ll struggle to get where you want long-term. Most new HMO investors don’t have the ability to strategically look into the future of their business, while the most experienced often talk about their 10, 20 and 30-year plans and exit strategies.
This is crucial because it impacts the way you approach decisions, conversations, relationships and your attitude towards things that you come across on a day-to-day basis. Early-on I knew I wanted to grow my HMO business, but I hadn’t really thought about how I was going to do that.
Once I started to plan and identify what I should be doing and approached my business in a different way, this boosted my business quickly. Now I think about strategy and my goals for the next one, three, five and 10 years almost every single day. That might sound obsessive, but that’s what drives me and I reverse engineer what I need to do to reach those goals.
10. Self-Development
Successful HMO investors are also constantly focused on their own personal development. You won’t just pick up everything you need to know by osmosis. So, it’s important to always be looking for ways to improve myself by reading books, listening to podcasts, learning from other people, networking, sharing ideas and asking for advice.
However, it’s important that you’re not only focusing on your own development but also taking action and implementing what you learn! There are a range of resources and property education on offer that can help you become an expert on HMO investment and owning a business.
These 10 traits are the backbone to being a successful HMO investor, which is often slow and frustrating and requires a lot of money, but the great thing is that you can practise and hone all of these!
You might have some natural talents and weaknesses. Focus on the things that you’re struggling with and the areas you could be even better at. Make a priority list of what you should focus on first and where you think you should be, and be strategic about how you approach this.
If you have any questions or want to discuss anything about HMO investment, join us over in our free Facebook Group The HMO Community. And if you want to really level things up and boost your knowledge in the HMO industry and get access to tools like our deal stacker, sign up for The HMO Roadmap today!
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. He 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!