A Guide to Managing Your First HMO Property

A Guide to Managing Your First HMO Property

Photo by Perfect Abode

Managing HMO properties is often considered one of the most time-consuming and challenging parts of HMO investment and especially so when you’re just getting started! This is a crucial part of setting up and scaling a successful HMO portfolio, so you need to make sure you get this right and build solid foundations around this from the beginning.

If you don’t, you could get the compliance piece wrong, end up in a whole heap of bother and not make anywhere near what you should be from your HMO property! So, here are nine key steps to managing your first HMO property and beyond, including some of my top tips for creating a solid HMO management strategy!

1. Understand the HMO basics.

For starters, you need to understand the basics of what’s involved when it comes to HMO management. There are a number of areas to start to consider with this part of HMO investment, including:

  • Tenant referencing
  • Tenancy deposits
  • Tenancy agreements
  • Inspections and inventories
  • Utilities and bills
  • Maintenance and repairs
  • Managing tenants

HMO property management is difficult to get right, especially if you aren’t prepared in advance. Even if you plan to outsource the management of your HMO, it’s still important to understand the ins and outs of this. So, take some time to understand the basics of HMO management and what tasks and activities you’ll need to do or hire someone else to do.

2. Become a local expert.

It’s also extremely beneficial to become an expert on your local HMO market by understanding what’s happening with supply and demand and the competition. SpareRoom is a great platform to start with as it has tons of data that can help you piece together all of the details of your investment location.

Spend time researching how your product fits into the market, so take a look at current room prices, property specs and what the competition is offering and figure out how you’ll attract and keep the right tenants.

Additionally, becoming a local expert can help you secure top rents and allow you to create the best product and service possible, so make sure you look at this sort of information and data in detail. Don’t just make assumptions or try going off what others tell you – undertake your own due diligence and figure this out for yourself!

3. Understand legislation and legal obligations.

With hundreds of different laws in place across the private rented sector, keeping up with current legislation and your legal obligations are areas you MUST get right with your HMO properties!

There are lots of certificates HMO landlords need to keep and renew, in addition to specific rules and responsibilities to be aware of. On top of that, there have been quite a few legislative changes to keep up with in recent years and even more on the way!

The process of gathering documents or ticking boxes isn’t fun or easy, especially if you’re the one pulling everything together. However, we all must accept it and get on with it. Here’s a few of the certificates you’ll need to make sure you have in place for your HMO properties:

  • Electrical Installation and Condition Report
  • Gas Safety Certificate
  • Portable Appliance Tests
  • Fire Detection System Certificate
  • Emergency Lighting
  • Energy Performance Certificate
  • HMO license

This certainly isn’t the most thrilling part of investing in HMOs, but you must get these things in place as otherwise there can be big consequences. If you’re not confident about this area of HMO management and best practice, invest in property education to help you gain knowledge and confidence. 

There are a range of services and products available across the industry. Start by taking advantage of free resources, such as listening to The HMO Podcast and reading our blog. 

You can also look at paid-for services, like our e-learning platform The HMO Roadmap where we provide resources, lessons, templates and step-by-step plans for HMO investors. Working with an experienced mentor in the industry can also be massively helpful with the right person being able to provide essential guidance, support and accountability every step of the way!

4. Don’t underestimate the challenges of HMO management.

It’s important to go into managing your first HMO property with the awareness that this will be challenging and will take a lot of your time and effort. While starting a HMO business can be incredibly rewarding, you’ll likely face some big trials and tribulations along the way…

Since I first started investing in HMOs more than 15 years ago, I’ve managed thousands and thousands of tenants and have naturally experienced my fair share of both ups and downs, no matter what I’ve done to try to mitigate this as much as possible!

But if you focus on the right things, you can be prepared for these challenges ahead of time. Prioritise keeping up with changing compliance and effectively communicating with tenants. HMO management definitely isn’t for everyone, so also figure out whether self managing or working with an experienced managing agent is right for you.

5. Prepare for worst-case scenarios.

There are a whole range of difficulties that can come up with managing HMO properties that could send you under or put you in hot water if you get it wrong! So, it’s important you’re aware of everything involved with managing HMOs from the beginning.

At some point, you’ll have to deal with formal complaints and difficult tenants. A difficult tenant is especially challenging to manage, and the law isn’t always on your side when it comes to removing them. There are also certain processes you need to follow and hoops you have to jump through just to get to court, and this could get even more time-consuming moving forward.

It can be helpful to prepare for worst-case scenarios ahead of time and try to mitigate the risk of ever having a difficult tenant in the first place, but you should still expect to experience this at some point. Think about how to manage this when it does crop up and how to avoid it getting to that point where possible.

Keep in mind that it isn’t a case of if things with your properties, tenants or tradespeople will go wrong. It’s really a question of when. No matter if you have solid foundations and structure in place, people will let you down, things will break down and sometimes, things will be out of your control.

So, don’t expect HMO investment to be all plain sailing. You’ll have to overcome obstacles you don’t foresee, but be aware of this before you even get started. You’re simply not going to be able to just sit back and collect rents because trust me, that’s not what HMO property management is about!

This is not to scare you off from investing in HMOs, but it’s to help you understand everything involved with managing HMOs from the beginning and being prepared for the worst-case scenarios as much as possible.

6. Fill your rooms as quickly as possible.

Knowing how to fill your HMO rooms with the right tenants is another crucial part of investing in HMOs. But it can be difficult to continue filling your rooms, arranging viewings and converting them into tenancies, especially if you invest in professional HMOs.

You could end up spending hours just on managing enquiries only to find out that they’re not the right tenants for you or your property, and this could then in turn cost you money as your rooms sit empty! You need to make sure you get your adverts right with the title, copy and photos all needing to be spot on and effective in capturing your prospective tenants’ attention. 

It’s also essential that you reply to enquiries quickly. We recommend aiming to answer ALL enquiries within 15 minutes and offering viewings within 48 hours of their first contact wherever possible.

So, do what you can to reply as fast as possible and be engaging. If you don’t, other landlords will likely beat you to it, and you can then lose out on great prospective tenants! Also, master using SpareRoom and other platforms you plan to use for letting your rooms, and create a great tenant matching strategy.

7. Set up systems and processes.

It’s helpful to implement systems and processes into every area of your HMO portfolio and especially property management. This involves writing down each step on how to deliver certain tasks and helps you create structure, ensure standards are being met and keep you compliant.

With so many different laws impacting the HMO industry, legislation and legal obligations are key areas you can apply this to. You can also do this for how you carry out tenant enquiries and viewings, move-ins and move-outs, and rent collection and inspections.

The best time to start implementing this is before you even start managing your first HMO property. If there are any areas you’re worried about when it comes to managing your HMO, think about what could be issues and create Standard Operating Procedures. Later on, you can start to audit this area of your business and see if any changes need to be made.

It’s also about looking at ways you can be more efficient, especially as HMO management takes up so much time and energy. There are even ways you can achieve more while working less, such as by finding tasks and activities you can simplify, automate, eliminate and delegate and batching your processes.

8. Manage maintenance swiftly and efficiently.

Maintenance is another essential part of managing HMOs, so create a maintenance policy so your tenants know what to expect and what resolution timeframes you work within from the beginning of their tenancy.

Not everything is urgent, and there may be certain low-grade, non-urgent jobs you can batch together when possible. On the other hand, urgent and emergency items will of course need to be taken care of quickly!

It’s helpful to get a team of skilled and trusted tradespeople to work with. Work on building relationships in these areas and negotiate labour rates with them. It’s also essential to ask for photographic evidence of any work being carried out, insist on guarantees and avoid paying invoices straightaway to help you manage maintenance costs and potential issues.

9. Get any support you need.

There are numerous ways you can get the support you need when it comes to managing your first HMO property. The ongoing challenges and upcoming changes will make it more difficult to deal with everything on your own. 

However, there are still plenty of opportunities for HMO landlords as long as you have the right support. There are professionals who provide key services that can help you manage your portfolio, including a managing agent (if you’re not going to self manage) or an interior designer.

So, work on building a power team with the right professionals. This will allow you to remain compliant and can even help you boost your service offering. You’ll also be better placed to deal with the upcoming changes expected to hit the industry and allow you to create a more sustainable HMO business overall.

Having a strong power team is essential as it’s impossible to do everything on your own! We have highly recommended HMO community partners to help support you at every stage of your journey from award-winning property management software and digital creators to architects and designers and virtual assistants.

Boosting Your Property Management Strategy

If you’re looking to start and scale your HMO portfolio, boost your knowledge in the industry and get access to lessons, resources and templates for managing your HMOs, become a member of The HMO Roadmap today!

And if you have questions about any part of HMO property management, join us over in our free Facebook Group The HMO Community, which now has more than 10,000 members! It’s a great space for growing, learning and supporting each other in the HMO industry.

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!