Photo by Wellnest Collective

Running a profitable HMO portfolio isn’t just about keeping the rooms occupied and the rent coming in. It’s often the smaller things happening behind the scenes, or more importantly, the things not happening, that end up costing property investors money.

Most experienced property investors know what needs doing, but the problem is finding the time to do it all, particularly when you’re managing several properties, trying to refurb another, juggling trades, dealing with tenants etc.

If you’re newer to property investing, some of these things might not even be on your radar yet. So whether you’re just starting out or looking to grow your portfolio, they’re worth being aware of before they start costing you money.

These are the sorts of things our property VA team at Beam regularly come across when taking on new clients and getting to grips with their portfolios. They’ve either been completely forgotten about, been pushed down the priority list or left because nobody has had the time or energy to face dealing with them.

And whilst some tasks can wait, others have a habit of becoming expensive when they’re left too long.

1. The council tax court summons that took you by surprise

A tenant moves out, another moves in, and somewhere along the way nobody updates the council or checks that the account is correct. Months later, there’s an unexpected bill, a dispute over liability or even a court summons.

Council tax can be particularly confusing with HMOs, where landlords are generally responsible for the bill for professionals but not for student households. Whatever the arrangement, incorrect records, poor record-keeping, missed correspondence and unresolved accounts can create a headache that takes HOURS to untangle.

Keeping track of occupancy changes, checking bills and dealing with council queries might not be anyone’s favourite job, but somebody needs to do it.

2. Utility bills that just keep creeping up

When you’re running bills-inclusive HMOs, energy costs can take a sizeable chunk out of your rental income. Yet how many landlords regularly check whether they’re on the best tariff, compare monthly consumption or investigate an unusually high bill?

A heating system running unnecessarily, a leaking toilet or an energy contract that’s quietly rolled onto an expensive rate can eat into profits month after month.

Even broadband contracts are worth checking. It’s surprisingly easy to continue paying an inflated out-of-contract rate simply because nobody has got around to making a phone call.

3. Insurance renewals and other recurring expenses

Insurance is another classic example. The renewal arrives, the premium has increased, but you’re busy and it’s easier to let it renew than spend time comparing quotes.

The same goes for cleaning contracts, gardeners and other recurring expenses. Are you still getting value for money? Has anyone checked whether the work you’re being invoiced for has actually been completed or is up to standard? Are you paying for services you no longer need?

Individually, these might not seem like significant amounts, but across a portfolio, they soon add up.

4. The inventory you wish you’d bothered with

A tenant moves out leaving damage to the property. You know it wasn’t there when they moved in, but without a proper inventory with detailed photographs and a checkout report – and someone willing to scrutinise them – proving it is another matter.

When the tenant disputes the deposit deduction, you’re left with very little evidence to support your claim.

It’s one of those administrative jobs that can feel unnecessary and expensive when everything is going smoothly, right up until the moment you need it.

5. Compliance deadlines don’t remind themselves

HMO landlords have a particularly long list of responsibilities. Gas safety, electrical inspections, HMO licensing, fire safety checks, PAT, maintenance records and licence conditions all need keeping on top of.

It’s not always the inspection itself that’s forgotten, sometimes the work has been completed but the paperwork hasn’t been filed, remedial work hasn’t been followed up or a renewal deadline has slipped through the cracks.

And with potential penalties, safety risks, enforcement action and even rent repayment orders in some circumstances, poor administration can become a very expensive problem.

6. What about the money you’re not collecting?

It’s not just unnecessary expenditure that affects profitability. There’s also the income landlords miss out on.

When were the rents last reviewed? Are all the rooms achieving a reasonable market rent? Could an empty room have been advertised sooner? Has someone followed up that outstanding rent payment?

An HMO with six rooms doesn’t need to lose much income per room before the annual total becomes significant.

So who’s keeping an eye on all of this?

One of the things our virtual property managers often find when taking over the administration of a portfolio is that there are quite a few small but important jobs sitting on the back burner. None is particularly complicated in isolation, but collectively they can make a real difference to the bottom line.

The difficulty is that these tasks rarely feel urgent until something goes wrong. There’s always a more pressing issue to deal with, and spending an afternoon chasing a utility supplier, checking invoices or comparing insurance quotes isn’t necessarily the best use of a property investor’s time.

That’s where having someone experienced working behind the scenes really makes a difference. Someone who knows what to look for, keeps track of deadlines, checks the bills, follows up with contractors and spots potential problems or opportunities and handles them without having to be prompted at every turn.

Protecting your property profits isn’t about making another investment. It’s about looking after the ones you’ve already made and seeing where savings can be made.

If you could do with an extra pair of experienced hands keeping on top of your property portfolio, get in touch with us here. We’re always happy to have a chat about where we could help.

About the Author:

Jane Scroggs and Taran Hughes are the founders of Beam Virtual Property Support, in partnership with The HMO Roadmap. Their team of virtual assistants handles all aspects of lettings, compliance, credit control and property maintenance, always focused on streamlining your operations. Learn more about Taran and Jane here.