Photo by Innova Property

I want to share what I’ve learned from the best in our industry on how to build successful HMO portfolios. This was taken from a presentation I delivered at the HMO Awards last year about the five most important lessons I’ve learned from the top investors in the HMO market.

There was a lot I looked back on from my own experience over the past 15 years and all of the great advice I’ve taken from successful investors. I really had to work hard to whittle this down to five things that are the most important to do if you want to get better results much more quickly!

All of these things can be implemented into your own business right now. These have provided better results than anything else in my own HMO portfolio. So, if your goal is to get to 10 HMOs or perhaps earn that elusive £10k per month, then read below or listen to the full episode on The HMO Podcast!

1. Be prepared to work incredibly hard and sacrifice a lot.

The cold, hard truth is that the process of building financial freedom and freedom of time through a HMO portfolio is tough. The only way I’ve seen this done successfully is by working incredibly hard and making lots of sacrifices.

You’re also going to have to work really smart. And if you’re not prepared for this, you’ll hold yourself back. So, you need to decide if you’re prepared to make these kinds of sacrifices for a 12, 24, or 36-month period to allow you to get to where you want.

Successful HMO investors don’t just saunter in and happen upon 10 HMOs. They had to work really hard, give up a huge amount, and put other things down, so they could prioritise their HMO portfolio and commit to it.

And the faster you want to move, the more you’re going to have to give up and the harder you’re going to have to work. The good news is that property is an incredible asset class and you can achieve some incredible things in a fairly short space of time!

2. Have an appetite for risk. 

To be successful, grow quickly, and beat the competition in securing deals, you need to be able to take risks and have an appetite for this. Sometimes you just don’t know the answer to everything, and you’ll have to trust the maths and your research. Until you start running and operating HMOs for longer, you won’t really know how it’ll perform.

For me, property investment has proven to be a fairly safe bet, and it’s been a really good performing asset class over the past 200 years. There are peaks and troughs, but building a HMO business comes with a significant number of challenges and concerns. And it’s your job as an investor to be able to overcome these! 

Good HMO deals aren’t going to fall onto your lap. Some of the most common risks are often around financing, location, and securing planning permission. But taking calculated, manageable risks is a part of why the best in our industry are successful in the first place. 

So, make sure you’re able to accept a certain level of risk. If you don’t, other investors will get deals before you. They’ll find ways to be more creative, push the value, get more out of the deal at the back end, which lets them pay a little more for it in the first place. 

3. Prioritise your access to finance. 

It’s so important to continuously have a supply of funding. You need to prioritise whatever actions and activities that will help ensure the funding tap is on. The most successful in our industry prioritise access to finance pretty much above everything else!

There are lots of solutions to create and recycle finance. So, if you’ve been thinking that you can only do so much because you only have so much capital in place but your goals are bigger, you need to really focus on this. 

The most experienced in our industry always have finance in place, are able to move finance around and swap it, and have a cushion if things don’t quite go to plan. It’s important to have not only a plan A but a plan B when it comes to this too.

This is the real difference I see between people who are really experienced and successful and those who are less experienced and not getting the results they want. Buying and developing property is not conducive to low capital, so without a clear plan and a continuous supply of funding, it will be very difficult to grow a HMO business! 

4. Understand that you can’t do this alone. 

The more people that you know that can help you, the easier and quicker it will be to secure great results in your HMO portfolio. Having the right people on your side could also save you a lot of money and heartache and make the whole experience more enjoyable.

There are so many moving parts when it comes to HMO property investment, and the best and most successful in our industry really understand and embrace that it’s the people they work with that make it all possible! With newer investors, I often see people doing too much and trying to master too many areas. 

There are a number of relationships that can be the difference in making your HMO portfolio successful or not. This includes sales agents as they will make it easier to find and secure deals. Having mutual relationships with investors can also really help. They may find a deal that doesn’t work for them but could work for you and vice versa.

Mortgage brokers are also super important. Having a good HMO broker on your side can be the difference between getting a deal through, securing a better mortgage, or having to put up a smaller deposit.

Architects, planning consultants, and mentors are also all able to really help. Of course, there’s a cost to working with these people and rightly so. But the amount of money and time they could save you and the mistakes they can help you avoid making could be priceless!

5. Play the long game. 

If you invest for the long game, you’ll get much better results. Time in the market is your greatest ally. I’ve bought a number of HMO properties, and cash flow has always been my top priority. But I’ve actually earned more from capital appreciation over the past 15 years. 

When I started buying, it was at the bottom of the market in the last house price crash. I had to accept that there was a certain amount of risk, but if you invest for the long term and you’re sensible with your lending, it doesn’t really matter in the end whether you buy at the top or bottom of the market. 

I’m not saying that you can disregard the short-term. You still need to make that work, but if you focus on getting results over the long term, you’ll find that you’ll ultimately achieve your objective much more quickly!

Additionally, the best in our industry also build portfolios and businesses that suit them over the long term. When it comes to your own personal objectives, think about where you want to have your portfolio, where you really want to end up and live, and how you want your life and time to look like.

These are the five most important things that I’ve learned from some of the very best in our industry and from my own experience over the last 15 years! These can help you build a bigger portfolio much more quickly, so start implementing these into your HMO business today!

If you’d like to discuss this further, join our 7,000+ members along with myself in our free Facebook Group The HMO Community. And to really level things up in your HMO portfolio, signup for The HMO Roadmap!

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 and Smart Property, a specialist HMO property investment and management company. 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!