Photo by Parable Property

If you’re looking to scale your HMO business quickly as a beginner in the industry, you should go beyond just getting the HMO basics right! To grow your business quickly and sustainably, you need to take the time to understand and prioritise additional strategies that will help you boost your deals and portfolio as a whole. 

Follow these seven strategies and pieces of advice to really take your property portfolio to the next level and scale up your HMO business!

Perfect Your Deals

If your goal is to scale up your HMO business, perfecting your deals is a great place to start. This is all about getting the right ingredients to bake the perfect HMO deal every single time. If you can get this balance right, you’ll make almost every single one of your HMO deals work effectively.

In order to do that, every time you look at a deal, you should think about the location, spec and room rental price. This will help you improve your deal prospects and mitigate almost all of the worst-case outcomes.

If you have a little more of one ingredient, you can afford to have a little less of another. And if you don’t have much of one, you’ll need to have a bit more of another. There is flexibility with this, but it’s all about making sure you have a desirable product for your target tenants!

In an ideal world, we’d buy a property in the best location, create a top-of-the-line spec and charge the highest possible rent every time. But finding those opportunities is extremely tough… And the economics and rental confidence of buying in a secondary or tertiary location can be really good. So, take the time to figure out how to get the balance right! 

To get started finding, sourcing and acquiring great HMO deals, work on finding motivated sellers, building relationships with agents and pipelining deals. Look for big boxy floor plans and properties where there are key amenities nearby.

Don’t be afraid to buy ugly properties as well. These sorts of properties can put a lot of people off, but there can be loads of potential if it’s in a good location and has a good floor plan. This often means the prices are often better, so these deals can turn out to be the most profitable!

Maximise Your Time & Efforts on Social Media

It’s easy to spend countless hours on social media without getting any real results. While using social media effectively can help you grow your HMO business, you can’t just scroll endlessly to achieve your goals!

Using social media the right way can allow you to expand your network, take advantage of experience-led learning, build your power team of industry experts, curate and showcase your brand, raise private finance and find opportunities to do deals and JVs.

There are some effective solutions that can help you maximise your time, efforts and resources on social media to achieve the best possible results and maximise your time.

Start by planning and documenting your social media strategy. Like anything in business, you need to have a clear strategy and then execute it successfully. Set clear objectives and brainstorm the type of content you could create. 

Then, decide when and where you’ll post content. Don’t get on every social media channel and try to post on all of them. Inevitably it’ll be too much. Personally, I’m predominately active on Facebook and Instagram, and I post some on LinkedIn and a couple other channels. I’ve personally found that’s where I’ve had the best results.

Also, think about how you can repurpose content across different channels. Be really intentional about what you’re doing and sharing and be realistic about how much time you can devote to this, what your skill set is more geared towards and what you’re more comfortable doing and sharing. 

Make sure you also take the time to measure your results and assess your business’s performance on social media at least weekly but then monthly and annually too. Figure out what you could do to improve your strategy as this will help you leverage social media as best as you possibly can!

 

Engineer Yourself More Time

We all have the same 24 hours, but lack of time is one of the biggest roadblocks in any business. And the more time you have the more you can do! So, if you can create more time to work on the important things in your HMO business, you can start to produce more results.

This can help you focus on the tasks and activities that will drive your business forward, including income-generating tasks, formulating strategies, developing relationships and viewing properties.

If you really want to scale your HMO business quickly, you’ll need to accept that for a period of time you will likely be extremely busy. You’ll probably also have to make some sacrifices along the way, but you’ll need to decide what sacrifices you’re going to make.

Start by thinking about how you could create more time. This could be through a number of avenues, such as:

• Reducing your other work hours and personal obligations
• Taking a sabbatical from your job
• Switching to a contracting role
• Outsourcing certain activities and tasks
• Hiring staff

Get More Finance in Place

Getting more finance in place is key to being able to grow your HMO business. So, here are the main areas to work on when it comes to funding your property portfolio!

Mortgages

Don’t underestimate the value of mortgages… You can often put down a 25% deposit, and you can leverage that to buy a property with substantially more value.

So, to effectively access HMO mortgages, get yourself into a super lendable position. Make sure you understand what banks like and don’t like, and get your credit score, deal analysis and entire deal prospects as strong as possible.

Basically, you need to make lenders feel comfortable and confident in lending money to you. When you’re able to achieve that, they’ll likely lend to you for cheaper and longer! Additionally, if you can get yourself in a position where you won’t need to borrow as much, you’ll get a much better deal and be able to proceed quicker.

It’s helpful to understand what’s going on in the mortgage market, so keep up with what’s happening with interest rates. Additionally, master the ability of applying for HMO mortgages so you can get the most out of this kind of funding. It’s recommended to work with an experienced HMO mortgage broker as they can be your eyes and ears on the ground!

Private finance

Raising private finance is an essential strategy for investors who want to scale their HMO businesses quickly. As HMO investment is so capital intensive, we’re almost always going to run into challenges with not having enough cash!

There are different ways to utilise private finance, such as fixed-rate lending and joint ventures. Take the time to understand the varying kinds of finance and structure you can use. Using different types of private finance may be the best way to really scale your HMO business up.

To effectively get started with private finance, set fundraising objectives and work on building your credibility, authority and branding. Additionally, there are compliance pieces you need to understand, and this includes regulations set by the Financial Conduct Authority.

Recycle capital

Another important area of funding your HMO is recycling capital. Start considering how you can recycle capital from your HMO deals and properties. Recycling capital is absolutely key for a business that needs to regenerate cash. This should be a priority as it can support private finance deal structuring so you can then pay investors back!

There are three core considerations when it comes to recycling capital. First of all, find projects where you can genuinely add value, such as adding square footage by adding an extension or converting a garage or loft. You can also add aesthetic value as well. Kitchens and bathrooms are usually where you can do this. 

Another essential consideration is that property values tend to go up over time in the UK. While you shouldn’t rely solely on capital appreciation with your portfolio, this can provide opportunities to extract value, recycle capital and scale your HMO business over time.

Thirdly, depending on the number of rooms in your HMOs and the rent rolls those rooms are generating, it’s possible to get a commercial valuation. If you then refinance off the back of that, you may find you’re able to recycle more capital, which you can then roll forwards into your next HMO deal.

Adopt an Entrepreneurial Mindset

An entrepreneurial mindset can help you squeeze the juice out of every single deal. To do this, you need to be willing to embrace risk taking. But this doesn’t mean you should be cavalier towards risk… You should still be looking for ways to reduce and mitigate risks as much as possible.

Another way you can adopt an entrepreneurial mindset is by approaching challenges with a problem-solving mindset. Be adaptable and remain flexible. And sometimes you’ll need to get creative!

To become a property entrepreneur, you need to get good at sniffing out deals through innovative and creative solutions that will allow you to get into deals with little to no capital. To do this, you can embrace direct-to-vendor marketing campaigns, lease options, land assembly deals and rent-to-rent deals.

Have a Long-Term View

When you’re building a HMO business, you need to be thinking about, prioritising and building a framework around your long-term view. Every property you purchase and every decision you make needs to be conducive to the lifestyle you ultimately want to build. 

If you are short-sighted with your property business and the decisions you have to make along the way, none of it will work! So, focus on having a long-term view with every decision that you make.

To effectively do that, take the time to really understand why you’re investing in HMOs and be clear on what your long-term goals are. What do you want to achieve over a 10-year period? What do you want your business and lifestyle to look like and where do you want to be?

Create a vision board and put it in front of you each day as a constant reminder. This can help you to disregard any other opportunities that come your way and could pull you off your top priorities. And when you’re facing challenging decisions or feeling uncertain, ask yourself if it will serve you in 10 years’ time.

Reinvest Into Your HMO Business

Don’t only reinvest your profits into your next property or paying yourself a wage, make sure you reinvest into your actual HMO business as well. This can be done by investing into systems, processes and staff members.

While we want to build and scale our HMO portfolios and generate more cash flow, you need to invest in these areas to be able to grow. This will help you continue to stride towards building up a bigger business as at some point you won’t be able to do it all yourself!

Admin staff can be particularly helpful to grow beyond the first couple of years. They can help you manage your properties and deal with administrative work. While hiring staff isn’t necessarily immediately income-generating, it will allow you to start scaling your HMO business up.

There are a number of strategies that can help you scale up your HMO business! If you have any questions about how to do this, join us over in The HMO Community, our free Facebook Group.

And to start, scale and systemise your HMO business, sign up for The HMO Roadmap! There are lessons, resources and case studies to help you take your investment strategy to the next level, in addition to templates and tools you can use in your own business.

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!