Photo by Cosi Living
As we’re now halfway through the year, it’s a good time to assess your HMO portfolio and consider what you should be aware of for the remainder of the year. It’s really important to evaluate the performance of your HMO portfolio and review your business at different points throughout the year, but it’s especially crucial with the ongoing economic challenges we’re facing as landlords!
So, make sure you look at how your HMO portfolio is doing, find out if there are changes you need to make, and understand what you should be aware of for the rest of the year. We’ll start by talking about the importance of assessing your business and tips to help you review your HMO portfolio right now!
The Importance of Assessing Your HMO Portfolio
You need to take the time to assess your HMO portfolio regularly – at least every quarter. And for certain parts of my own property businesses, we even assess things on a monthly basis. Doing this effectively will help you understand how your business is doing and pinpoint areas you may need to improve on or things you need to change.
It will also help you see where you are at with your monthly, quarterly, and yearly goals. This can help you measure your progress and see if you’re meeting your targets or not. Additionally, assessing the performance of your HMO portfolio will help you:
- Stay on top of things happening in your portfolio
- Identify any issues early on
- Make necessary changes before something has a negative effect on your business
What To Be Aware of For the Rest of This Year
The UK economy has caused a number of challenges for property investors, and this will likely be impacting your HMO portfolio. So, it’s crucial to be aware of how these factors are affecting your business right now and what is expected for the rest of the year to ensure you can remain successful!
For starters, inflation, which currently sits at 8.7%, has remained stubbornly high as it hasn’t fallen as quickly as many were previously predicting. Because of this, the Bank of England made the 13th consecutive increase to the base interest rate on 22 June. The base rate now sits at 5.0%, a 15-year high, and the next rate-setting meeting is set for 3 August.
Naturally, the cost of goods, services, and borrowing can affect the overheads across your HMO portfolio, which can then impact your profits. So, it’s key to understand how these are affecting you and if there is anything you can do to improve the success of your properties over the coming months.
While energy costs have dropped from the highs seen across the past year, this is still an area to be aware of, particularly as we inch closer to winter now that the summer solstice has come and gone. There may be energy conscious things you want to invest in for your properties before the cold and damp weather sets in.
On top of that, additional legislation that will impact the private rented sector is on its way, including the Renters Reform Bill that’s currently making its way through Parliament. This is something to keep an eye on and ensure you’re prepared for before these changes take effect. No matter when they become law, make sure you’re ready!
3 Tips for Reviewing Your HMO Portfolio
While there are a number of things you need to be regularly reviewing as a HMO investor, here are some of my top tips to help you simplify assessing your HMO portfolio and ensure you’re focusing on some of the biggest challenges facing the sector right now!
1. Assess All of Your Costs
Firstly, look at all of your overheads for running your HMO portfolio and business and see if there is anything you can minimise or completely cut out. Also, look if there are any changes you could make that could allow you to improve profits.
While costs are going up and up, it’s naturally not the easiest time to scale up. But we all need to be proactively thinking about how we can improve the financial efficiency of our HMO portfolios!
2. Take an In-Depth Look at Your Funding Strategy
Accessing the money you need to buy more HMO properties and undertake refurbishments may become more and more challenging. This is particularly the case as the cost of borrowing is increasing and as it’s becoming more difficult to pull much value out of projects.
So, it’s important to look at how your funding strategy has been during the first half of the year. Figure out if there are areas you can improve on and what you could do to make yourself more profitable at the back end of deals.
You may need to get creative to effectively do this! But really take the time to look at your current performance in this area, where you’d like to be by the end of the year, and what you need to do to make that happen.
3. Improve Your Approach to Finding & Assessing Deals
With the ongoing challenges in the sector, finding HMO deals is something you need to work on every single day, particularly as there are some good deals out there right now. But you’ll likely have to be quick so they don’t get snapped up! If you don’t make this a priority, there’s a good chance you’ll miss out on these opportunities.
And as there are so many economic difficulties impacting the sector and with inflation and costs remaining high, you might need to update your deal analysis too. This will help ensure you are making the most informed decisions on the HMO deals you’re interested in!
It’s important to take the time to look at these things throughout the year to ensure your HMO portfolio is as successful and sustainable as it can be!
If you’d like to learn more about this and really level up your HMO portfolio, sign up for The HMO Roadmap now! And if you’d like to connect with other fellow HMO investors, come join us in our free Facebook Group The HMO Community.
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!