Building a HMO business can be challenging, and I was definitely overwhelmed when I first started in 2009.

However, that didn’t stop me from creating a system to help me scale my HMO business and make sure that it’s sustainable. By learning from my experiences and finetuning my processes, I have come to rely on my ‘F System’.

This system that I’ve created has just five steps. Each step is an important concept that you can keep coming back to focus on building and growing your HMO portfolio.

The five Fs in my system are Find, Fund, Fix, Fill, and Flow. By understanding the principles of the ‘F System’, you will be able to compartmentalise the steps you need to take to make sure your HMO business is successful. Read more here or listen to the full episode on The HMO Podcast!

 

Find

What exactly are you trying to find?

To answer this, you must first pinpoint your long-term objectives to ensure that you will be investing in the correct type of HMOs. Your investment should fit and work towards what your end goal is, and this will also make sure that you won’t be derailed along the way.

You should know why you want to invest in a specific type of HMO (be it student HMOs, professional HMOs, low-income HMOs) to be able to find the specific type of property you will be building your business around.
Once you have decided on what you are trying to achieve, it will be easier to find the right properties to invest in. The size and the exact location will also play a role here because they very much influence your overall strategy too, so making sure the decisions you make on these fit with your long-term objectives is also very important.

Fund

Funding is everything. It is the lifeline of any HMO business because of how capital intensive this type of investment is. To be able to plan and consistently have funding in place for your projects, you must be able to forecast your HMO business. Knowing how much capital you need at the beginning up to the next few years will enable you to consider all of the components needed to get your funding in place!

This is also where financial management comes into play. By managing and accounting for your money well, you will be able to plan how you will tackle the question of raising finance.

Whether your funding will be coming from investors, be recycled from projects, is borrowed from the high street or a combination of all of these, you need to have a foundation of solid planning and good financial management.

Simply setting aside time to keep track of finances and strategise your fundraising objectives will help you achieve your long-term goal of building your HMO business.

Fix

The third point in my ‘F System’ is Fix. This principle is all about preparing and ‘fixing properties up’ to be used as HMOs. However, it’s not just the physical labour involved in fixing a property, there are also legal bits and pieces we’re required to know and adhere to before refurbishing.

As with building a HMO business, the Fix step also needs good systems and processes. You must be able to schedule and budget before and during your refurb. You also need to track its progress diligently.
The Fix step may be time-consuming, but it is vital in making your HMO property the best it can be. You can reduce your risk of losing money by avoiding planning this at the last minute.

Fill

The Fill step is where the money can start coming in. Once you have your HMO fixed and looking beautiful, you need to work on filling the rooms with great tenants.

You need to know when, where, and how to advertise your HMOs to make sure you have the best type of tenants. The time you post your listing and the platform you choose to post your listing on are important considerations. The way you present your HMO in your adverts will also help you fill your rooms.

Constant reviewing and tweaking of your adverts will make sure that they’re as good as they possibly can be. Simply having the best HMO isn’t enough anymore!

Figuring out a system to Fill your properties and rooms quickly and efficiently is vital to the success of your business. You can detail and create your own system to vet tenants, filter out the rotten eggs and get viewings booked quickly! If you can repeat this consistently, you’ll ensure you have good occupancy levels at all times!

Flow

The last principle in my ‘F System’ is Flow. This is all about the management of your HMO business.

Once everything is in place, don’t get lost in simply managing the property and its tenants. You need to make sure you are still working ON your business and not just IN your business!

The problems you might encounter can be resolved by having systems and processes in place and by automating and delegating, but you need to set aside time to work on that. Responsibilities and accountabilities need to be set out, and roles for yourself and staff members need to be in place.

Understanding your business and continuously working on it will help you reach your long-term objectives.

The five steps in my system are just an overview of what you need to do to build a successful HMO. My ‘F System’ will help you make your business sustainable so you can leave it to run for months at a time. In the end, that’s what we want to achieve in our HMO property business.

While Find, Fund, Fix, Fill, and Flow are the principles you can rely on as you venture into building your HMO business, you can get a more detailed guide through The HMO Roadmap which will help you scale and systemise with the help of downloadable resources, worksheets, checklists, and hundreds of hours of content for you to study and learn from.

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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 the host of The HMO Podcast! Follow Andy on Instagram!