Are you finding it difficult to find and secure HMO deals? The UK property market is currently moving at an especially quick pace.
With the market moving so fast, it can be challenging to not only find good deals but secure them; however, that doesn’t mean it’s not possible! It may just take a little extra work, and there are specific ways that we can combat this as HMO investors.
In this blog post, we’ll cover what’s happening in the UK property market and tips for how to find and secure the right HMO deals in a hot market.
An Update on the UK Property Market
Properties in the UK are currently selling at double the speed of 2019, and 53% of properties are selling at or over the final advertised asking price, which is the highest recorded percentage Rightmove has ever seen!
In March this year, it was taking an average of 33 days to sell a house, which is 18 days fewer compared to a year ago.
This is happening as there is increasing demand but limited supply in the property market, which has also driven house prices up to record levels. The average listing price on Rightmove has increased by 5.6% over the last three months alone, making the average price £360,101.
Tim Bannister, Director of Property Data at Rightmove, comments: “The strong momentum [for housing] has carried over from last year and, combined with the impetus of the spring moving season, has delivered the quickest selling market we’ve ever seen.
“With three new monthly price records in a row, 2022 has started with price-rise momentum even greater than during the stamp-duty-holiday-fuelled market of last year.”
6 Tips for Finding and Securing Deals in a Fast-Moving Market
With the fast-moving property market, it’s important to understand how you can still find and secure deals even if it’s more challenging. Here are six tips for how HMO investors can put together a deal-finding strategy that’s based on logic – not emotions.
1. Re-Evaluate Your Investment Location
Start by undertaking an in-depth area evaluation for the location you’re investing in. This will help you thoroughly understand exactly what is happening in the local market right now. And it will help you reassess the area as sometimes you need to re-evaluate the location you’re investing in!
Look at recent sales data going back six months, check out what’s presently coming onto the market, and research whether any legislative changes have come into play in the area.
Then, you can compare that to what you’re trying to get out of your HMO deals. Is the location allowing you to do that? If not, then it may be time to alter your strategy and look at a different location or different types of property.
2. Strengthen Your Buying Position
With rising interest rates making borrowing more expensive, it’s becoming even more important to strengthen your buying position. Get yourself in a position where you don’t need to borrow as much from the bank. This will help you get better mortgage deals and be able to proceed quicker, which is especially important in the fast-moving market.
You can also strengthen your buying position by raising private finance and recycling capital. Spend time working on additional ways to access the HMO funding that you need.
3. Ramp up Your Networking
Find ways to improve your networking, whether through online or in-person groups. Tell people what kind of deal you’re looking for. You never know when someone might have a property for sale that fits your requirements.
Focus on finding solutions to increase your network, make a plan of where and how regularly you’re going to network, and ensure you stick with it!
4. Consider Hiring a Sourcing Company
While sourcing companies often get a bad rep, if you do your due diligence and work with the right people, they can help you find fantastic HMO deals. So, think about recruiting a sourcing agency if you’re struggling to find the right property.
This could really capitalise on the process of actually securing a deal, especially if you’re not investing locally. Keep in mind that a few thousand pounds to source a good deal will be worthwhile.
5. Create an Action Plan
Write your deal-finding strategy down to help keep yourself accountable, but most importantly, make sure you actually set aside the time to tackle this process and execute the action plan. Set KPIs that will help you achieve your overarching goal of finding and securing HMO deals.
Also, acknowledge that finding HMO deals is a huge priority. You need to be searching for deals every single day and especially so in a fast-moving market. Otherwise, you’ll likely miss out on the opportunities you’re looking for!
6. Keep Putting in Offers
Remember that an asking price doesn’t mean that that’s the true value of a property. It also doesn’t mean that’s ultimately what a buyer is going to pay to purchase it, so don’t be embarrassed about putting a lower offer in – even if you don’t think it will get accepted.
And don’t get discouraged if your offer doesn’t get accepted. If someone else puts in a higher offer that ends up getting accepted, there’s still a chance that the deal could fall through later on, especially in a market like this.
If you already put an offer in, you’ll likely be at the top of the agent’s list, and they might give you a call to let you know the property is on the market again.
If you’d like support and insights from experienced HMO investors, join us over on The HMO Community Facebook Group.
For additional lessons and resources on how to start, scale, and systemise your HMO business, including helpful information on finding and securing deals, join The HMO Roadmap today!
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!