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Are you looking to step up your HMO business? There are some key areas to think about and improve if you’re wanting to scale your investment portfolio. Here we’ll cover nine important things to focus on to take your HMO investment strategy to the next level! These are all things you can start putting in place today. 

No matter whether you’re a beginner HMO investor or are experienced and want to scale things up, following these methods can help you achieve better results much more quickly and allow you to scale your HMO business right up!

1. Approach issues with a problem-solving mindset.

There are tons of problems that come up in property, and you have to be able to figure these out. In my property development business, I’ve found 80% of it is figuring out problems and putting solutions in place. 

Sometimes you won’t be able to even see the finish line, but you’ve got to have the faith and discipline to keep putting one foot in front of the other! To do that successfully, you need to be able to effectively solve problems and learn how to keep moving forward. 

Tips: Build a good level of knowledge and a network of people around you who can help you find solutions for a range of issues. You’ll also need the right attitude so you can get stuck in and deal with any challenges that come your way.

2. Be creative and innovative.

If you want to take your HMO investment strategy to the next level, you should focus on becoming great at sniffing out deals through a range of creative and innovative solutions that allow you to get into a deal without having lots of cash or capital.

Tips: You could utilise direct-to-vendor marketing campaigns, lease options, land assembly deals, rent-to-rent deals and other ways of taking control of HMOs without purchasing properties. And it’s also helpful to become an expert in raising private finance, which will help you really scale your HMO business!

3. Improve your time management and be more efficient.

Efficiency is an area many people struggle with, and improving at this can help you take your HMO business to the next level. We can often find ourselves going a hundred miles an hour, but finding the time to implement efficient solutions is really key.

Draw on a range of skills, different people, varying products and unique tools to help you become more efficient. Once you do that, you’ll likely find it easier and simpler to apply your resourcefulness and methods of driving efficiency into other areas of your HMO business!

Tips: Think about what systems and processes you can put in place. What can you simplify, automate, delegate and eliminate? This is very important because there’s a natural threshold to the amount of work we can all take on.

4. Find ways to reduce overheads and improve profits.

While inflation is coming down, many costs for HMO investors are higher than they were a few years ago. This can naturally impact our profits, and other areas of the industry have become more and more challenging.

And while there have been positive signs surrounding the economy, we still need to be proactively thinking about how we can improve the financial efficiency of our HMO businesses! There are a number of areas where we can work on reducing overheads and improving profits.

Property maintenance

For starters, we need to all proactively manage maintenance. Many of us are guilty of being reactive and waiting for things to happen before we deal with them… 

However, that can be expensive as the labour costs more if you have to ask a tradesperson to do any work quickly. Or it could also be pricier because something has caused more damage than if you would’ve caught it earlier!

Tips: Work on being more proactive with your maintenance strategy. This includes doing inspections more regularly and thoroughly. Inspections shouldn’t be a quick whirl around the property only to check that the tenants haven’t trashed the place. These should be detailed health checks to ensure that there’s nothing that could become a larger problem.

Customer service

Make sure you think of your tenants as customers. I know they can frustrate us sometimes, but we still need to understand this and provide them with the best possible service. 

So, work on improving your customer service policy. If tenants feel valued, appreciated, listened to, understood and are receiving a great service, they’ll likely stay for longer, improving your profits.

Tips: It doesn’t cost anything extra to provide better customer service! There are simple things you can do like setting better standards, improving your communication policy, being more available for your tenants and making it easier for them to contact you about their problems.

Renewing tenancies

No matter how long the tenancy is for, be proactive with tenancy renewals. Doing this can give you more rental confidence, in addition to the ability to plan. 

You should try to avoid having all of your tenants in a HMO on rolling tenancies. This would mean at any point they could all give you four weeks’ notice to leave. Then, you’d all of a sudden have a number of rooms to fill, and that can cost a lot of money.

Some tenants are of course going to need to leave – that’s just the nature of co-living! But if you have your tenants on fixed-term tenancies and you’re proactive with renewals, this can reduce the chance of a mass exodus happening all at once and impacting your profits.

Tips: Don’t just wait for your tenancies to expire! Talk to your tenants about what they want to do, and then try to get them onto a new tenancy agreement as soon as possible. 

Opportunities and growth

At the same time, you still need to focus on opportunity and growth as this is ultimately the best way to remain more profitable. To do this, you’ll need to really prioritise finding HMO deals and investors, undertaking great refurbishments and adding value to your properties. 

Tips: Start thinking about all of the areas of your HMO business that you can improve and grow. Make sure that no matter what problems you face and what challenges you need to overcome, you still remain focused on growing!

5. Prioritise networking and building good relationships. 

Throughout your HMO investment journey, having good people around you will help you leapfrog issues and to even stand on their shoulders. This has been one of the single most important reasons behind my successes in the HMO sector and property industry as a whole! Along the way, the range of people I’ve worked with have really helped catapult me forwards.

There are a range of professionals that are particularly helpful to build good relationships with, including fellow HMO landlords, private investors, agents, mortgage brokers, architects, builders and other tradespeople. So, find networking events and communities in-person and online to get involved in.

Tips: Make sure you set aside time to network and build relationships. You don’t have to be an expert at this or a social butterfly. I personally don’t like wandering into a room and talking to lots of people that I don’t know, but it’s something we all need to do and ideally get better at as we grow our businesses.

6. Implement practices to avoid distractions.

This sounds like a really simple one on the surface, but so many of us spend way too much time on things that aren’t really doing us any service whatsoever! Social media is a big example. 

If you find yourself seamlessly scrolling on social media for large chunks of time when you should be working on your property portfolio, you really need to ask yourself whether you are cut out to build a HMO business in the first place…

Tips: Be very rigid with your time and avoid any distractions, particularly when you need to work on certain tasks or activities. Turn your phone off or keep it in a different room. Switch off all of your notifications, including your email, which I know can be hard. But avoiding these common distractions can help you get into deep work and tackle your priorities. 

7. Pipeline opportunities and relationships.

Another key way of really stepping up your HMO business is by pipelining relationships with people and potential opportunities. There have been countless property viewings, business relationships or negotiations I’ve had that ended up going nowhere initially…

Your offers will sometimes be rejected. Don’t get frustrated by this – it’s just part of running a property portfolio. But months or sometimes even years down the line, these people could reach out again, and all of a sudden, that opportunity could be back on the table!

So, make sure you’re still putting offers in even if you know they’ll get rejected. And make sure you’re recording how often you’re following up later down the line. In the UK, the reality is a good chunk of sales do fall through…

And if a sale falls through three, four, or five months down the line, everybody will be really frustrated. In those instances, agents will usually go back through the backlog and call whoever they think will likely be able to proceed quickly – instead of putting it back on the market. If they don’t know you’re interested and that you’d be able to proceed quickly, they won’t call you.

But if you are that person and that property is available again, who do you think they’re likely to reach out to first? So, work on building that pipeline. And if you’re putting enough offers in, you’ll find that you build quite a good pipeline over time!

Tips: It can be helpful to put this all in a CRM software or spreadsheet. It doesn’t need to be fancy, but keep notes on what you offered, the last conversation you had with the agent and continue to follow up on anything that you offered on.

8. Step up your financial planning.

Financial planning certainly isn’t the most glamorous side of any HMO business, but it’s an essential part of what we should all be doing. However, so many of us fall short in this area!

You don’t need to be an accountant to get your head around this, but you need to spend some time understanding and setting this part of your business up and then improving it as you grow.

Tips: Start to understand the basics and set financial goals. It’ll be helpful to also budget your income and costs and set up cash flow management and forecasting. You then need to prioritise finance and investment planning and work on risk management and contingency planning.

9. Keep furthering your knowledge.

As HMO investors, we should always be trying to find ways to improve and expand our knowledge. This can help you do more deals, bigger deals and different types of deals in varying locations.

There is so much to know and learn in the HMO sector, and things can also move and change quickly, making it even more challenging! 

Tips: To keep on top of this and stay ahead of the curve, invest in continuously learning and use resources and tools like The HMO Podcast and The HMO Roadmap, which can help you streamline the learning process.

These are nine key steps to help you take your HMO investment strategy to the next level! If you want to really level things up, sign up for The HMO Roadmap, where you can access more than 400 resources and tools that will help you improve your HMO investment strategy.

And if you have any questions about HMO investment or want advice from experienced investors, join us over 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, 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!