Given the target market for HMOs, location is absolutely key! If your target market is young professionals, you don’t want to buy a property in the middle of a student area. If your target market is students, you don’t want somewhere miles out of town in sleepy suburbs.
Why is it so important?
Location impacts so much when it comes to investing in HMOs. It can affect occupancy, profitability, competition and ultimately, the success of the investment.
Due diligence
When choosing your investment area, you must become an expert on your chosen location. Speak to the postman about the area, nip into the local shops and ask questions, take a look at the local news websites and what is happening in the area. If you’re investing remotely and don’t have time to keep nipping back and forth, check back next week for our tips on desktop due diligence. But don’t get too blinkered. One of the main factors of being successful in property is having the skills to change and adapt based on market conditions and circumstances.
What makes an area a good investment area?
Again, start off with your target market and work back from there. Check out websites like Spare Room to see what else is on the rental market. Keep an eye on how quickly things get snapped up, what kind of prices they’re on for and what standard the accommodation is. Is there an abundance of suitable properties? As a very basic rule, we never consider anything less than 100sqm. This is our sweet spot for knowing that we can fit the standard of accommodation we provide, and it still stack healthily. But property styles and sizes vary from area to area. Are you looking for 5, 6, 7, 8 bed HMOs? Calculate what your minimum requirement is for your strategy and make sure your chosen area has enough for you to go at. Rightmove sold prices are great for seeing what has previously been on the market in the area. Local amenities At risk of sounding like a broken record, consider your target market and what amenities they might be drawn towards. Is it vibrant night life, is it leisure facilities such as gyms, cinemas or shopping centres. Maybe there’s a local hospital or large distribution centre nearby. All of these factors attract HMO residents and can drive demand considerably.
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