Five Rent-To-HMO Tips & Tricks

Are you looking to get into Rent-to-HMO?

Discover my top five tips and tricks that I have discovered along the way…

I love Rent-to-HMO, and in this episode, I'm going to break down my top tips and tricks that I have learnt along the way to building a seven-figure Rent-to-Rent business. 

Let's get straight into it:

Number one - Self-manage

I always recommend managing the properties yourself, and the main reason for this is that you want to keep the cream. If you outsource the management, it's going to cut into your cash flow.  

For example, if you outsource the management, the agent is likely to be looking for 10% + VAT. So with a £2,000 gross rent, I would be paying £220 before I get started if I'm looking to cashflow £600-700 on this deal that would take me down to £400-500. That makes the deal tight because I would be operating in losses if I had one empty room. 

If you don't want to deal with tenants, then the reality is that you may be in the wrong business, and Rent-to-Rent is probably not for you. 

My focus with Rent-to-Rent is to build the funds to invest into my portfolio, so my mindset is that you need to work with Rent-to-Rent to develop passive income from your portfolio later. 

Number two - target existing HMO's. 

Existing HMO's are set up and ready to go. They should have their license, be compliant. Have all of their health and safety because some HMO's are not run correctly. 

*Disclaimer - make sure you get all the documentation to reinforce the compliance.

Number three - Student HMO's

You can target student HMO's that are empty. I love when September comes and properties are vacant because I know the landlord will most likely be motivated and open to a company let. They don't want a year of no cash flow, and if it's their second year, they will be desperate and in need of help. 

Listen to the rest of this weeks episode to discover my final two tips & tricks for Rent-to-HMO's...

Podcast Transcript↓

[00:00:00] So you want to do hate Shamone on this video. I'm going to give you five tips and tricks that you need to know. Simon here, I've done countless rent to rent deals. I love rent Haitia Moe. And on this video, I'm going to break down five tips and tricks. I've learned along the way to a seven figure rent to rent business.

[00:00:19] Let's get into it. Number one, you're going to need to self manage your rent to. The main reason for this is you want to keep the cream and if you outsource the management, it's going to really crop your cashflow down. So to give you an example of what I'm saying on an average MIMO in my portfolio, we might do 2000 pounds revenue.

[00:00:44] Now, if I got a manager, they would take two. Lb 10% plus VAT from the top. So I'd be giving them 220 pounds before I got started. Now, if I'm cashflow in say 600 or 700 pounds on this deal, that then takes me down to 500, maybe 400 pounds. That gets a bit tight because if I have one room empty and then losing money.

[00:01:09] So top, top tip, manage your own rent to HMO's. And I know what you might be thinking. I want to be. I don't want to manage it. I don't want to deal with tenants. Well, if that's you, you're in the wrong business. Turn this video off right now, rent to rent is not for you. Now, the key thing you need to know is you got to earn the right to passive income and rent to rent is a Rite of passage to that passive income.

[00:01:35] So personally, my mindset is I'm going to work. I don't mind working. It don't have to be passive right now because I'm focused on creating the cash. That will reinvest into my own portfolio and that can be passive later. Number two, target existing hatred. Y because they're already set and ready to go.

[00:01:57] They should have their license. They should have all their compliance. They should have all their health and safety. And I say should, because some HMO's aren't ran correctly. So disclaimer, make sure that you get all the documentation to reinforce that however, It's a great way to get into rent, to HMO because they'll have all those bits and bobs, Hey, they should even have furniture because they're already.

[00:02:26] They're probably going to have some shoddy matches, you know, them old, tired mattresses that we love to see. Not, I actually had a situation last week where somebody was renovating their rent to hate. And they said, oh, I think I'm going to be able to keep the mattresses. I said, hell no. And she said, why? I said, well, would you sleep in him?

[00:02:44] She said, no. I said, well, there you go. But at least you've got a good foundation to start from. So target existing patients. Ready to go. You can move quickly, save money. Number three, you can target student hate shomos that are empty. And I love it when September comes and properties are empty because I know the landlord's going to be open to a company lead.

[00:03:07] They're going to be like, oh no, I don't want to know the year of no cashflow. And if it's their second year, they're definitely going to be desperate and in need of help. These are great properties to target. Rent to hate Shemot and they're actually great properties that you can potentially do lease options for and buy.

[00:03:25] Eventually where I do that is I call up the agent. I look for properties that seem like their student property is still on the market in October. And I just say, Hey, if you want any student prefers. Where the landlord will consider a long-term company let, and I've got tens of deals like this, and I've seen so many other people get deals like this.

[00:03:45] So go ahead and do it given you all these bombs. If you're finding this useful smash, the subscribe button right now for weekly content, number four, and it's controversial. I know, I know it's controversial. I'd probably recommend doing this only if your client is a more esteemed professional type, um, rather than charging security deposits.

[00:04:09] Once again, disclaimer, it's just my opinion or it's just a trick. I'm not saying you should do it. You could potentially do first and last months rent instead of. And what that means is if your rent's 500 pounds per month, and you've got five tenants, instead of you getting two and a half thousand pounds, when they move in, you actually get five K crazy.

[00:04:34] Right? This is a really cool trick that you can use to supercharge the cashflow and to break even quickly so that you're out of the deal and into the next one. All I would say is if you do do this, make sure. Make sure that you've got the right insurances and the tenants have got the right insurances to offset any damage.

[00:04:55] You've got, that's a good hack. Trust me. I never forget when I first started and I had three K and I got halfway through my first rent to rent refurb, I was like, damn, I need some more money. So I managed to borrow another three K from a mate I six K, and then essentially my money was wiped out. But then I secured four tenants, two grand got four grand.

[00:05:20] I paid my mate bat. I had a grand and then I started doing 800 pound a month and the rest is history. So it's a great hap try last but not least observe the masses and do the opposite. Try and avoid hate Chimo row. You know, if you could see there's tens of hate shomos everywhere, then try and go for a slightly different.

[00:05:43] Because then you're going to stand out from the crowd and it's not going to be as competitive. The, I personally like to go for areas where there's not a lot of HMO's because there's less competition. And I personally like to go for areas where normal traditional investors buying properties would be like, nah, I'm not investing in it.

[00:06:03] It's too expensive because if they can't make the returns. But I can, cause I'm not buying the property, then I'm filling a huge niche. And that is a massive, massive hack. I probably shouldn't be telling you that, but Hey, here I am rent to hate. Shema is my bread and butter. I've done tons of these. And the great thing about them is once you get the tenants in it's recurrent.

[00:06:26] Might not be a thousand percent passive, but if you're getting 5, 10, 15, 20 K a month from rent to HMO's, it's such a great foundation for you to build upon. You can smash it. And I remember when I hit 10 K on that. It was just a game changer because every single month I was essentially able to do one or two more deals and then it compounded and compounded and compounded.

[00:06:52] And I think our biggest cashflow in month now is like 22 K from the HMO's alone. And I split them between student HMO's and professional HMO's. So I've diversified and D leveraged my risk. So yeah, you could have a hatred. Which is students, seven students move in once a year. They stay in the whole property.

[00:07:16] They pay you every month. You don't pay council tax, or you could have a professional house where you rent it by room by room basis. You might have a couple of voids, but when you've got both of these working together, The odd room empty doesn't matter. And you really start to de-leverage your risk. And that's why I love it.

[00:07:36] But yeah, go out there. Get yourself some rent to hate streamers. Get yourself some tenants. May I love some of my tenants. I got certain. They've been with me for 18 months, they've gone, you know, moved in with a partner or whatever. It's not worth. Tyler moved back in with me. Um, so keep your tenants happy and trust me, rent.

[00:07:53] HMO can be an amazing strategy. Make sure you get it in your portfolio. That's it for me. If you've enjoyed this, if you've found value, I'm trying to grow this channel helped me out. Hit the subscribe button comment below with any. And I'll see you in that.

[00:08:20] Thanks for listening. For more information, check out Simon Smith, online.com. See you next time.