Your Property Network: Book Review September 2014
The Other Half and I have done quite a few things in property, but one of the things we do not have experience of (yet) is a professional House in Multiple Occupation (HMO). If/when that happens, I will be re-reading this book from cover to cover.
In HMO Property Success, Nick takes a business approach to investing in HMO’s. Multi-letting, in most cases, is all about maximising the cash flow potential in a property; for that to work the story must start with the figures. From the financials to the market to the property itself, just about everything you need to know is here. And if it is not, then Nick suggests where to look or ask for further information.
Nick has an entrepreneurial history and spotted the trend for increased demand for shared housing in the mid-2000’s. Since then he has built a portfolio of over 200 properties, though he does say that buying his first few properties back in the days pre-2008 was very easy, probably much more so than it would be to start out nowadays. In the first chapter, he states “In the current economic climate, and at a time when regulation and availability of financing and refinancing is so much tighter, investing in property is a very different thing and, to be truly successful, there’s a great deal of work to be done before you even peer in an estate agent’s window.”
From Concept to Reality
One of the really good things about this book is that it takes the reader from that pre-purchase stage of investing in HMO’s – the why’s, wherefores, self-preparation and insights into what life will be like post-purchase – to ownership and tenancy, including costs of refurbishment and set up, the realities of managing the property and the tenants, and the financial side of monitoring the performance of your investment.
In Chapter 2: The HMO Model, he explains the realities of multi-letting in some detail, including a list of both pros and cons, the things that you as landlord will be responsible for compared with single lets, and an introduction to the Key Performance Indicators (KPI) that will help you identify a potential HMO investment and monitor performance once it is up and running.
Chapter 3: The Financials offers a list of some of the risks – a particularly valuable section – and realities, as well as funding, while Chapter 4: The Legals looks at pre- and post-purchase legal issues, licensing, health and safety and so on, together with some of the administration that goes with compliance.
Another useful element of this book is Nick’s use of Checklists at the end of each chapter, instead of the more common Action Points. A simple technique really, but one that is particularly handy: another reason to keep the book nearby when you are researching and if you go on to purchase.
All in all, this is a very thorough guide to professional HMO’s. Some of the content will be relevant for other types of HMO, in which case you would need to adjust your target market and the figures accordingly. Nick makes the point that the professional HMO strategy is not going to work everywhere; in Chapter 5: Become Your Own Local Expert, he advocates investing within 15-30 minutes’ distance from your home, rather than at a distance, but does reference rural areas where you may need to travel longer. In our corner of the country, the journey would be even longer than the hour that he suggests. From experience, I know that managing properties and tenants more than 30 minutes away is challenging enough with single lets – with an HMO it could be five or six times the hassle, depending on the number of tenants in your property, particularly when you take into account a higher tenant turnover.
Who Is It For?
The people who will benefit most from this book are those who are either considering an HMO strategy or just starting out on the HMO journey. If you have one or two already under your belt, then you might still find it useful in helping you to streamline the business in preparation for expanding your portfolio.
I only really have one gripe, and that is to do with the rather free distribution of exclamation marks. A lot of readers respond quite well to exclamation marks in the text so I am probably being an editorial snob. Either way, it does not matter in the context of the book.
As you can probably tell, despite the miniscule editorial grumbles, I like this book. With so much practical information and how-to’s presented in an easily readable style, it is essential reading for HMO investors. Put it on your reading list.
Or get the audio version …