Recent research has shown that during 2010 – 2014, HMOs were the best performing asset class – by a long way.
The analysis by Platinum Property Partners shows that the average Return on Equity from HMOs reached 108% over the four years. The next best investment? A standard buy-to-let property with 77% RoE.
The assets analysed and each respective RoE were:
Overall, each £1000 invested in HMO attracted £310 more than each £1,000 invested in a standard buy-to-let property.
In addition, the average HMO yield was 12.4%, compared with 5% for standard buy-to-lets.
Why do HMOs work so well as an investment?
Ultimately, HMOs meet the needs of everyone involved.
They are strategically converted and refurbished to maximise the number of rentable bedrooms, the size of communal areas and therefore rental potential. Landlords enjoy greater returns.
A growing number of people are looking for high quality, affordable accommodation. HMOs meet this social need, with the cost of renting a room far lower than that of a one bedroom flat. With average rental increases of 11.2% (January 2014 – January 2015, HomeLet Rental Index), many young professionals simply can’t afford to rent a property. The answer? HMOs.
“We’ve experienced a big increase in the demand for rooms within HMOs,” says Martin Roche of HMO Property Sourcing Ltd. “HMOs offer an exciting, proven investment opportunity and the growing demand from potential tenants indicates that returns will increase even more.”
Are you interested in investing in HMOs?
HMO Property Sourcing Ltd offers weekly tours that show you the world of HMOs from sourcing to refurbishing, to managing. Plus, our friendly team is available for an informal chat and to answer any queries. Find out more!