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Always stay in your preferred area

When building your HMO portfolio, HMO management company or even your R2R portfolio, all property gurus always say that location is the most important criteria, and I can’t emphasise enough how true it really is.

You can pretty much change anything within the property (as long as you do it in line with planning permissions), however you can never change the location of your property. Well, unless you buy an HMO on wheels 🙂

Photo by Janis Oppliger

I would even say that sticking to your preferred postcode is the number one best thing you can do. If it’s E16 area, stick to E16 as much as you can. Ideally, acquire all properties in E16. If it’s NW6 area, then stick to NW6 as much as you can. Having each property within 5 – 15 min walk from each other is going to save you lots and lots of money in future.
You might grow your portfolio a bit slower as you will have to say no to some properties outside your area, but in the long run this will save your business.

Here are a few reasons why sticking to one area (15 min walking distance) is the best thing for your business: 

1. Whenever you will have rooms available for rent, you will be able to show them all to every lead at the same time.
Potential tenants are always open to seeing multiple options if it’s within 5-15 min walking distance. This will help you rent your rooms much faster and will save you lots and lots of money in room marketing costs.

Photo by Bruno Martins

2. Maintenance issues resolved quicker and more effectively, leading to great customer experience for your tenants.

If you a have a broken toilet seat in one property, no boiler pressure in another, dripping tap and broken kitchen cupboard hinges in another, then all this could be easily resolved in one day by one trusted engineer. Your engineer invoices will be much lower.

3. It will be easier and faster to build a trusted power team of engineers and trades people for all necessary departments – plumbing, carpentry, electrics etc. And it will naturally lead to creating sustainable, trustworthy, long term work relationships with these contacts. 
However make sure to always do your quality control as it’s just natural for one engineer to get too comfortable with the same client, and the quality of work might go down with time if no quality checks are implemented.

Photo by ThisisEngineering RAEng

4. You will get known in this particular area as a great landlord and will naturally attract more tenants and new properties. As long as you provide great quality accommodation, great customer experience, and as long as all your HMO properties are in line with the latest regulations, then soon enough you will get noticed in your community and even by your local council.

5. All these small details will add up quickly, and in the long term you will save lots and lots (and lots!!) of money comparing to if your properties were spread out across large areas of town. If you have a 20 property portfolio, just property inspection visits alone will save you a lot of money if you stick to one area.

6. You will save time. Lots of your valuable time.

Photo by Aron Visuals

Trust me from my mistakes – just one or two properties a bit outside your main focus area will cause you such a headache. It will need a different plumber, different boiler engineer, different handyman… And every time you need to visit the property yourself for any reason, you will try to delay it, things will start accumulating and your service quality will be greatly affected.

Photo by Alev Takil

So stay within your area as much as you can and don’t be tempted to take on that one large 15 bedroom property on the completely opposite side of London. 

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Where are you going?

Have you ever left your home without deciding on where you are going?

Photo by vikram sundaramoorthy

It might sound like a silly question, but it’s actually a really important one. I truly believe that this approach applies to pretty much anything we do in life.

  • Have you ever started something without having a vision on how you would like the end result to look?
  •  Would you ever decide on writing a book without first identifying a particular vision for it or kind of message you want to convey to your readers?
  • Would you ever plan your week without first identifying you main goals or what would you like to accomplish, such as a new business idea?

Same approach should apply to your HMO management strategy.

How would you like your HMO business to look like in a few months or a few years time?

When you have your long term vision in mind it’s much easier to make every day decisions, even the big important ones.

Photo by Estée Janssens

I would like to share an example from my experience and the time I didn’t consider my long term goal in a decision making process. (This is why it’s important to always write down your long term goals and overall vision for yourself or the business and read through to yourself every single day).

When we started our HMO management business, we decided on a 6 month AST agreements for our tenants, same as the majority of other people that I know.

When a tenancy expires, it automatically becomes a monthly rolling agreement.

We decided to keep the tenancy agreements monthly rolling and not implement the work flow in renewing the tenancy agreements every 6 to 12 months as it was less hassle and when circumstances change we can serve S21 notice much easier. However as I begun to manage more than 100 tenancies, I have realized that this was not the best long term decision for us. This meant that our tenants can give their 6 week notice any time and this in turn means that it’s much harder to predict and plan your lettings workflow.  

Photo by krakenimages

However with renewing tenancy agreements every 6 – 12 months you can predict the times of the year when there could be an increase in tenants moving out and times of the year when you might have no one moving at all.

We have started implementing the tenancy agreement renewal process only once we had reached more than 100 active tenancies.  Currently it’s much more complicated and slower process as it could have been at the very beginning.

Therefore my advice is, whenever you make any decisions, either big or small, remind yourself of where are you going and making a correct decision will become much easier.

Photo by Toa Heftiba

Have a great journey.