5 Tips For Finding And Keeping Perfect Tenants For Your HMOs
Does the perfect tenant exist? The tricky part about renting out your HMO properties is finding the right tenants to live in them. In order to maximise the profits from your investment, you’ll want to find tenants who can pay their rent on time, take care of the place, and treat your HMO like their own home.
Here are my five top tips for finding and keeping perfect tenants –
1. Know Your Target Demographic Before You Start
Be very clear on who you want to rent to right from the start, whether that’s first year students, professionals in their mid-20s or social housing referrals receiving Local Housing Allowance (LHA). Each type is unique and what’s ideal for one investor, might not suit you.
Getting the right tenant type is essential when creating a profitable HMO. At Babouris, we have follow two golden rules to get this right —
i. Don’t Mix Tenant Types
Ensure that each HMO is lived in by either students or professionals. Never both! A similar age range and style of living is often the best choice to minimise friction and create the best living situation for your tenants. By defining your tenant type and catering to that you can help eliminate disputes.
ii. Look For Balance
A lot of people fixate on getting all male or all female tenants and worry about what clashes might come up if you have 5 men, 1 woman for example. Our general rule is to judge it in the context of the HMO and if you’re not sure, just ask your prospective tenant what they are comfortable with. If in doubt, you can never go wrong with a balanced mix.
2. Create HMOs To Attract Your Target Tenants
Getting the right type of tenant is important, but what they are going to experience in your HMOs may be just as important. It’s crucial to attracting and retaining your target tenants.
Now you know who your ideal tenant will be, take time to make your HMO their dream home by decorating and furnishing it with pieces that suit their tastes and needs. This will make them more likely to want to rent from you again, or even refer their friends — your potential new tenants!
3. Always Be Advertising – Everywhere, But Be Selective
Once you’ve defined your target tenant type and create a HMO that meets their needs, you need to find suitable tenants. At Babouris, we have an expression: ‘ABAE’.
This stands for ‘always be advertising - everywhere’. One of the very best ways to do this is with social media. Whilst we use all the property portals you might expect, Babouris — unlike other agents, have tracked a significant uptick in HMO tenants using social media for pretty much everything. So naturally, we have embraced modern technology and marketing and now over 60% of our tenants are coming to us from Instagram, Facebook and LinkedIn.
When it comes to advertising, you should prioritise professional photo and video content and share this far and wide. Landlords without a strong social reach would do well to consider SpareRoom.co.uk for professional tenants or StuRents.com for students. Otherwise, be sure to work with a reputable letting agent with a proven track record for success in the room let market, such as Babouris.
In Cambridge, you should find a high demand for your rooms. But don’t be blinded by wanting to get tenants in straightaway and start getting the cashflow.
4. Referencing And Background Checks Should Be Thorough
Based on your strict criteria and high standards, you should have a shortlist of qualified candidates wanting to rent your room by now. Don't rush and take the first ones - instead, process each qualified applicant for referencing.
It's important to note that there are differences in referencing standards among letting agencies and third party providers. Make sure that the agent you're hiring offers the type of referencing service that you want before choosing them.
Pair these referencing results with feedback from viewings, and select those you feel will suit you best.
No matter what, some difficult tenants will slip through the net. These tenants can be like a virus in the house. It can upset other tenants and even cause others to leave. If you have a problematic tenant, don’t just stand by. You might have to manage the expectations of the other tenants, or you may need to step in and deal with it.
If things are getting out of hand, then you need to show that you’re dealing with it. If you do that, the tenants who are upset are more likely to stick with you and have faith that you’re going to deal with this appropriately.
5. Good HMO Landlords Keep Tenants Longer
High tenant turnover can kill your cash flow and spare time fast. Losing a tenant requires you to spend time and money advertising, showing, running background checks, and doing admin work to get one tenant out and another one in. One of the best ways to prevent this from happening is to work on being a ‘good landlord’.
A good HMO landlord is someone who spends time on making sure that their tenants are happy. They spend their time proactively identifying and then working to resolve any problems that may come up – ideally before they’re even reported. They focus on communicating well with their tenants as well as trying to understand what they're going through in difficult times. Equally important is not being too soft. A good landlord balances what’s right with what’s fair and when needed, can say no to unjustified requests.
All of these qualities are important if you want your tenants to feel valued and content so that they'll want to stay in your HMOs for a long time.
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Comment below if you have any questions or thoughts about finding and keeping perfect tenants. To discuss anything else and share ideas with likeminded property investors, join the Cambridge Property People online community. You can also subscribe to Hi-Five Friday, a weekly email newsletter of what the Babouris team are enjoying, following and working on in the world of HMO and property investment.
Meet The Writer:
Alex Babouris is a HMO investor with more than 10 years of experience. He is the founder of Cambridge Property People – a community of local property professionals, investors and enthusiasts, and Alex is the founder and lettings director at Babouris – a specialist HMO property investment and management agency.