Investing in property can sometimes feel confusing. With many different strategies out there, it’s sometimes difficult to know which is right for you. At present there are 2 main strategies dominating the landscape, the growingly popular HMO with its promises of high-income potential and the tried and tested Buy-to-Let which has laid a solid foundation for many an investors’ portfolios. Both have their pros and cons and remain dominant investment types for both first-time and seasoned buyers alike.
What is an HMO?
Put simply, an HMO (house for multiple occupation) is a dwelling which is occupied by two or more people who are not all relatives of one another. To qualify for this definition, the location must be the primary residence of the occupants, and the categorisation applies to a wide variety of property types.
As an HMO is deemed to be a more active investment, some investors consider these properties to be troublesome to manage, ultimately handing over control to a property management company. They can also include a higher turnover of tenants and must reach set standards in order to please local councils as a viable rental property. However, if done right they can bring great returns for those willing to put in the extra effort, which will be pleasing news to anyone eager to maximise on their assets and aren’t afraid to get hands-on.
What is Buy-To-Let?
A Buy-To-Let property is one purchased by an individual or group with the intention of renting out to tenants. Often, purchasing a Buy-to-Let property is accompanied by a specialised mortgage which is created for this purpose. This type of property investment is sometimes referred to as a single let.
Buy-to-Let properties, considered to be a more passive investment, tend to be purchased with a view to longer-term rental. For this reason, those choosing this form of investment should be more careful when assessing the particulars of a property in order to ensure they’re buying an asset that will remain desirable for a long period of time. One popular trend in the Buy-to-Let market include desirable apartments in commuter towns and cities, ideal for young professionals who are increasingly willing to sacrifice space in order to be within proximity to amenities such as bars, cafes and restaurants.
Choosing the Right Investment for you
Selecting the correct investment for your needs, budget and overall goals requires careful consideration. What works for one investor may not necessarily work for you and before jumping into any strategy, carefully consider how much capital, time and effort you are able to give to the project, as this will help you to narrow your options to what you can realistically manage.